HomeMy WebLinkAbout1999-0909 Study Session PACKET CITY COUNCIL STUDY SESSION
Thursday, September 9, 1999 at 12:00 p.m.
Council Chambers
Discussion and Presentation of the Draft Storm Water and Drainage Master Plan.
Electric Deregulation in Oregon update.
Green Power discussion.
Council travel and expense policy discussion.
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Council Communication
Electric & Telecommunications Department
Renewable Resources Green Power
September 9, 1999 (Study Session)
Submitted by: Pete Lovrovich
Approved by: Mike Freeman
Title:
Renewable Resources Green Power
Synopsis:
If Northwest utilities are to maintain consumer loyalty, it is important that we understand the
wishes of our consumers regardless of the outcome of deregulations. Utilities need to take the
lead in providing alternative power options that will help to protect and preserve our environment.
This memo contains a summary of several Northwest utility surveys and rates for"green power
products."
Recommendation:
This is for information only. Staff would like to present proposed options for Council
consideration should Council direct.
Background Information:
See attached information
Utilities Providing Green Options
Emerald County PUD
Purchases 3MW from BPA of green power
Emerald PUD melded the cost of the green power into their rate base
Emerald did not increase rates to cover additional costs
EWEB
EWEB owns 21% of a wind generation plant located in Wyoming. This plant consists of 69 wind
turbines covering 2,000 acres. This project supplies approximately 41 megawatts of power of
which PacificCorp receives 20MW, BPA receives 15MW and EWEB 6MW.
EWEB allows customers to choose to use wind for 10, 25, 50 or 100 percent of their bill. For
every 1,000 kilowatt hours of electricity used, the additional cost for Windpower is:
♦ $3.09 for 10 percent Windpower
♦ $7.73 for 25 percent Windpower
♦ $15.45 for 50 percent Windpower
♦ $30.90 for 100 percent Windpower
For example, if your monthly use is 2,000 kilowatt hours and you choose 10 percent Windpower,
you will pay $6.18 more (2,000kWh x $3.09 per 1,000 kWh)
Council Communication
Administrative Services Department
Electric Deregulation Update
September 9, 1999 (Study Session)
Submitted by: Dick Wanderschei dg)
Approved by: Mike Freeman
Title:
Electric Deregulation in Oregon Update
Synopsis:
Senate Bill 1149,passed by the 1999 Oregon Legislature and signed by Governor Kitzhaber, is
deregulating privately owned utilities in Oregon. This memo contains a summary of that
legislation.
Recommendation:
This is for information only; no action is necessary.
Background Information:
Deregulation of Oregon's electric industry was initiated in the 1997 Legislature and was
completed in 1999 as Senate Bill 1149. Investor owned utilities are required to give their
industrial and large commercial customers open access by October 1, 2001. Residential
customers must be given a portfolio choice of electricity by the same date. Public utilities can
decide locally if they want to open up their electric systems to competition.
While this legislation has been passed, PacifiCorp is currently challenging its legality in the
courts. Final implementation will not occur until the legal challenges are resolved.
`may pF AS 14
CITY OF ASHLAND - a
Department of Administrative Services
1�
MEMORANDUM EGON.,,..'
DATE: August 26, 1999
TO: Mayor and City Council
FROM: Dick Wanderscheid(P
51-113JECT: Electric Deregulation in Oregon
5enate Bill 1149, passed by the 1999 Oregon Legislature and Signed by Governor Kitzhaber, will
deregulate the investor owned utilities in Oregon. Here are the highlights of the bill.
► The bill recognizes that Oregon is served by two types of utilities - private utilities
regulated by the Public Utility Commission (PUC) and consumer owned utilities regulated
by locally elected officials.
► It spells out in separate sections the authorities of the PUC and local officials to deal
with changes in the electric industry.
Investor owned utilities (PacifiCorp and Portland General Electric) will be required to:
► Provide direct access for industrial and large commercial customers by October 1, 2001.
► Provide residential customers the option of purchasing their power from a market rate, a
cost of service rate, or a renewable resource rate by October 1, 2001.
