New Report Shows California Consumers Deceived by “Green” Electricity Marketing Claims

Oct. 22, 1998

New Report Shows California Consumers Deceived by “Green” Electricity Marketing Claims

Ratepayers Pay Extra Dollars for Sham Benefits

WASHINGTON, D.C. — A ground-breaking new study released today by Public Citizen shows that the marketing of “green” electricity in California?s newly deregulated utility market is largely a hoax on consumers and results in little or no benefit to the environment.

“The electric utility industry is justifying deregulation by claiming there are environmental benefits, such as the marketing of green electricity, but in fact the ?green? is going mostly into the pockets of marketers,” said Public Citizen President Joan Claybrook.

According to the report, consumers who choose green electricity pay an average of $10 extra per month for it. An estimated 75-95 percent of that cost goes toward covering marketing and overhead and does not result in an expansion of renewable energy generation. Green electricity is generated from wind, geothermal, solar and other sustainable, non-polluting power sources.

“Most marketers are making renewable energy the ?boutique option? and taking advantage of people who want to do the right thing,” said Wenonah Hauter, director of Public Citizen?s Critical Mass Energy Project. “They are deceiving ratepayers into believing the extra dollars they pay for ?green? electricity are actually promoting the greater use of clean, renewable energy sources, when that is clearly not the case.”

The report, Green Buyers Beware: A Critical Review of “Green Electricity” Products, reviews the content and cost of green power products being offered in California and analyzes the claims being made about them. California is one of the first states to open its electric utility market to retail competition. A number of states are following suit.

The green electricity bought by California consumers comes largely from renewable energy sources controlled by utilities and is already being paid for by those utilities? customers. The electricity is simply being repackaged and sold at higher prices. The result of a consumer?s purchase of green electricity can in some cases lead to the extended operation of fossil fuel plants and greater pollution.

“The message in this is that consumers should look very carefully at claims dealing with green energy, and they should demand policy changes that result in real gains, not bogus claims,” Hauter said. “We will encourage the California State Attorney General?s Office to look into this situation.”

The report, written by energy consultant Nancy Rader of Berkeley, Calif., found that only one marketer of green electricity exclusively sells power that is not repackaged from existing utility resources.

“The bottom line is, reselling utility resources does not result in any additional generation of renewable energy, such as wind or biomass power, and so it makes no difference to the environment,” said Rader. “Clearly, consumers are being deceived by claims that they are helping the planet by purchasing these so-called green products.”

Other major findings include:

Promised “new” renewable energy content comprises only a small fraction of the products on the market.

The resale of utility-controlled resources to green consumers cannot make a difference in the West because the supply of these resources already greatly exceeds any realistic projection of green demand.

Largely because of high retail marketing costs, public subsidies are required to support green marketing. More than $75 million in direct public subsidies will support such ventures in California through 2001.

Green product claims cannot be verified without a regionwide tracking system, which does not exist.

False or misleading green product claims are common. Some marketers, for instance, falsely give the impression that their products contain solar or wind power.

Green marketing is unlikely to reverse the current decline in renewable energy production or significantly diversify electric system resources.

Most green marketers are affiliated with polluting companies and are not advocates of renewable energy policy.

Consumers have no way of distinguishing between renewable energy that is merely resold and renewable energy that truly needs support.

Significant policy changes are needed to make green electricity a larger part of our energy future, Hauter said. For example, consumers need to have the right to work with their local governments or purchasing agent to buy green power directly from producers on behalf of all citizens in the community, making green power both affordable and meaningful. Currently, this “community choice” is impossible under California?s utility restructuring legislation.

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View Executive Summary of Report