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Power Politics

Report Blasts Green Electricity Companies

Michael Welch

©1998 Michael Welch

I recently read a short piece in the business section of my local newspaper. It announced a new report about green energy marketing. The report is called Green Buyers Beware— A Critical Review of "Green Electricity" Products. It was written by seasoned consultant Nancy Rader, and commissioned by Public Citizen's Critical Mass Energy Project.

I have often reported on Public Citizen in this column. Out of all of the U.S. renewable energy organizations, Public Citizen is definitely the most respected and right-on. That's why I was very surprised and upset by the almost entirely negative viewpoint of this report.

Everyone even remotely interested in green grid electricity should read this report. I will post it on the Home Power web site in the download area. The executive summary and related press releases are available on the Public Citizen web site.

On the Edge of Comfortable

I have to admit that I have never been completely comfortable working with "green energy" corporations. For over a year, while reporting on and supporting certain programs, I have been walking the knife's edge, wondering how much good it is really doing. This extremely critical report has confirmed my concerns. But there is still enough to hold on to—to keep from falling off the wrong side of the knife edge. I still stand by the main principles of my, and Redwood Alliance's, recommendations—that any choice of a green energy provider absolutely must result in new RE sources being built. And Green Mountain Energy Resources (GMER) is still the only one doing that.

Wind for the Future

Rader complains heavily about GMER's Wind for the Future Program, claiming that it is deceptive to offer future RE sources and begin collecting money now. Sure, we all wish that we could have instant access to new RE sources, but the fact is that no company in its right mind will build these sources blindly. No start-up company has enough faith in the RE market to invest hard-to-come-by cash in new wind or solar farms on its own. And GMER is up front with the fact that the promised wind generators are future ones, hence the name, Wind for the Future.

Rader fears that Green Mountain and other companies will not follow through on their promises. Just one week before Rader's report was released, GMER celebrated the start of construction on two huge 700 kW wind machines. GMER has followed through on their promise, as I had expected. But Rader paints a dark picture of all RE suppliers, with one inexplicable exception.

Wake-Up Call

This report should serve as a wake-up call to the green energy industry. It outlines everything that is (and could be) wrong with green energy providers. It even complains about the things that aren't wrong with the industry.

The only semi-positive thing in the report relates to a particular green provider that purchases its power solely from independent power providers (companies not owned by utilities). One has to wonder about Rader's prejudices. Just because the energy comes from a non-utility provider, that alone does not make it better energy. The report appears designed to give this particular company a boost. This pseudo-recommendation bugs me enough to leave the company's name out of this column. We can't recommend them anyway, because using them will still not result in new RE sources being built.

I hope Rader's report will shake up the industry. Certainly, it is coming from the right group to do so. The report recommends that consumers watch out for themselves and demand their right to new green energy sources and favorable policy. It reminds consumers that energy conservation and efficiency are still the best investments they can make. The report also calls for consumer protection agencies to police green marketing plans.

My Recommendations

In spite of the negative tone of her report, I think Rader's recommendations are excellent. GMER has proven to be an open organization. They have been willing to listen to California's grass roots activists and RE customers, and their programs have changed accordingly. But Rader even managed to find fault with GMER's flexibility and openness. For example, she chides GMER for raising the number of sign-ups it takes to trigger building a new wind machine from 3000 to 4000 new Wind For the Future customers. She failed to mention a mitigating factor. Instead of the mid-sized wind generators originally planned by GMER, state of the art 700 kW machines will be installed. There was no net loss in the watt to customer ratio, even though the required number of sign-ups increased.

My recommendations for GMER and other non-utility providers take a slightly different angle. They are currently spending most of their capital on marketing and advertising. Instead, I want them to spend their money on production facilities. Think of it—rather than just brokering power with a sideline in windmills, they could be investing their millions directly in the installation of their own wind machines. They could even contract with municipal landfills to cap them for their methane, and run big generators with the gas. That would mean less money for the marketing departments and more funds for RE.

I think this is the future for companies interested in selling RE directly to consumers. As the Rader report points out, there is a lot wrong with the industry and where it buys power. The answer lies in companies making their own power, getting good press about it, and then selling it to the customers who should be lining up to get the good stuff.

From the Front Line

I usually don't publish letters with my column, but this one is a great success story that I think you'll enjoy and find inspiring. Yes, small groups of people can still make a difference in their communities.

Dear Home Power,

Here is a story that you may find hard to believe. It tells about the unintended consequences of the Public Utility Regulatory Act of 1978 (PURPA) that supposedly allows us RE types to sell power back to the grid.

Before my wife and I had even moved into our home on the Cumberland Plateau in eastern Tennessee, we heard some disconcerting news. We were building a remote home and planning a solar/hydro system to run it. I was in the process of installing the components— six 75 Watt panels, a Trace 4024 and C40, a Trimetric meter, and six recycled 8 Volt railroad engine batteries. We have a magnificent western viewscape across the plateau and into the sunset. The bad news was that someone was planning a monster set of high voltage transmission lines right across our view.

