Electric utilities to go green after deregulation

The electric utility industry will increasingly have to compete for market share as deregulation proceeds over the next five years, says RDI, a consulting and energy information firm based in Boulder, Colorado.

RDI says that many consumers will pay a higher price for “green” electricity produced by renewable energy sources, like wind, or by utilities that have a better environmental image than competitors.

“Consumers will increasingly select electricity providers that offer some environmental advantage over the competition,” says Todd Myers, senior consultant at RDI and author of the report. “Because of deregulation, green

electricity will become mainstream like recycled paper, even if it costs more, and our air will become cleaner.”

According to the RDI report, ‘Green Power: Consumer Choice and Clean Air’, green electricity represents one of the fastest growing consumer markets in the US. By the year 2003, the green market will capture up to $37.5 billion or half of the $75 billion in annual sales of residential electricity in the US, the report claims.

In 1997 test market programs, 20% of New Hampshire customers selected a green electricity option, while green electricity captured 31% of the market in Massachusetts.

Other findings from the RDI report include:

– Utilities will increasingly seek third party endorsements of authenticity from environmental groups or other organizations for their green market products.

– As the green market for electricity grows, it will drive construction of renewable energy plants, like wind and solar-generated electric plants, by 40% over the next 10 years nationally, and by 60% in the Western US.

– Some utilities may offer donations to conservation groups if consumers pay a premium for their electricity; others may advertise nuclear-free power; or electricity generated at plants that are less polluting than those of a neighbouring utility; or offer electricity bought from a non-polluting hydro-electric plant hundreds of miles away.