Tech Sector, Consumers Alliance Debate Best Way to Give Consumers Green-Electricity Options

7/26/07Follow @wroush

When is green energy not so green?

The central Massachusetts gas and electric distributor NStar said Tuesday that it plans to sign long-term power contracts with wind farms in Maine and upstate New York and let NStar customers get their electricity directly from those facilities, in exchange for a small premium on their utility bills. Not so fast, said the Massachusetts Energy Consumers Alliance, a non-profit energy provider, in a press release and in comments to the Boston Globe on Wednesday. NStar should buy all the renewable power it can get its hands on—but the utility’s plan to market this power directly to consumers conflicts with a Massachusetts state law designed to limit utilities’ monopoly power, says Larry Chretien, executive director of the alliance, which has petitioned the Commonwealth Utility Commission to disallow the program.

Energy entrepreneurs and industry observers contacted by Xconomy applauded NStar’s idea, which it’s calling “NStar Green,” and said it would be unfortunate if the program were delayed or quashed. “The NStar plan to offer wind energy to Massachusetts customers is fabulous,” says Nick d’Arbeloff, executive director of the New England Energy Innovation Collaborative, a Cambridge non-profit that promotes development of clean energy technologies. “It’s exactly the kind of program that’s required to raise consumer awareness and increase clean-tech activity in the state.”

But the problem, Chretien says, is NStar Green might actually slow energy innovation. Fewer firms will enter the green-power market if they have to compete with NStar itself to sell their electricity directly to consumers, he worries. “The law says that that the utilities are supposed to provide basic service and competing power suppliers are supposed to provide alternatives to the basic service,” says Chretien. “We want to see green alternatives, and we are not going to get them if we allow an investor-owned utility to have a monopoly on green power.”

State law, Chretien points out, requires utilities to meet a “renewable portfolio standard” under which they must buy 3 percent of their electrical load from renewable sources. NStar hasn’t been meeting its obligation, and contracts with the Maine and New York could help nudge the company toward compliance. But when it comes to packaging and selling green power, says Chretien, NStar should emulate the state’s other large utility, National Grid.

National Grid meets the renewable portfolio standard and supports smaller power operators by buying juice from three competitively selected renewable-energy providers, including the Alliance, which operates a windmill in Hull, as well as several solar-power facilities, and provides power to about 4,000 National Grid customers. “We think that if NStar is going to buy wind power from Maine and New York to comply with that law, it’s a great thing,” Chretien says. “But if they then start offering an ‘NStar Wind’ product, it’s certainly going to reduce or eliminate competition.”

But to have a major player like NStar competing in the renewable-energy market might be a healthy thing, d’Arbelloff suggests. “I fully understand that there may be competitive concerns here,” he says. “And when a big new competitor enters the fray, it does represent formidable competition. But on the other hand, it validates the market…It’s my hope that all parties will find a way to allow NStar’s plan to bear fruit, because this is exactly the type of action that needs to be taken in every state across the country.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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