Achieving the smart grid’s potential requires a revolution in electricity pricing. Smart metering and smart rates might yield surprising and beneficial changes in the U.S. utility industry. But...
Green Price Stability
New approaches account for the economic benefits of renewables.
Administration (EIA) (2008). “ Cost of Fossil-Fuel Receipts at Electric Generating Plants .” Monthly Energy Review , July .
12. Energy Information Administration (EIA) (2008). Coal News and Market . Accessed June 2008 .
13. Green-power customers in Long Island voiced frustration over being charged for rate increases due to non-renewable fuels. For example, see “Lawmaker Says Some Feel ‘Ripped Off’ by LIPA’s Alt-Energy Plan,” Newsday, May 25, 2006. Similar articles appeared in the press in Connecticut.
14. Capage, A. (July 2001). “ Across the Green Divide: The Macro Lessons .” Presented at the 6th Annual Green Power Marketing Conference .
15. Hagen, K. (April 2006). “ Conversation with REI Corporate Social Responsibility Program Manager .” See also REI (March 28, 2006). “REI Steps Up to 20 Percent Green Power.” News release .
16. Holt, E.; Wiser, R.; Fowlie, M.; Mayer, R.; Innis, S. (2001). “ Understanding Nonresidential Demand for Green Power .” Prepared for the National Wind Coordinating Committee .
17. Hinckley, T. (February 2005). “PGE Flat Rate Wind Power Research.” Presented at the EUCI conference: Marketing Green Power: Profit Opportunities in Selling Renewable Energy.
18. Hanson, C. (December 2005). “ The Business Case for Using Renewable Energy .” World Resources Institute, Corporate Guide to Green Power Markets, Installment 7 .
19. See “AMD Turns Greener,” Austin American-Statesman , October 24, 2005.
20. It is important to note that there is not a single utility rate that is charged to all customers. The rate usually is distinguished by different customer classes (residential, commercial, and industrial) and generally varies so that large volume purchasers receive a discount.
21. While this report is focused on utilities in states that have not undergone electric industry restructuring, note that utilities in restructured states changed the way that they tracked generation costs. As electricity restructuring propagated throughout several U.S. states in the late 1990s and early 2000s, affected utilities often were required to separate out the generation costs in their rates. This disaggregation was done so that if a customer decided to switch to a competitive supplier, the default utility easily could remove generation costs and replace them with the competitive supplier’s costs. As restructuring is active in only 16 states (including the District of Columbia) today, most utilities are not required to separate their generation costs from other costs.
22. If a utility is using renewable energy certificates (RECs), which represent the environmental attributes of the renewable energy source, to supply the green pricing program, the premium simply would be: (1) the cost of the RECs, plus (2) program implementation costs.
23. Ancillary services help control the short- and long-term operation of generation supply, transmission equipment, distribution equipment and overall system control. The activities through which ancillary services can be provided include: before-hand scheduling of generation and transmission, real-time dispatch of available generation and transmission ( i.e., adjust the schedule for current conditions), generation reserves to instantaneously maintain the supply-demand balance (load-following spinning reserve responds to small changes and operating reserves respond