California Power Crisis: Impacting the Green Power Market

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TO ENERGY AND ENVIRONMENT EDITORS:

California Power Crisis: Impacting the Green Power Market

CALIFORNIA, SAN FRANCISCO, Feb. 8 -/E-Wire/-- A national green power non-profit has pooled industry experts and resources to

provide an accurate overview of the California energy crisis and its effect on green

power choice in the state. The Center for Resources Solutions in San Francisco has put

together a striking summary of facts that affected California's green power market and

also has recruited leading energy authorities to document events leading to the

California energy crisis.

Facts for the media can be can be found on the CRS website:

http://www.green-e.org/media/index.html:

* "How We got into the Energy Crisis' a paper on the complex web of events leading

to the energy crisis by William Marcus of JBS Energy, Inc. and Dr. Jan Hamrin,

executive director of the Center for Resource Solutions can be viewed at

http://www.green-e.org/media/crisispaper.pdf * A list of "The Top Ten Factors that Affected California's Green Power Market' can

be viewed at http://www.green-e.org/media/topten.pdf * A "California Green Power Update' that went out to green power industry advocates

can be viewed at http://www.green-e.org/media/update.pdf

Three Factors to remember that helped drive the crisis:

California's Green Power Market: Success Despite Disintegration

1. Despite A Flawed Deregulation Bill, Surprising Market Success:

A major flaw in California's restructuring legislation was a poorly designed retail

market. Even though the law made it virtually impossible for retailers to economically

compete with the incumbent utilities, the green power market appeared as one of

deregulation's few successes.

Consider the following facts:

* Over 90 percent of the 200,000 consumers who at one time switched power suppliers

in California chose a green power product from one of eight companies.

* The amount of power sold by these companies resulted in the following pollution

savings in 1999 alone: 950 tons of nitrogen oxides (which contributes to urban smog

and respiratory disease) and 114,500 tons of carbon (a major contributor to global

* An audit conducted by the Center for Resource Solutions (CRS) discovered that

consumers received more renewable energy than they paid for. While some customers

opted for products based on 50-75 percent green supply, the power they received in

1999 was 99% renewable.

2. Drivers Behind the Market Collapse: Ironically, successful efforts by utilities to

undermine California's retail market, a necessary requirement if wholesale electricity

competition was to work, has left them facing bankruptcy serving the millions of

customers they successfully captured. Additional short-sighted actions contributing to

* Natural gas deregulation in 1992-93 eliminated incentives to store natural gas in

back-up reservoirs, adding to the recent run-up in natural gas prices.

* Utilities abandoned approximately 2,000 MW of energy efficiency efforts California

-- enough power to supply two million homes. If implemented, the efficiency savings

could have helped prevent blackouts, ameliorated price spikes, and provide the

conditions for California green power choice.

* Almost 1400 MW of renewable and cogeneration capacity (684 MW Edison, 246 MW PG&E;,

451 MW SDG&E;) was to be acquired through an auction that was bid but never purchased

because the utilities petitioned the FERC to kill the auction as discriminatory

against other power generators. Edison claimed that it did not need power until 2004

one month before it cancelled the conservation on which that forecast was based (see

second bullet below).(a) California spent $90 million of ratepayer money in AB 1890

(the state restructuring bill) to offset liability costs incurred by the utilities for

killing these contracts and didn't get a single kilowatt-hour.

3. Green Power Is Succeeding Elsewhere: Green power is flourishing in other states:

* The Green-e Renewable Energy Certification Program is active in Pennsylvania, New

Jersey, and other Mid-Atlantic states, Connecticut, New York, and other New England

states, Ohio, and Texas. These markets feature over 100 thousand green power

* Utility green pricing programs in deregulated states are operating in the Pacific

Northwest; Tennessee Valley; Iowa; Colorado; Georgia, Alabama, Minnesota and

Wisconsin. Tens of thousands of customers are purchasing green energy in these

* While roughly one percent of California consumers switched to green power, over 10

percent of Pennsylvanians have switched to new providers. Rules make the difference --

Pennsylvania made it easier for consumers to save money when switching.

The Center for Resource Solutions is a non-profit based in San Francisco's Presidio

that works across the U.S. and throughout the world to encourage sustainable growth

and promote the use of clean energy. More information on CRS is available at

www.resource-solutions.org.

(a) Southern California Edison Company, Notice of Ex Parte Communication, I.

89-07-004, July 25, 1994.

Center for Resource Solutions

The Center for Resources Solutions, Keri Bolding, 415/561-2100, [REDACTED-EMAIL]

http://www.resource-solutions.org

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