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Green Pricing: The Bigger Picture

Fortnightly Magazine - August 1996

retail supplier, Portland General Electric (PGE). Recently, PGE asked 400 residential and 366 commercial customers whether they would be willing to pay premiums to develop alternative generation in the utility's system. Richard Weijo, PGE's project manager of new products and services, reports: "The percent of commercial customers interested in green pricing appears to be similar to the percent of residential customers who are interested."

A research study at Ontario Hydro examined 599 municipal utility commercial customers and 320 retail commercial customers. It projected C/I customer participation equivalent to the support shown by the 4,153 residential customers who were surveyed. Commercial customers responded in a manner similar to residential customers when asked, "If you had the option of paying a bit more to contribute to increasing the amount of 'Green Electricity' produced in Ontario, would you definitely choose it, probably choose it, probably not choose it, are you not sure, or would you definitely not choose it?" However, when asked "How much more per month would you be willing to pay to increase the amount of 'Green Electricity' generated in Ontario?," commercial customers proved willing to pay premiums from 300 to 700 percent higher.

At Wisconsin Public Service Corp. (WPS), a study found an equal proportion of commercial and residential customers willing to pay premiums to fund installation of photovoltaic systems on high school roofs. The SolarWise for Schools ProgramTM allows customers to make tax-deductible contributions to a fund that supports installation, operation, and maintenance of these photovoltaic systems. Each system delivers power directly to the school building, reducing electric consumption from the utility grid. The project includes curriculum materials about solar energy and linkups with national renewable agencies and organizations via the Internet (World Wide Web).

For commercial customers, the act of contributing to the program demonstrates their commitment both to the environment and the community. Given these promotional advantages, the niche of WPS commercial customers interested in green pricing reported that they would contribute 1,000 to 5,000 percent more than

residential customers who were surveyed previously.

Finally, a study of executive focus interviews conducted with 130 commercial and industrial customers of Public Service Co. of Colorado suggests a proportion of support for renewable energy similar to that shown by residential consumers. In this study, we offered both residential and commercial customers the opportunity to to buy 100-Kwh blocks of wind-generated electricity at various premiums. To commercial customers, we also offered the option of underwriting portions of the wind system, along with a cooperative public relations effort involving both the utility and the commercial customers. Ron Fish, senior market research analyst, states: "Value-added services like cooperative public relations build relationships and will keep customers from switching to competitors."1

Crafting a Program

To attract customers successfully, green pricing programs must overcome a number of hurdles (em such as limited understanding of renewable technologies and the novelty of paying a premium for environmentally friendly products. Public education about the costs and benefits of renewable energy also plays an important role.

Here is a partial list of elements for program success:2

s Quality. Research the