July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Director agrees, the Fortnightly doesn't get it.
In your Oct. 1, 1999 editorial regarding green power marketing, you stated that "the FTC would leave consumers in the dark on some environmental claims." (See "We Got Green?" Public Utilities Fortnightly, p. 4.) After reading your observations, we here at the FTC are in the dark as to why you believe that retail power marketers should be required to give consumers information that would shed no light on their purchase decisions.
In our comment to the National Association of Attorneys General (NAAG), we advised that retailers not be required to disclose when a system of tagging (as opposed to contracts) is used to track environmental characteristics of power. In discussing the comment, you seem to understand that tags are equivalent to contracts, and yet you imply that consumers will be harmed if advertisements do not disclose the use of a tagging system.
But, as we went on to say in our comments to NAAG, under both systems the premiums that consumers pay for environmentally preferable power are matched with the producers of that power, even though consumers (under both systems) are all using the same electricity, which is blended on the grid. The only significant difference between the methods is that more trades can be made under tagging because grid constraints need not prevent the purchase of tags (and this could mean that environmental benefits may accrue in areas that are geographically remote to the consumers). And while you allude to the possibility of double-counting green power, such concerns apply equally if a contract system is used.
Fundamentally, the chosen method of tracking is really just a method of substantiation for environmental claims, and does not have implications for the power's characteristics themselves. We do not usually consider such methods of substantiation to be required information for consumers. For example, consumers do not generally know what test methods are used to determine the nutritional content stated on food labels, but as long as the methods are reasonable and reliable, consumers are not misled or injured by such omissions.
Frankly, just as you conceded in your opening that you "don't quite get it about green marketing," we don't get why you would suggest that consumer advertisements for electricity should be cluttered up with a disclosure that provides no useful information to consumers.
Bureau of Consumer Protection
Federal Trade Commission
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