California Power Crisis: Impacting the Green Power Market (continued)

1. Despite A Flawed Deregulation Bill, Surprising Market Success: A major flaw in California's restructuring legislation was a poorly designed retail market. Even though the law made it virtually impossible for retailers to economically compete with the incumbent utilities, the green power market appeared as one of deregulation's few successes. Consider the following facts:

• Over 90 percent of the 200,000 consumers who at one time switched power suppliers in California chose a green power product from one of eight companies.
• The amount of power sold by these companies resulted in the following pollution savings in 1999 alone: 950 tons of nitrogen oxides (which contributes to urban smog and respiratory disease) and 114,500 tons of carbon (a major contributor to global climate change).
• An audit conducted by the Center for Resource Solutions (CRS) discovered that consumers received more renewable energy than they paid for. While some customers opted for products based on 50-75 percent green supply, the power they received in 1999 was 99% renewable.

2. Drivers Behind the Market Collapse: Ironically, successful efforts by utilities to undermine California's retail market, a necessary requirement if wholesale electricity competition was to work, has left them facing bankruptcy serving the millions of customers they successfully captured. Additional short-sighted actions contributing to the crisis:

• Natural gas deregulation in 1992-93 eliminated incentives to store natural gas in back-up reservoirs, adding to the recent run-up in natural gas prices.
• Utilities abandoned approximately 2,000 MW of energy efficiency efforts California - enough power to supply two million homes. If implemented, the efficiency savings could have helped prevent blackouts, ameliorated price spikes, and provide the conditions for California green power choice.
• Almost 1400 MW of renewable and cogeneration capacity (684 MW Edison, 246 MW PG&E, 451 MW SDG&E) was to be acquired through an auction that was bid but never purchased because the utilities petitioned the FERC to kill the auction as discriminatory against other power generators. Edison claimed that it did not need power until 2004 one month before it cancelled the conservation on which that forecast was based (see second bullet below). California spent $90 million of ratepayer money in AB 1890 (the state restructuring bill) to offset liability costs incurred by the utilities for killing these contracts and didn't get a single kilowatt-hour.

3. Green Power Is Succeeding Elsewhere: Green power is flourishing in other states:
The Green-e Renewable Energy Certification Program is active in Pennsylvania, New Jersey, and other Mid-Atlantic states, Connecticut, New York, and other New England states, Ohio, and Texas. These markets feature over 100 thousand green power customers. Utility green pricing programs in deregulated states are operating in the Pacific Northwest; Tennessee Valley; Iowa; Colorado; Georgia, Alabama, Minnesota and Wisconsin. Tens of thousands of customers are purchasing green energy in these markets. While roughly one percent of California consumers switched to green power, over 10 percent of Pennsylvanians have switched to new providers. Rules make the difference -- Pennsylvania made it easier for consumers to save money when switching.