Utilities find the concept appealing because in studies, a majority of electric customers say they would pay as much as 10% more for renewable power.
California, the first state to deregulate electricity in January, will be the testing ground for the concept. All but one of California's residential energy companies are promising green power as part of their marketing plans, said Ralph Cavanagh, energy program co-director for the Natural Resources Defense Council.
GOING FOR 'GREEN'
Enron Corp., for example, is marketing Earth Smart Power; Edison International is offering EarthSource power; and a host of smaller companies that will compete in California, like Vermont-based Green Mountain Energy Resources, are making aggressive green pitches to consumers.
So far, the bulk of the green marketing has been via direct mail or Web ads; larger ad campaigns aren't likely to appear until closer to the deregulation date.
Purveyors of green power will face close scrutiny from other energy marketers, as well as federal and state regulators.
The Federal Trade Commission currently has green guidelines for environmental ad claims such as "degradable," "ozone friendly" and "recyclable," but no specific rules for the electric utility industry. Current guidelines direct advertisers to avoid generalizations and overstatements; display qualifiers and disclaimers prominently; and make sure comparative claims are clear and specific.
"It's too soon to determine if the FTC will need to issue new guidelines or specific guidelines for the electric utility industry," Elaine Kolish, FTC enforcement division associate director, said at a National Advertising Division of the Council of Better Business Bureaus seminar in New York last week.
Some states already are proposing or mandating their own green guidelines. In California, a Green-e label will be given to complying companies by a third party, the Center for Resource Solutions.
Energy marketers in California also will be required to disclose in customers' bills the fuel mix used for their electricity generation. Massachusetts recently adopted legislation that will create regulation of electric utilities' ad claims.
In addition, "NAD is poised to play a prominent role," said Chrysse Spathas, senior attorney for NAD. "NAD recognizes new industry-specific issues, and we assure you they will be given the attention they deserve."
A MATTER OF TIME
The irony of green power is that the electrons flowing to a home won't be any different, at first, from those sold before deregulation. The only way to change the system is to change the generation sources, which takes time. Some marketers, such as Green Mountain Energy and Enron, say they will dedicate some profits to new environmentally sound sources of electricity, such as wind turbines.
"If the flow of dollars to fossil energy companies changes to renewable energy companies, then the flow of where kilowatt hours come from will change," Mr. Cavanagh said. "We believe consumers will respond enthusiastically and aggressively. The California marketers obviously think so too with the campaigns