Are you paying extra for green power?
Your money may not actually support green energy.
Wed, Nov 18, 2009 at 06:20 PM
Photo: Martin Pettitt/Flickr
You know the flyers that fall out of your phone bill? Many of them tout clean energy options that can be yours, for a small fee. But the New York Times recently reported that the money you spend on renewable energy may do little more than finance the mailers that advertise clean energy.
About 1 million electricity customers have signed up for clean energy payments. The amount of electricity sold in this way has nearly tripled since 2005, which has been attributed to the public’s rising concern about climate change and energy security. Many energy companies offer green energy options or green power certificates to offset global warming emissions.
However, the customer sign-up rate is only 2 percent for these utility programs. Many times, these programs incur an added cost. Renewable energy options like solar and wind power often cost more money to produce than traditional fossil fuels. And in the current economic climate, consumers are loath to spend more money.
The lack of participation in green energy programs may not be entirely due to higher cost. Some wonder if these programs really cause more renewable energy projects to get built. Unfortunately, there are examples of programs that used the money that “clean energy” brought in for other purposes.
Last year, Florida Power and Light’s green power program, Sunshine Energy, was terminated by the state after it was found that the promised solar power facilities were far behind schedule. The company’s 38,000 customers paid extra for solar energy. Further, an audit found that about 76.4 percent of the contributions were spent on marketing and administrative expenses.
This is not unusual. According to a national laboratory report, around 19 percent of the money that goes into voluntary clean energy programs is spent on promotion and marketing. Smaller utility companies often spend much more.
And the reality of clean energy is somewhat bleak. No big utility can deliver exactly 100 percent renewable power to any customer. This is because electricity from all sources is mingled in the same wires. Further, sometimes contributions are not spent on local renewable energy products. Recently, the city of Durango, Colo., discovered that some of the payments supporting local solar energy had gone into installing solar panels on a school in a different city.
This does not mean that renewable energy programs should be discarded. As reported, the utilities are basically collecting extra money that they promise to use to support the development of renewable energy. This is a pitch that many customers are interested in supporting.
Think of it this way. Green energy certificates sold by New York’s Con Edison might sell green power to its customers, and then buy certificates for that amount of power on the open market. These payments can help new facilities get built. Seems like that is a step in the right direction.