Al Weed and Bobbie Joe Gardner: Customer alert on utilities and renewable power

Op-ed by Al Weed and Bobbie Joe Gardner

Earlier this year the Virginia General Assembly passed a bill requiring investor owned electric companies to notify their customers about the possibility of buying renewable power. In asking the utilities to do something innovative, the General Assembly has also given the power of choice to the utility companies rather than the citizens Recent filings with the State Corporation Commission by Dominion and Appalachian Power highlight this concern.

These two utilities, who together serve the majority of Virginia’s electricity customers, have recently announced that they will allow consumers to buy power from renewable sources. While each company is pricing this “green power” option differently, choosing the renewable option will mean a bigger electric bill – and more profits for the utilities.

As presently structured, the renewable options will not generate a single watt of new green energy. Utility companies are suckering environmentally conscious customers into paying more for what the companies are already selling. Add to that the fact that when a utility offers it own renewable option, it can shut out all other sources of renewable energy from its service area. You will pay more for the same product that you’re already getting, and at the same time give up choice. That sounds like a pretty rotten deal.

Both companies admit that they are offering these options to test the market for green power. That is about all they will do – test the market. Without significant changes, they will do little to protect customers from the rise in fossil fuel costs, and even less to generate sustainable demand that will support development of renewable energy generation.

Still, it is good to see Virginia’s two largest utilities offer something to consumers concerned about climate change. As the slow but steady process winds its way through the SCC, Virginians can do something to influence the outcome in a positive way. We can all write to the SCC on-line at www.scc.virginia.gov citing Case # PUE-2008-00044 (Dominion) or 00057 (Appalachian). Comments should:

1. Ask that consumers be allowed to choose the form of renewable energy they will be purchasing. This is important to ensure that the various forms of renewable energy compete to bring about market efficiencies.

2. Ask that those who are paying a premium for renewable energy be protected from fossil fuel increases. After all, if you are being charged more for energy that doesn’t come from coal or natural gas, why should you also pay for fuel increases? (Appalachian’s proposed tariff explicitly takes the premiums they get from renewable consumers and uses it to lessen fuel increases on all customers.)

3. Support long-term commitments to your chosen form of renewable energy. Development of new energy sources will take long-term capital that can only be raised if there is a steady consumer demand for the specific renewable power. Both companies allow customers to cancel with only 30 days notice. No banks are going to invest in renewable generation without a stable customer base.

Developing a biomass energy economy in Virginia is simple: allow demand for renewable energy – driven by the high cost of fossil energy and increasingly widespread concern about climate change – to be monetized through our electricity bills and direct those resources to the most competitive producers of alternative energy. Let consumers choose their type of renewable energy and give them long-term incentives to stick with their choice.

A good example of this is Austin Power in Texas. Customers who chose to commit to the purchase of wind power in the early part of the decade – even though they were paying more for it then – now get their green power free of fossil fuel increases and cheaper than their conventionally powered neighbors do.

Initial estimates of the biomass energy potential in Virginia suggest that as much as 20% of our total energy needs could come from renewable, sustainable biomass. This would have a dramatic impact on our rural economy, on jobs throughout the state, and on air quality. A real commitment to renewable energy by our power companies could lead the way towards eliminating dependence on fossil fuels. This leadership begins with a green power choice that will really make a difference, not one that is merely cosmetic.

Al Weed is chairman and Bobbie Joe Gardner is a researcher at Public Policy Virginia, a Charlottesville based nonprofit working to change Virginia’s energy culture.