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Mother Jones: Are Green Power Programs a Scam? Why does NIPSCO want a new Green Power Pilot Program? October 9, 2012

Posted by Laura Arnold in Duke Energy, Feed-in Tariffs (FiT), Indiana Utility Regulatory Commission (IURC), Indianapolis Power and Light (IPL), Northern Indiana Public Service Company (NIPSCO), Uncategorized.
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Dear IndianaDG Readers:

Why does NIPSCO really want to create a new green power pilot program? Part of the answer can be found in the petition and testimony NIPSCO filed earlier this year to create a voluntary green power rider pilot program as follows:

44198 NIPSCO Petition to Create Voluntary Green Power Rider Pilot Program

44198 NIPSCO Green Power Testimony of Tim Caister_2012-05-07

This case is now completed and is awaiting a final order from the Indiana Utility Regulatory Commission (IURC). I fully expect that it will be approved by the IURC.

Both Indianapolis Power and Light (IPL) and Duke Energy Indiana have programs like the one proposed by NIPSCO.

To read the most recent IPL 2012 Green Power Tariff Rider Annual Report click HERE > 43251 IPL Green Power Tariff Rider Annual Report_2012-09-28

Unlike most utility reports filed with the IURC, this is a short and sweet 12-page report with lots of bar charts and graphs. Apparently as far as green power tariffs go IPL’s is a good one–meaning that the cost to IPL customers to essentially purchase Renewable Energy Credits (RECs) from large out-of-state wind farms is very low.

The real question in my mind is what does purchasing these wind energy REC’s via IPL’s green power tariff do for IPL customers except make them feel good.

Does it improve the air quality in Indianapolis? NO

Does it create green jobs in Indianapolis? NO

Does it help to demonstrate the viability of urban friendly renewable energy technologies such as solar PV or CHP? NO

To get the details of the IPL Green Power Option program click HERE > Rider 21 Green Power 7-31-12

To see Duke Energy Indiana’s GOGREEN tariff click HERE >DE–IN_Rider_56_07_23_09_GOGREEN

The GOGREEN Tariff is only two-pages and shows that it became effective July 22, 2009.

I would note that not everyone shares my view (or the one expressed in the Mother Jones article below) on the subject. A recent article By on June 27, 2012 in Indiana Living Green extols the virtues of these programs. See http://www.indianalivinggreen.com/squandered-indiana-ipls-green-power-option/ The author does ask:

“Are these programs effective at encouraging the markets in alternative power? Or are they merely a voluntary tax on environmentally aware do-gooders? Signing up for the Green Power Option is an easy way to express public demand for green power and demonstrate to our state legislators that we want an alternative to burning coal.”

I don’t intend to answer all the questions raised by these Indiana electric utility green power programs, I just merely want us to start asking the right questions. Are the green power options for Indiana electric ratepayers good or what would be better? I suppose it would not be much of a surprise to learn that I support feed-in tariffs (FITs) as a far better way to bring renewable energy into the grid to serve Indiana ratepayers. FITs have many other side benefits as well including green jobs creation and improving environmental quality. Creating renewable energy right here in our own backyard through distributed generation also does not require costly new transmission lines. You make it here and use it here.

I think what we really need is a good honest debate or educational forum on the subject of green power riders. Are you interested?

Laura Ann Arnold, Laura.Arnold@indianadg.net

Are you paying for renewable energy, or just a bunch of hot air?

—By

THE TWISTING TURBINES on the Columbia River Gorge ridges were one of the first things my husband and I noticed en route from Baltimore to our new house in Oregon. So a few weeks later, when a hawker at the farmers market urged me—with a $5 token for free veggies and a postcard with pictures of children lounging in front of local windmills—to sign up for a renewable energy program called Blue Sky, I didn’t hesitate. For less than an extra $10 a month, my utility, Pacific Power, would supply our home with electricity from wind turbines instead of coal.

