Terry Peterson of EPRI sends out several notes a week to an email list, where he comments on current events in renewable energy. It’s primarily for EPRI members, but temporary ‘free preview’ subscriptions are available and he’s added my name to the list in anticipation of my supplying him reciprocal information. (Contact him directly if you want to be put on the list for a preview.)
Below is an item he sent out this morning. He gave me permission to forward it to you. It makes two very important points:
1. Retail customers haven’t rushed to switch suppliers in California — yet — but people who say this means restructuring is a flop are missing the point entirely. There isn’t much reason to switch now, but wait until the stranded asset recovery transition is completed, and then see what happens.
2. Most customers who have switched do it to go green, and are even willing to pay more, not less, for the opportunity. Everybody has been too fixated on “cost” of renewables — “price” (and “brand”) are what are really important. Precisely the point Karl Rabago made in his keynote speech to the CURC Conference (Nov 97 — see UFTO Note Nov 13, 1997).
The Harvard Business Review article looks interesting, too. Which cereal do you buy?
Subject: California’s green power market reported heating up
Date: Fri, 30 Jul 1999 11:15:28 -0700
From: Green Power News
To: Green Power News
California’s retail electricity competition has gotten off to a pretty slow start, owing to several factors that tended to discourage residential customers from taking action to switch providers, including an across-the-board 10% rate reduction and an effectively wholesale market price for competing electricity suppliers to beat. In the first year only about 1% of all residential customers bothered.
Enron, for one, found the heat in that kitchen unbearable and stopped marketing residential products. However, several other marketers have stayed the course and, from the press release below, it seems their patience is beginning to pay off.
As noted below, although the total number of switchers to date is comparatively small, the vast majority of them have opted for green power. Since the present California energy market provides very little economic incentive for switching, that testifies to two facts: The great majority of electricity customers are relatively satisfied with their present provider; And green power is clearly a product with “premium brand” potential.
That last point will become very important as the electricity industry learns to stop operating on “level 1” of building brand equity (What are the tangible, verifiable, objective, measurable characteristics of products, services, ingredients, or components that carry this brand name?) and moves toward “level 4” (What does “value” mean for the typical loyal customer?) and “level 5” (What is the essential nature and character of the brand?). If this notion intrigues you, and you don’t think that level 1 captures all the differences between Safeway’s and Kellogg’s corn flakes, please read S. Ward, et al., “What High-Tech Managers Need to Know about Brands”, Harvard Business Review, July-August 1999, pp. 85ff.
Company Press Release
Summer Heats up for California’s Green Power Market
SAN FRANCISCO–(BUSINESS WIRE)–July 23, 1999–California Green power providers report a new surge of customer enthusiasm.
Two companies, GreenMountain.Com and Commonwealth Energy, report signing up customers at a record pace. A third, The Sacramento Municipal Utility District (SMUD) announced plans to buy all the power available from a new green power facility that begins generating in September, in order to meet recent high customer demand.
All three organizations offer products certified by Green-e, a renewable electricity certification program. To date, over 90 percent of California customers who switch electricity providers are receiving green power — electricity produced using renewable resources such as wind, solar, biomass, geothermal, and small scale hydropower.
“Last month was our most successful month ever in terms of sales,” said Rick Counihan, Director of California Public Affairs for Green Mountain Energy. “We are greatly encouraged by the speed with which green power is catching on in California,” Counihan continued.
Jay Goth, Vice President of Commonwealth Energy, said that “Each week we set new records for the number of customers that switch to our 100 percent renewable power offering. In the San Diego area alone, 43 government entities are now buying our green power.”
California Public Utilities Commission Reports support the marketers’ statements showing that customer requests for green power are up almost 90 percent from earlier in the year.
Customers have directly benefited from a statewide credit for renewable energy purchases that allows green power providers to offer renewable-based electricity at a price below that offered by the state’s three major utilities.
In addition, a grassroots education program being conducted by leading environmental organizations such as the Center for Energy Efficiency and Renewable Technologies and Global Green, USA, in conjunction with the Renewable Energy Marketing Board, is helping educate customers on the environmental benefits of green power purchases.
“Still much work remains to be done,” said Karl Rabago, Chair of the Green Power Board which governs the Green-e Program, “but the strength of California’s green power market shows that when customers hear about it, they get it — buying green power is a choice they can make to create a healthier environment for us all.”
The Green-e, a renewable electricity certification program, is administered by the Center for Resource Solutions, a non-profit organization dedicated to building human capacity and institutions for energy, economic and environmental sustainability.
Based in San Francisco’s Presidio, the Center administers national and international programs that preserve and protect the environment through the design of innovative strategies and increased utilization of sustainable technologies.
Contact: Center for Resource Solutions, Meredith Wingate or Suzanne Tegen, 415/561-2100 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This news item comes to you as a service of EPRI’s Renewables and Green Power Marketing Target. If you are not a Green Power News subscriber and wish to become one–or are one and wish not to be–please send me an email request. Thank you.
Terry M. Peterson
Manager, Solar Power & Green Power Marketing
EPRI Palo Alto CA TPeterson@epri.com 650-855-2594
Visit the Renewables website: http://www.epriweb.com/gg/rgpm/