Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to...
The Green Police
Technology advances despite a political conflict.
Opinion polls show that Americans are growing tired of eco-nannyism. This isn’t a new trend, but on February 7 it went prime-time, during the biggest TV event of the year: Superbowl XLIV.
During the fourth quarter, the big game’s record-breaking 100 million-plus TV viewers witnessed a new commercial for the Audi A3 TDI luxury sedan. Set to the tune of “The Dream Police” (a 1979 hit by the band Cheap Trick), the 60-second Audi ad depicts so-called “green police” arresting people who install incandescent light bulbs and throw batteries in the trash. The punch line arrives when a green cop at a traffic checkpoint identifies an Audi A3 and tells the driver, “Clean diesel … you’re good to go, sir.”
Audi’s ironic ad simultaneously ridicules the green movement and promotes the green cred of its product, which the company says produces 30 percent less greenhouse-gas (GHG) emissions per mile than a comparable gasoline-powered car. In this way, the company’s marketing strategy assumes at least two things about prospective Audi buyers:
1) They’re sick and tired of eco-preaching. They’re choking on locally grown, fair-trade, organic tofu burgers, and they’re ready to kick the next person who mentions a carbon footprint; and
2) They expect eco-regulation to persist and intensify. When they go car shopping, they believe fuel economy and emissions performance increasingly will dictate their choices. They don’t necessarily like it, but they view it as inevitable.
All of this suggests a couple of interesting lessons for U.S. utilities.
First, as we seek ways to bring ratepayers on board with such green-energy options as conservation, demand response and renewable energy, we might assume that many of them will find the whole thing annoying at best. They’ve seen it coming and they’re ready to accept the costs, but we shouldn’t expect them to like it. Utilities’ approach to marketing and customer service should account for this reality.
Second, it suggests that green has transcended beyond a trend to become a fact of life, yielding fundamental changes in American markets—and politics.
Political battles are heating up in the fight over environmental regulation. Since last summer, when the House of Representatives approved the Waxman-Markey cap-and-trade bill, the front lines in the green revolution have moved substantially backward. Opponents of GHG regulation chalked up a major victory in December when the U.N. climate summit in Copenhagen failed to formulate anything resembling a binding accord. Also, an anti-eco movement coalesced around last year’s “climategate” scandal—in which hackers stole and publicized embarrassing email messages written by scientists at Britain’s University of East Anglia.
At the same time, in early 2010 the Obama Administration found itself significantly weakened after a year of bad economic news and the collapse of Congressional Democrats’ healthcare reform bill. By mid-February, climate legislation in Congress seemed dead for 2010, and the administration seemed unlikely to spend what remained of its political capital issuing controversial GHG constraints based on the EPA’s Clean