The power industry by and large has failed to understand the potential of Green Power. Years ago, when I was attempting to design a Green Power marketing program for an ESCO (Accent Energy), I was arguing with the founders of that company that Green Power was different, and ultimately would require a separate company to market it.
Essentially, my analysis of the situation was that the mindset of the power industry was about price competition, and Green Power broke the mold, because to the power people it was power for 2 cents more, and that made no sense to them. Seen in that light the market place for Green Power was limited to some fringe cases, and was not worth worrying about. The power people therefore were incapable of understanding it, and I pointed out to them that selling Green Power rather meant promoting empowerment, and energy independence, not selling power.
Power is a negative, and people feel dis-empowered, because they have to pay that bill anyway, never mind whose name is on the bill. Moreover, they don't understand de-regulation, and it is somewhere between hard and impossible to verify the various claims, and many ESCOs have proven to be somewhat less than ethical in their dealings.
One of the major features of differentiation in the power market place has been often misunderstood and sold the wrong way: fixed rates. People think they are buying fixed rates in the illusion that they're going to beat the market, which is not so. Now, if you are responsible for a budget, and you'd like to fix one element of your cost, and you can rationalize that the cost is historically reasonable, well... perhaps you should consider the fixed price option. If you think you're going to beat the energy market, you probably should buy a lottery ticket instead. And, you are paying extra for the pleasure of having fixed rates.
All in all the ESCOs don't know what to do with themselves to differentiate their product. And in the direct sales model this inevitably leads to reps who will tell any lies necessary to get the deal, and in spite of codes of ethics that try to rein in the abuses, the results are a joke. In the last few months I've had more reps from power companies at my door than I can shake a stick at and almost all of them lie, although they've now been trained to not say they represent ConEdison, for then they could get fired. But they all violate the spirit of the law. From my time in the industry it was always clear that the system is rife with abuse, and that invariably the reps who lie the most make the most money. It is time to break the mold...
Fundamentally the justifications for de-regulated energy markets are not valid. Price competition is no solution to the nations energy problems. Instead it roots us in the illusion that we can beat the system, when in reality we can't. Here in NYC it is particularly evident. The real issue is transportation, for the T&D portion of your bill is 65%, and going up ahead of inflation as far as the eye can see. The real answer therefore is renewable energy generation at the building level, for these are investments that gain in value over time and therefore are conducive to appreciating real estate values. Their value goes up with every energy price hike, and with every rate increase for ConEdison.
Economically also, the utilities will have a long term economic interest in encouraging growing diversification of markets, because it is a proven fact that the overall system often becomes more reliable when the grid serves as a backup, as we have seen in energy intensive buildings like data centers, where reliability counts. Today's renewable technology is enabling this model for large groups of buildings, and it is part of the solution on a lot of levels. By the same token economic competitiveness, public safety and national security all gain from greater energy independence.
Especially in the urban environment the economics of energy are now solidly favoring the local production model in a growing number of cases. From the standpoint of economic modeling with T&D at 65% of the bill, and energy at only 35% of the bill, a 10% better energy rate is a 3.5% difference in the bill, and the arguments of de-regulation soon become laughable. Energy efficiency, demand management, and renewable production are where it's at because they gain on the T&D problem. As long as the incentive systems are done right, it should end up with both better utilization of the grid, and with greater energy diversification.
Thus, if we take the average household consumption of 900 kwH, at typical rates in NYC, of ca. 25 cents/kwH, of $225, a savings of 3.5% is ca $7.88 per month, or about 3 subway fares at current rates. Thus besides generating campaign contributions for the politicians that voted for it, financially it is not very meaningful. However if Green Power is an innovation that rides the back of de-regulation, it may be worth it after all. Watch the ratings of the largest corporate users of Green Power here:
http://www.epa.gov/greenpower/toplists/top50.htm
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