Green power more complex than it seems

If you're willing to pay American Electric Power another $15 a month, the company will make sure all of the electricity that flows into your house comes from a wind farm in Illinois or Indiana.

Well, not exactly. The nation's electrical grid doesn't work that way. Electrons flow where they want to flow. Physics aside, AEP subsidiary Appalachian Power Co.'s new Green Pricing program is a bit more complicated than it sounds.

But the plan, which kicked off two weeks ago, for the first time gives West Virginians who say they want clean energy a chance to put their money where their mouth is.

"Most states have this, so it's a good thing West Virginia is adding this," said Judi Greenwald, director of innovative solutions at the Pew Center on Global Climate Change.

ApCo's program works like this: Customers can buy blocks of "green power" for $1.50 each. Every block equals 100 kilowatt-hours of renewable electricity. Customers can buy as few as 2 blocks per month, or as many as 50 blocks per month. The program also is open to businesses, with somewhat different rules.

An average residential customer in West Virginia uses about 1,000 kilowatt-hours of electricity per month. So it takes 10 blocks to buy enough power to account for all of what an average customer uses. That's $15 a month, on top of an average residential monthly bill of $70, or an increase of about 20 percent.

In newspaper advertisements, ApCo says customers who sign up are "investing in a future of energy that's both clean and green."

"For every $1.50 applied to the green pricing option, customers are adding 100 kilowatt hours of green energy to the power supply in West Virginia," said ApCo President Dana Waldo.

But ApCo has already agreed to buy the green power. ApCo contracted for 75 megawatts of energy from the Camp Grove Wind Farm in central Illinois and 100 megawatts from the Fowler Ridge Wind Farm in western Indiana. ApCo already buys power from Summersville Hydro in West Virginia, and has plans to buy from the Beech Ridge Wind Energy project in Greenbrier County when it is finished.

So what's the benefit if ApCo customers sign up, given that the company's already buying the green power?

First of all, ApCo is paying nearly twice as much for the wind power as it would to generate electricity at its own coal-fired power plants, and company officials say they did so in anticipation of offering the Green Pricing Option, and having customers pay more to support the program.

"They're already buying wind power," said Byron Harris, director of the state Public Service Commission's Consumer Advocate Division, "but if this is a very popular program, and a lot of people sign up for it, that sends a signal that people value power sources that have environmental attributes."

Next, the program allows customers to help lock ApCo into buying more green power later.

It's a little complicated, but here's how: For every 1,000 kilowatt-hours of renewable energy it buys, AEP gets what is called a Renewable Energy Certificate, or REC. RECs are commodities that can be bought, sold or traded. They're similar to sulfur dioxide emissions allowances companies buy, sell and trade to meet Clean Air Act emissions limits.

Some energy experts believe that when Congress eventually sets limits on power plant greenhouse emissions, it will allow companies to meet at least some of their limits with RECs.

AEP has RECs for the wind power it's buying now. Theoretically, those certificates could be used to meet some eventual greenhouse gas limit - and AEP would avoid otherwise lowering its coal plant emissions, but if customers buy up all of AEP's RECs by joining the Green Pricing Option, the company would have to buy more renewable energy or install more renewable generation on its own system.

In addition, AEP operates in several states that require power companies to produce a share of their electricity with renewable power. Every REC that a customer buys means that AEP has to buy still more renewable power to meet those states' requirements.

There's also a likely financial benefit to all ApCo customers, not just those who take part in the program.

Under PSC rules, the Renewable Energy Certificates are an ApCo asset. Their value must be included in the company's balance sheets. The value will be credited to customers, and eventually lower rates.

Utilities in 43 other states already offered green pricing to their customers. Such programs have grown from a handful in the early 1990s to more than 750 utilities today, according to the U.S. Department of Energy.

Prices under green pricing programs have been dropping, and overall enrollment continues to go up, according to DOE reports. Green pricing has been especially popular among some large businesses that want to promote their environmental awareness.

Nationwide, only about 1.8 percent of customers who have the option have joined green pricing programs, according to DOE, but in some programs located near large wind farms in California and Texas, participation rates have been much higher.

Jeff Deyette, an energy analyst with the Union of Concerned Scientists, said voluntary programs like ApCo's are "an important leg in the stool of supplying renewable, clean energy across the board."

Deyette, however, said a mandatory Renewable Portfolio Standard, or RPS, that requires utilities to provide a share of their power from renewable sources is a more important program for West Virginia to adopt.

"While the voluntary market is an important driver, it's really the compliance markets that are driving the renewable energy market," Deyette said.

Twenty-seven states have mandatory renewable standards, while five others have voluntary standards. West Virginia has neither.

Legislation to impose a renewable standard in West Virginia was introduced this year, but went nowhere.

No law or regulation in West Virginia has kept utilities from previously offering green power. but West Virginia is the nation's second-largest coal producer, and leads all states with 98 percent of its electricity coming from coal.

"It just was not on anybody's radar screen," said Terry Eads, ApCo's regulatory services director.

With two wind farms operating and others proposed for West Virginia, Eads said, the time seemed right to start a green power program here.

ApCo officials say the company hasn't set a goal for its participation rate.

Right now, only about 2 percent of ApCo's power comes from renewable sources. Under a PSC order, ApCo can suspend the program if enrollment reaches 10 percent of its existing renewable power purchases.

"We don't believe there's going to be an incredible rush for this," Eads said last week. "Our little rider is not going to move the market, but you have to start somewhere."

ApCo's Green Pricing program

HOW IT WORKS: Customers can buy blocks of "green power" for $1.50 each. Every block equals 100 kilowatt-hours of renewable electricity. Customers can buy as few as 2 blocks per month, or as many as 50 blocks per month.

An average residential customer in West Virginia uses about 1,000 kilowatt-hours of electricity per month. It takes 10 blocks to buy enough power to account for all of what an average customer uses. That's $15 a month, on top of an average residential monthly bill of $70, or an increase of about 20 percent

HOW TO SIGN UP:

www.appalachianpower.com or call (800) 982-4237.