Two years after the state of New Hampshire began the first U.S. experiment with allowing citizens to choose their electricity supplier (See "Power of Choice," September/October 1997), the next big test for greenpower marketing has begun. On March 31, 1998, the state of California opened its $20 billion retail-power market to competition, offering an estimated 13 million households a choice between electricity suppliers. Of 62 "power marketers" that signed agreements with utilities to sell their electricity, 9 hope to cash in on a potential demand for dean electricity by offering "green power." Recent surveys have suggested that between 10 and 30 percent of Californians are willing to pay a small premium for electricity derived from cleaner energy sources.
Seeking to circumvent the confusion created in New Hampshire and Massachusetts by marketers' questionable claims to "green" power, consumer advocates and environmentalists in California created the "Green-e" certification program. The Green-e label, established by the Center for Resource Solutions, denotes an electricity product that is at least 50 percent derived from renewable energy - wind, solar, geothermal, biomass, and small hydropower. The share of nuclear power cannot be greater than the portion used statewide (15 percent), and the non-renewables allotment must have air emissions at least as clean as the average emissions in the state. (Currently the state's electricity is derived from 32 percent natural gas, 27 percent hydropower, 16 percent coal, 15 percent nuclear, and 9 percent renewables.)
Participants in the Green-e program must also abide by a marketing code of conduct and undergo an annual audit to verify their purchases of renewable energy. As of mid-April, seven of the thirteen green power packages advertised by marketers had qualified for the Green-e label. Five of those rely entirely on existing renewables. Meanwhile, two marketers have made commitments to support new wind-power installations through their programs. Overall, the environmental quality of the electricity being sold is substantially higher than that offered in the New England pilot programs.
More so than preceding green-power programs, California's nascent market has been nurtured by several public policies. State utility restructuring law requires all companies to indicate the fuel mix of the electricity they market -...