"Green pricing," at typical rates of customer participation, could expand demand for renewable energy beyond current levels by more than an order of magnitude, pushing down production costs for energy resources preferred by environmental advocates. And just as important, that expanded demand would occur outside of the regulatory framework (em matching capacity to customer needs and wants.In practice, the utility asks customers to pay rate premiums to fund the production or purchase of renewable resources. In return, the utility assures these customers that all or a portion of the electricity they use is being generated by renewable resources. In essence, green pricing represents a
free-market solution to some of the problems of demand-side management and resource planning.
Green pricing programs are currently available or under consideration at a score of electric utilities across the nation, and can be used to measure customer support for renewable energy under semi-competitive conditions. They offer insights into the process of unbundling the value of utility electric services to meet the needs of specialized or niche markets. Green pricing programs also provide an opportunity to test, in a low-risk setting, a utility's ability to accurately predict market share and price unbundled services. Given the attention it deserves, green pricing enables utilities to develop programs and products that address needs in small market niches, create business strategies, and target promotions to specific market goals.
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