Fair Trade in Green Power?

Michael Giberson

Newsday reports that some consumers “feel ‘ripped off’ by LIPA’s alt-energy plan.â€?

Ratepayers who sign up for Green Choice permit LIPA to add an average premium of 1 to 2 cents a kilowatt hour, or $4 to $15 a month, to their bills. LIPA sends that to one of two green-power marketing companies that buy renewable energy “attributes” from state-approved, green-power producers to send to the state power grid, which is available to all users.

Some consumers thought that the “green power� they paid a premium for would be delivered directly to them, so that the power they consumed would be the actual green power they paid for. However, there is no way to differentiate power on the grid, and no way to deliver a specific injection of power in one location to a specific consumer at another location. Green power certificates allow consumers to, in some sense, overcome the physical limitation of the grid and support green power even when the generator isn’t right next to the consumer.

However, another feature of the Green Choice program puzzles me a bit. From the article:

Green Choice customers still pay LIPA for 100 percent of their regular usage, plus fuel-adjustment surcharges, from power produced at local plants fired by oil and natural gas.

Well, I guess it is only puzzling if you think of Green Choice as a product selection. The LIPA Green Choice brochure (PDF) provides options to support 100% wind, wind and hydro, or wind, hydro and biomass for a premium of 1 to 2 cents per kWh. The alternative, default option — let’s call it “Gray Choiceâ€? — in New York would be a combination of coal, oil, gas, nuclear and hydro. (See EIA report, PDF) If Green Choice were a product, then choosing Green Choice would opt you out of responsibility for Gray Choice, including, for example, fuel-adjustment charges.

But the choice in Green Choice is not for an alternative to Gray Choice, it is merely to continue to get Gray Choice while paying extra to support alternative energy generation in New York.

Green Choice as a product would be much more interesting than Green Choice as a premium. Oil and gas prices have been relatively high and volatile recently, and Gray Choice consumers are being hit via fuel adjustment charges. Makes a certain amount of sense. But shouldn’t consumers making the Green Choice be given a little protection from the hazards of Gray Choice? That would make more sense.


One thought on “Fair Trade in Green Power?

  1. Austin Energy’s green power program works as you describe – the green power customers are buffered against fuel adjustments and the like. For a brief time recently, in fact, the green power rate was actually cheaper than the grey rate (green power here is sold as ‘batches’ – depending on when you sign up, your rate is set by the batch for some period of years after that). They had to hold a lottery for the remaining spots in that particular green power batch.

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