Energy Deregulation in California
Air Date: Week of July 31, 1998
Across the United States, states are slowly deregulating their energy markets. Already, some consumers are able to choose an electricity generator the same way they choose a long distance telephone company. California is one of the first states to try this. Host Steve Curwood talks to Kirk Brown, who tracks the energy business for the Center for Resource Economics in San Francisco. He says a number of Golden State firms are selling renewable power. It costs more, but some consumers are willing to pay more for the sake of the environment.
CURWOOD: In the U.S., states are slowly deregulating their energy markets.
Already, some consumers are able to choose an electricity generator the same way they choose a long-distance telephone company. California is one of the first states to try this, and Golden State power companies have designed a variety of energy products to appeal to residential and business customers. Kirk Brown tracks the energy business as assistant director of the Center for Resource Economics in San Francisco. He says a number of firms are selling renewable power, which costs more. And some consumers say they are willing to pay more for the benefit of the environment.
BROWN: Typically speaking, a third of customers say they'll spend at least 10% more to get electricity that's better for the environment. An overwhelming percentage of customers, 70 or 80%, say that the environment would factor into their decision as far as purchasing electricity. What we don't know, though, is under an open market condition where people actually have the chance to choose, how many people actually vote with their dollars to protect the environment and buy renewable energy products. Our experience so far in California has been: though there are customers signing up, there is a lot of inertia in the marketplace. That people aren't used to thinking about electricity as a choice, and they're certainly not used to thinking about it as a choice that can be good for the environment.
CURWOOD: Well, what incentives do you have to offer people to consider buying renewable?
BROWN: Well, the state of California offers some -- they're offering a rebate program to help cover some of the additional costs of buying renewable energy for renewable energy resources that are produced in the state of California. I really personally think that the major incentive is that producing electricity is the single greatest thing that we do to pollute the environment. And for the first time ever, people can make the choice to not harm the environment in such a significant way through their use of electricity.
CURWOOD: Is it possible to get 100% renewable energy?
BROWN: Right now there are a number of different products being offered to the residential market that are 100% renewable energy. Edison's source in Los Angeles is offering a 100% product. PG&E energy service is offering a 100% renewable energy product. Green Mountain Energy Resources, though they're not offering a 100% product, is offering two different 75% products. Now, that's just for households, for individuals at the household level. Even companies are entertaining this thought of buying renewable energy, and in fact Toyota Motors Sales in Los Angeles has just opted to buy 100% renewable energy for 13 of their facilities in Los Angeles. That's enough energy, that's the equivalent of 4,000 households buying 100% renewable energy.
CURWOOD: A common concern about renewable energy, among some customers at least, is that well, you know, the wind and sunlight depend more on the weather than your local coal-fired plant. Do customers have to worry if the output of renewable energy is uneven? I mean, could I have a blackout if I'm dependent on wind?
BROWN: No, you can't. And that's where the metaphor of drawing water from a lake is very helpful. The way we get electricity is that we all share a big lake of electrons that provides all the electricity for all our households. And that lake of electrons is built up from different streams that are feeding into the lake. And the question with restructuring now is that you can vote with your dollars and choose to direct your energy dollars towards a clean stream or a clean stream of resources going into the lake. The system, however, though, this integrated pool of electrons, still is as reliable and still will be as dependable regardless of the seasonality of renewables, because of that undifferentiated pool of electrons that we all receive.
CURWOOD: If you could give us an assessment, please. Deregulation: good for renewable energy? Bad for renewable energy?
BROWN: Hmm. That's a very good question, and I think it's too early to say right now. Every state is different. In the state of California, right now, we get 11% of our energy from renewables. The national average is maybe 1 or 2%. But many states get none of their energy from renewables. My hope for restructuring is that we can focus public attention through restructuring on energy, focus it in a fresh way, in a new way, on the fact that you can buy renewables. And my hope is that that is going to be very good for the environment.
CURWOOD: Kirk Brown is assistant director of the Center for Resource Economics in San Francisco.
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