But it turns out ditching dirty energy is more complicated than that hawker would have me believe. From the windmill postcard, you’d think my premium would go straight to local projects. Not quite: True, Pacific Power operates one wind farm in Oregon, but that’s largely because the state mandates that utilities get 25 percent of their power from renewables by 2025. My well-meaning purchase has little to do with those windmills. Instead, Pacific Power hands my Blue Sky money over to companies that buy renewable energy certificates (RECs) from wind farms, mostly in other states, and other renewable projects like methane-burning landfills. Consumers need to understand that the electricity “is not going from the windmill on the ridge to your toaster,” says Pacific Power spokesman Tom Gauntt. Michael Gillenwater, a Princeton researcher who codeveloped the EPA’s carbon emissions tracking system, says it’s more like donating to a cause. “What you are doing is subsidizing the market for renewable energy.”

Pacific Power says our premium “avoided the release of 897 pounds of carbon dioxide emissions into the air…equivalent to not driving 909 miles.” But it’s hard to verify those numbers, says Stanford professor Michael Wara, who studies carbon markets. “You don’t have an overseeing regulator ensuring that the claims made are backed up.” Green-e, a third-party certification program, ensures that my RECs come from relatively new projects and aren’t double-counted to meet state mandates. But Gillenwater says its “additionality” test isn’t thorough enough to prove I paid for an emission reduction that wouldn’t have happened anyway.

Experts say that RECs like mine can make renewable projects more profitable, but they play a much smaller role than government subsidies. (Disclosure: My father recently invested in a wood-chip-fueled electricity plant in Florida, and he said RECs sweetened that deal.) Gillenwater says most projects would have produced the energy regardless of whether consumers like me pitched in—in 2008, for example, Pacific Power bought a third of my RECs from two Puget Sound Energy wind farms built in 2005. (A spokesman says the projects’ planners didn’t count on revenue from residential RECs in their budget.) The remaining two-thirds were purchased from other projects, including a landfill-gas plant in Utah. Only 1 percent came from solar.

RECs, mandates, additionality—my head was spinning like those windmills, which were seeming further away. To make matters worse, in 2008, only 67 percent of my Blue Sky bucks purchased RECs; the remaining 33 percent was spent on staff and publicity. On average, 19 percent of green programs’ revenues go to marketing, but at small utilities that percentage is far greater.

Utilities insist that the promotion is necessary, since voluntary green power programs work better when lots of people participate. Nationwide, only about a million customers shell out for green power—with corporations, governments, and universities buying the bulk of it. In 2008, residential customers made up only one-quarter of green power purchases.

So what’s a consumer to do? Even with their problems, RECs are “one of the simplest and most direct ways to support renewable technologies,” says Jeff Deyette, a senior analyst with the Union of Concerned Scientists. Premiums can provide that extra profit margin to make renewable projects competitive with fossil fuels. And some utilities are experimenting with other models. If I had enrolled in Pacific Power’s Blue Sky Block program, for twice what I pay now, 41 percent of my money would have funded local solar arrays and a geothermal test project—and only 25 percent would have gone to overhead. Or instead, I could spend my premium on efficiency upgrades in my new home: sealing leaks, insulating, and replacing drafty windows. It would just take more time and elbow grease than checking a box.

Laura McCandlish is a freelance journalist, radio host, and teacher based in Oregon. She previously was a business reporter for The Baltimore Sun.

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Comments»

1. Jim Daniels - October 9, 2012

It seems the REC’s are convoluted and difficult to verify. A simplification in which the electric utility owned to renewable energy pfoduct, or at least a very direct connection it would be different. Vectren here says they have purchased wind power directly from the Benton County field [don’t know who owns that].
The idea of a direct feed based on a specific installation sounds very simple. Better yet is a direct connection with paying an average of old higher rates after a renewable installation, which has lower bills, until the cost of installation is covered plus interest. So, take the cost of installation is paid for completely through the savings generated by that installation.

2. John Gibson - October 9, 2012

Jim: Run that by again. Is there anywhere in Indiana a program like you just proposed where the utility fronts the cost of installation?

Jim Daniels - October 14, 2012

No. The utility does not do the installation so has no part in fronting costs. The idea is that the contractor does that. A while back Honeywell had a deal where they claimed a savings and fronted the cost. They got paid what the customer would have paid without the installation and their profit was in getting the savings paid to them for a set period of time. It became a simple math function.
This kind of purchase structure could work for a lot of things. A carpet company called Interface was offering this kind of deal to its commercial customers. Determine your carpet budget on a yearly basis. Pay the supplier that amount on a long term contract and they make sure you always have viable carpet.


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