Consumers may not want to shell out thousands of dollars to buy electric cars, but it seems they are willing to pay $10 or $20 a month more to buy cleaner power. That’s what the city of L.A. Department of Water and Power has found out during the 11 months its green-power program has been up and running. As of April 21, the DWP had signed up 34,000 customers, at a rate nearly twice as fast as the statewide average for power providers. And this has been accomplished with only minimal marketing efforts so far largely through inserts in DWP bills. “People are voting with their pocketbooks for cleaner power,” said DWP General Manager S. David Freeman. “But the green-power program is only now just leaving the runway. In the next few years, it will really soar as the price of clean power falls.” Surprisingly, the greatest demand for green power has not been from wealthy Westside environmentalists, but from customers in South L.A. and the San Fernando Valley. Until now, the DWP has not delivered any additional clean power to its customers. That’s because the L.A. City Council required the agency to reach a 20,000-customer threshold before it could sign its first contract with an alternative energy source. But this week, the first additional clean power generated from wind turbines is set to flow through the DWP’s power grid. “Clean” or “green” power is generated from renewable resources, including wind, the sun, geothermal power, hydropower and even methane gas emitted from landfills. These alternative energy sources chiefly hydropower already made up more than 10 percent of the state’s power supply before electricity deregulation kicked in two years ago. Willing to pay The DWP is far from alone in signing up more green-power customers than expected. In fact, the green-power market is by far the fastest growing segment of California’s electricity marketplace. Statewide, 94 percent of the 219,000 customers that have switched power providers since deregulation began two years ago switched to companies offering green power, according to the California Energy Commission. And the number of green-power customers has been going up at a pretty steady clip of 3 percent per month. “Our surveys have long showed that consumers want green power and are willing to pay up to 10 percent more for that power, and this bears it out,” said Marwan Masri, renewable energy program manager for the CEC. But more people have signed up than the CEC expected, largely because of a rebate program set up by the state Legislature to encourage the use of green power. So many people have signed up that the commission earlier this year was forced to scale back the rebate from 1.5 cents per kilowatt hour to 1.25 cents per kilowatt hour, and is now considering cutting the rebate further to 1 cent per kilowatt hour. (Because the total amount of money allocated for the rebates is fixed, the higher the number of green-power customers, the less rebate money is available per customer.) Meanwhile, the DWP is signing up customers even faster than the rest of the state’s power providers. In less than a year, it has signed up about 3.5 percent of its customers; statewide, about 2 percent of power customers have signed up for green power over the course of two years. When consumers sign up for green power, they don’t necessarily receive power generated from alternative sources. Rather, the electricity provider uses that customer’s dollars to put additional power from one or more of these sources on the power grid, thereby reducing the overall percentage of power generated from fossil fuels. Energy-saving devices These alternative power sources typically cost anywhere from 5 percent to 30 percent more than fossil-fuel-generated power; much of that is offset by the California Energy Commission rebates. More than two dozen providers have signed up to sell green power to California residents and businesses, although only a handful of companies account for the bulk of green-power sales. One of those is Tustin-based Commonwealth Energy, which a year ago switched its customers to green power. Since then, it has added 55,000 customers statewide, bringing its total to 90,000, according to Jay Goth, senior vice president of marketing for Commonwealth. But unlike Commonwealth and other green energy providers, the DWP is actually charging its customers more for its green power anywhere from $5 to $20 a month more for the average resident. (Even that’s not the full cost of providing green power; the rest is made up from a public benefit fund the L.A. City Council has set aside for the DWP.) In order to offset some of the additional cost to its green-power customers, the DWP is trying to encourage them to use less power by supplying them with energy-saving light bulbs and a CD-ROM that has an energy audit program on it. One of the surprises of the DWP’s green-power program so far has been the large number of signups in South L.A. and the San Fernando Valley. A major reason for this, said Angelina Galiteva, the DWP’s executive director of strategic planning who runs the green-power program, has been the DWP’s focus on getting community-based organizations to go out and sign up green-power customers by word of mouth. Many of these organizations are based in South L.A. and the San Fernando Valley, as well as the Eastside.