The Tennessee Valley Authority (TVA) is the grid in these parts and they are all-powerful, pun intended. They have booted land owners off their own land over the years to build power plants of various kinds, including nuclear. They have run up a debt of over 25 billion dollars to finance these white elephants that they can't even finish. That is a whole 'nother story. They also string power lines wherever they want them.

But, TVA was not going to put up those wires. We were disturbed enough to want some answers, so we attended a meeting of a group of concerned citizens. What we learned that night and during other meetings made political activists out of a bunch of laid back country folk.

To start from the beginning, there was a small company in Pennsylvania owned by a man named Armstrong. This company had diverse interests in such things as cable TV and other operations unrelated to power production. But Mr. Armstrong had a fascination with the concept of pumped storage hydroelectric plants— pumping water uphill at night when power is cheap and then running it back down to generate power during peak daytime to sell at a net gain in price. Sounds good in theory.

Armstrong wanted to leave his mark. He wanted a monument. A man named Richard Hunt entered the picture and Armstrong Energy Resources was created and funded with $5 million. Hunt identified a site in the Sequatchie Valley of Tennessee as the best spot to build the proposed plant. The Sequatchie is a magnificent rift in the Cumberland Plateau. It is 140 miles (225 km) long, four miles (6 km) wide, and 1500 feet (457 m) deep. It has some of what you need for a pumped storage facility. You need elevation, water, and access to the grid. Many years ago TVA did studies in the area and identified numerous sites for possible development. They eventually built the Raccoon Mountain facility at Chattanooga. Then they got financially strapped due to their nuclear fiasco. Richard Hunt knew about the studies, and he picked the site he wanted.

One day Hunt arrived in our area and started courting the local county governments of Sequatchie and Bledsoe. He sold them on the idea of a $4 billion

Power Politics project that would bring jobs and development to these rural counties. They signed on big time! They endorsed the project without even the slightest doubt about what a project like this would do to the quality of life out here.

There were actually two facilities planned—one on each side of the valley. Four reservoirs would be built, two on top of the plateau and two in the valley. Water from the Sequatchie River would be diverted via four foot pipes to fill and replenish the reservoirs. Transmission lines would be built to provide power for pumping and to carry the regenerated energy in peak periods.

Our group, which was then calling itself SOS for Save Our Sequatchie, was not happy. We gathered all of the information we could. We ran the numbers. We called and wrote every politician and bureaucrat from Al Gore on down. We went to TVA board meetings. We felt that the whole project was a scam on the part of Armstrong and would never work. But we would end up with our lives and environment damaged beyond repair. And we could get very little help from our "public servants."

TVA doesn't need to ask anyone's permission—they just take. TVA is "publicly owned"—that is government owned—operation. They have the power of eminent domain. But Armstrong Energy Resources was a private for-profit company. We said that over and over. No one should have the right to take what is rightfully yours if you don't want to give it up. Except the government. We may not like it but the government can and does, all the time. But where does this private company from Pennsylvania get off coming down here and telling people to get off their land?

The sites selected by Hunt were all privately held property Some parcels were family farms that had been held since the first white people came into the valley. Aside from all the disruption and damage from these projects, the most stunning and painful revelation was that the Federal Energy Regulatory Commission (FERC) was prepared to evict owners in the way of Armstrong under the PURPA law. Armstrong would be granted the right of eminent domain. And TVA would buy the product.

We may never know what ultimately happened. We knew that the money did not add up. The projects would not be profitable. But one day after a year of uncertainty, there was a quiet announcement that the project had been suspended. Hunt's office closed and he left town. They said that they might restart the project if the results of the impending deregulation are favorable. Personally I think that a combination of the efforts of SOS and the fact that the $5 million was gone was what ended the struggle.

But the valley is still there and the law is still there. In fact just down the valley on the Alabama line, the FERC has recently granted a private company, US Gypsum, the right to build a 24 inch (610 mm) gas pipeline across private land to fuel their wallboard plant in Bridgeport, Alabama. Yes, I do think there are many evils in the grid system—this is just one more I thought you might want to know about. Thanks, and power to the people!

Tom Phillips, [email protected]

Great job, and congratulations to SOS. In a subsequent email, Tom let me know of a further result of SOS' efforts. "...in our recent election of the Sequatchie County Commission, the county executive who fought us tooth and nail was booted out of office by just about the margin of the SOS membership." What a powerful group! Keep up the good work, and keep 'em honest.

Access

Author: Michael Welch, c/o Redwood Alliance, PO Box 293, Arcata, CA 95518 • 707-822-7884 [email protected] Web: www.igc.org/redwood

Green Mountain Energy Resources (please mention code: C029), 55 Green Mountain Drive, South Burlington, VT 05403 • 888-246-6730 • 802-846-6100 Fax: 802-846-6102 • Web: www.choosewisely.com

Public Citizen Critical Mass Energy Project, 215 Pennsylvania Ave. SE, Washington, DC 20003 202-546-4996 • Fax: 202-547-7392 [email protected] • Web: www.citizen.org

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