Encouraging Green Market Development

Transcription

1 Encuraging Green Market Develpment Karen O Neill VP New Markets karen.neill@greenmuntain.cm x6177 May 14, 2003

2 Intrductin t Green Muntain > Cnsumer marketing cmpany > Funded in August, 1997 > Natin s leading residential prvider f cleaner electricity > 100+ emplyees headquartered in Austin, TX

3 Intrductin t Green Muntain (Cnt.) > 500,000 custmers in seven states CA, PA, NJ, NY, OH, TX, OR > Investrs include BP, Nun, and private investrs > Multi-faceted grwth strategy Direct Access Aggregatins Utility Partnering

4 Green Markets and a RPS > Green markets Educate the public abut electricity and its effects Drive the develpment f new renewables Place n upper limit n renewables In TX, green market has led t the additinal develpment f 150 MW f wind t date Target market is substantial 20% t 40% f cnsumers

5 The Key t Cmpatibility Between the Green Market and the RPS > RPS establishes a fundatin Market builds upn that fundatin > Green electricity prducts ffered shuld NOT be allwed t cunt tward RPS requirement

6 Experience with a Green Market and RPS > Cnnecticut Requirement placed nly n cmpetitive suppliers Perverse cnsequences Disadvantages cmpetitive marketers Wrks against renewables > Texas The gd Market-based All suppliers must meet requirement Based n energy, nt capacity Bankable renewable energy credits used fr cmpliance The nt-s-gd Lack f synchrnizatin between RPS and label cmpliance perids

7 Hw t Get Green Market > IL is cmpetitively challenged > Fcus n utilizing utility t partner with a green cmpetitive supplier > Tw ptins (in bth, utility prvides electrns) Exclusive partnership resulting frm cmpetitive bid Example is Oregn Nn-exclusive partnership with multiple cmpetitive green suppliers Example is Niagara Mhawk in NY

8 Exclusive Partnership > Results frm a cmpetitive bid Ensures cmpetitive price and quality services Can include minimum marketing cmmitment t ensure success > Prducts ffered jintly by credible third party and trusted utility Optimal frm custmer perspective since innvative but safe > Chsen supplier incurs all csts and receives revenues frm custmers > Easy fr utility Only needs t transact with ne partner > Cst-effective fr supplier Willingness t invest significant mnies int the prgram > Utility can fully supprt chsen cmpetitive supplier Custmers mre cmfrtable with ffering resulting in greater participatin > Example is Oregn

9 Open Partnership > Utility acts primarily as a distributin channel fr cmpetitive green suppliers Des nt endrse any f the suppliers; des endrse prgram > Suppliers incur all csts and receive all revenues > Utility must transact with multiple parties > Des nt ensure that marketing and educatin ccurs in market > Less cst-effective fr supplier, but multiple suppliers have market pprtunity > Example is Niagara Mhawk in NY

10 Exclusive vs. Open > If gal is building renewable demand and develpment, then the exclusive partnership resulting frm a cmpetitive bid has been mre successful Prgram Start Market Size Cmpetitive Landscape Incremental Custmers (As f February 2003) Oregn - Exclusive > March 2002 > 1.2 Millin > 3 Prducts > 1 Supplier > 30,664* > 3.1% Penetratin NiM - Open > September 2002 > 1.4 Millin > 7 Prducts > 3 Suppliers > 6,000 > 0.4% Penetratin *Nte: Des nt include the 6,000 custmers that were part f the prgram befre GMEC tk ver (Ttal custmers as f February 2003 are 36,664)

11 Why Nt Just a Green Tariff > Partnership has many public benefits ver utility prviding the prduct The supplier incurs all csts, reducing utility risks and ensuring that nly thse custmers interested in green pwer pay fr it > Having the utility prvide this cmpetitive prduct further entrenches the utility in the merchant rle Undermines any pprtunity fr cmpetitin in the shrt r lng term > It is unlikely that the prgram will be marketed with the same vigr, r be as successful, as if a cmpetitive supplier were invlved It is nt a cre business fr the utility while it is fr the supplier

12 > Amends Clean Air Act Clear Skies > New cap and trade fr Nx, SOx and mercury Des nt include CO2 regulatin > Prblem is n allwances fr renewable generatin With cap placed n fssil fuel generatin, renewables d nt effect air pllutin (nly effect greenhuse gases) > Ptential slutin is giving prprtinal allwances t new renewables Wuld mean that develpment f facilities wuld lead t imprvement in air quality

13 Questins? Encuraging Green Market Develpment Karen O Neill VP New Markets karen.neill@greenmuntain.cm x6177 May 14, 2003