Green-energy choices widen in Pa.
Until this year, Peco Energy Co. customers who wanted to buy renewable power had to drop some extra green. But the advent of retail electricity competition Jan. 1 introduced a new dynamic into the mix. Residential customers can now buy renewable power, mostly from wind generators, at practically the same price they would pay by sticking with Peco. They might even pay less.
Until this year, Peco Energy Co. customers who wanted to buy renewable power had to drop some extra green.
But the advent of retail electricity competition Jan. 1 introduced a new dynamic into the mix. Residential customers can now buy renewable power, mostly from wind generators, at practically the same price they would pay by sticking with Peco. They might even pay less.
"It's no longer a sacrifice to buy renewable power," said Courtney Lane, a senior energy-policy analyst with Citizens for Pennsylvania's Future. "It makes economic sense, as well."
Competitively priced green power may be a temporary phenomenon - because of the recession, green electricity is in oversupply and is not fetching much of a premium.
Environmental advocates who tout the clean-energy benefits of wind, solar, geothermal, and hydroelectric power are encouraging customers to send the markets a signal by buying green.
"Vote with your dollars and make a difference," said Jay Carlis, vice president of Community Energy Inc., a 10-year-old Radnor renewable-power developer and marketer.
Community Energy devised the Peco Wind option that was one of the few renewable-power choices for customers of the Philadelphia utility before Jan. 1.
At its peak, 35,000 Peco customers chose to pay an additional 2.5 cents per kilowatt-hour to buy some or all their power from Peco Wind, which invested in Pennsylvania wind projects. Carlis said Peco Wind customers paid for the construction of 40 megawatts of wind turbines.
Nowadays, at least 12 of the 27 suppliers competing for Peco's residential customers offer a renewable-power option, and Peco Wind's 2.5-cent premium seems steep - it adds about 25 percent to Peco's current residential supply cost of 9.99 cents per kilowatt-hour.
About 25,000 Peco customers are still enrolled in Peco Wind, said Cathy Engel Menendez, the utility's spokeswoman.
In Pennsylvania's deregulated markets, customers are free to shop for a power supplier - the commodity charge makes up about two-thirds of the total bill. Regardless of the supplier, traditional utilities such as Peco collect a fee for distributing the power over their wires.
Customers are not obligated to switch. Those who remain with Peco accept a default rate known as "the price to compare," which adjusts quarterly to reflect market changes.
Most alternative suppliers compete on price - some offer flat rates that guard customers from rate shocks; others offer variable rates that change monthly.
But the renewables market is emerging as a significant sector.
As more green offerings hit the market, the suppliers are differentiating their products by emphasizing that not all green energy is created equal. Some sell the advantages to buying power from local resources, rather than out-of-state wind farms.
The Energy Cooperative of Pennsylvania, for instance, tells its members that all its power is sourced from Pennsylvania hydroelectric, solar, and wind projects.
"As a Pennsylvania cooperative, the community aspect is important to us, and we believe we should be supporting projects with local economic and environmental benefits," said Jossi Fritz-Mauer, the co-op's codirector.
One obstacle that renewable-power suppliers must overcome is the common misconception that they can deliver the actual electricity produced from a renewable source.
"People make the assumption that we're coming to their electric meter with a long extension cord that runs to the wind farm," Carlis said. "That's not the way it works."
In reality, all power generated flows into the distribution grid, where it is simultaneously drawn off by customers.
Green-energy producers are paid through a system of Renewable Energy Certificates. Power producers can sell one REC to utilities for each 1,000 kilowatt-hours of electricity they generate. Some resellers employ an auditing firm called Green-e to certify they actually bought the credits.
Where the power is actually produced is becoming a distinguishing factor. Some suppliers selling to Peco Energy customers buy power from big out-of-state wind farms, such as those in Texas, whose RECs are inexpensive. Others buy their power in the regional grid, PJM Interconnection L.L.C., which includes parts of 13 states and the District of Columbia.
"A lot of products are being marketed in your area as renewable, but there's absolutely no disclosure about where those RECs are coming from," said Michael Fallquist, chief executive officer of Viridian Energy Inc., a direct-marketing company that has burnished a green image.
Viridian publishes an annual report that identifies the renewable certificates it buys. Its Pennsylvania customers are supplied from the Lookout Wind Farm in Somerset County and a Maryland project. The regional sourcing is "one of our strongest selling points," Fallquist said.
But Viridian's price tends to be higher than the competition's, according to prices surveyed by the Pennsylvania Public Utility Commission and the Office of the Consumer Advocate. A one-cent-per-kilowatt-hour difference amounts to about $90 a year for a typical residential customer who uses 750 kilowatt-hours a month.
The current low-cost leader appears to be Ambit Energy L.P., a direct seller that is a new entrant to the Peco market.
The Texas company quotes a fixed rate of 8.9 cents per kilowatt-hour for 100 percent wind power generated in Pennsylvania, according to Robin Stevens, Ambit's marketing vice president.
The risk: Ambit's deal includes a $120 penalty for customers who cancel before the one-year term is finished.
Citizens for Pennsylvania's Future compares choices for renewable power: www.pennfuture.org/energy.aspx.
Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at www.papowerswitch.com.
The Pennsylvania Office of the Consumer Advocate will mail a Peco shopping guide for free: 1-800-684-6560.