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Green-power Costs Shouldn’t Be in the Dark

Green power curbs greenhouse-gas emissions, reduces our reliance on fossil fuels, and has the potential to create new industries and jobs. But it’s not cheap, and consumers footing the bill for green power have a right to know what it costs.
All too often the price tag is either not disclosed at all or hidden in plain sight on customer utility bills, buried inside charges for power generation and distribution. NStar, as part of its obligations under the state’s Green Communities Act, recently asked state regulators to approve three windpower contracts the utility signed after a lengthy bid process.
Hundreds of pages of testimony supporting the contracts were submitted to the Department of Public Utilities, but on the copies available to the public, the product and pricing information for each contract were blacked out.
NStar says public release of the pricing information would result in the disclosure of competitively sensitive bid terms and hinder the ability of its suppliers to compete for future contracts. Disclosure might also set a floor on bids for future windpower contracts. “This is consistent with all of NStar’s energy-supply contracts,’’ says NStar spokeswoman Caroline Allen.
But green-power deals are different from most other energy-supply contracts because they are being subsidized directly by utility customers. NStar acknowledges as much in its filings, noting that the cost of its three windpower contracts — two of which last 10 years and one that lasts 15 — will exceed market prices by a combined $62 million.
These above-market costs are essentially the premium NStar estimates its customers will pay for the green power. It would be helpful to know what assumptions NStar is making about future energy prices to develop its above-market cost estimates, but the utility says that information is also proprietary and confidential.
National Grid has been more forthcoming about the pricing of its windpower contract with Cape Wind, in part because the contract was negotiated and not put out to bid. The utility initially proposed paying Cape Wind 20.7 cents per kilowatt hour starting in 2013, a price that would rise 3.5% a year for the remainder of the 15-year contract. The above-market cost of the contract was estimated at $65 million the first year and somewhere between $734 million and $885 million over the entire 15 years.
Attorney General Martha Coakley, who represents ratepayers in utility proceedings, was battling National Grid and Cape Wind last week for more information about the project’s construction costs and profit margins when she decided to give her blessing to the contract in return for a 10% reduction in the initial price. The new, reduced price still requires DPU approval.
One would think consumers would find out the actual cost of these green-power contracts and the state’s other energy and environmental initiatives when the charges for them start showing up on utility bills. But that’s not the case. Aside from assessments for some energy-efficiency programs and the state’s Clean Energy Center, most of the costs associated with the state’s green initiatives are lumped in anonymously with other charges on the bill.
For example, the distribution charge on customer utility bills is ostensibly the cost of delivering electricity to homes. But it has become a dumping ground for all sorts of green-power charges, including the above-market cost of long-term renewable power contracts as well as the tab for utility solar installations, smart-grid pilot projects, and other programs subsidizing renewable energy. Even the fees utilities collect for signing green-power contracts are rolled into the distribution charge.
The cost of the state’s green initiatives should be separated out and clearly identified, either on customer utility bills or separate-bill impact statements. That way, consumers can decide if the environmental benefits of green power are worth the extra cost. If state officials want consumers to embrace a green future, they have to be truthful about what that future costs.

Bruce Mohl is the editor of CommonWealth magazine, which recently published a special issue on energy and environmental issues.

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