► Unbundle their electric bills by October 1, 2001.
► Collect a 3% public purpose charge itemized on the bill to fund conservation, renewable
resources and low income weatherization. Large customers (over 1 AMW) may install
their own energy efficiency measures and be credited against the charge. 10% of the
funds raised are dedicated to energy efficiency improvements in schools and 5% is
dedicated to the 5tate Housing Trust Fund.
Collect low income bill paying aoci5tance charge determined by the PUC based on a needs
Study conducted by State Houoing.
► Provide reciprocity oo that if an IOU cello power to a non-reoidential customer of another
utility, it must permit any other electric service supplier to sell power to its non-
reoidential customers.
► Continue paying franchise fees. Cities may, however, convert to a volumetric charge.
The PUC i5 required to do the following IOU related items:
► Determine standard coots and transition charges if necessary.
► Eotablidh a method of determining the default oupplier.
► Certify and eotablioh conoumer protection otandards for all marketero.
► Make cure that reotructuring doeo not reoult in the loon of acceoo to IOU small farm
and reoidential customero to benefito of 13PA low coot power.
Conoumer owned utilitieo will be:
► Allowed to have the local officialo determine if and under what terms and conditiono they
will offer variouo forma of direct or portfolio acceoo.
► Allowed to determine transition charged and be able to collect charged if necessary
becauoe of otranded cooto.
► Required to collect a public purpooe charge of 3% if direct access i5 pffered. Local
officialo may determine the method of collection and design programs for conoervation,
renewable reoourceo and low income weatherization to meet the needy of the local
community. Fundo rained by the charge will remain in the local community.
► Required to eotablioh a low income bill paying ao5iotance program by October 1, 2001, or
whenever direct acce5o is offered, but leaven program funding amounto and program
design up to local elected officials.
► Continueo the payment in lieu of tax paymento and franchise feeo. It allowo a converoion
to a volumetric calculation in order to endure that those receiving electricity from a
marketer aloo would pay these chargeo.
I
RENEWABLE RESOURCES AND
CONSERVATION:
WHAT CONSUMERS WANT
April 21, 1999 Edward G. Ferguson
ABSTRACT
If Northwest utilities are to maintain consumer loyalty, it is important that they understand the
wishes of their consumers regardless of the outcome of deregulation. We have reviewed public
opinion surveys, as well as research and focus group reports, conducted in the 1990s across the
nation, including 17 surveys or focus group studies in the Pacific Northwest. Taken collectively,
this work shows that a strong majority of consumers supports utility investments in conservation
and renewable resources. Moreover, consumers say they would be willing to pay more to ensure
that their utilities invest in those"green" resources.
The surveys in the Northwest revealed that the majority of the region's consumers want their
utility to actively acquire clean resources. This finding is consistent with national surveys.
Nationwide, there is slightly stronger support for utility investments in renewable resources than
in conservation, but both were favored by significant majorities (when taken together in the
surveys in which each was listed as a separate option). Most surveys indicated that a majority of
consumers would be willing to buy "green power products" from renewable resources at prices
ranging from 5 percent to as much as 50 percent higher than the price for power that does not
include such resources. However, some surveys found that an overwhelming majority preferred
that their utility purchase power from renewable energy projects and add these to the current
resource mix. The majority of these people want their utility to roll the higher cost into
everyone's rates.
1
ACKNOWLEDGEMENTS
We would like to recognize the contributions made by those others whose hard work helped
make this paper complete. In particular we would like to thank the management and staff of
Renewable Northwest Project. Special appreciation to Rachel Shimshak, Director, and
Diane Eidenberg, Office Manager. They not only provided access to their files, helping greatly
in gathering materials, but a myriad of services.
It is important to thank the utilities and others whose research contributed the basic data for much
of this paper. The work they do in tracking and understanding customers interest bodes well for
the industry in the Northwest. It is strong evidence of the industry's desire to meet their
objectives as public entities to provide public benefits.
Doug Untalan provided assistance with research and contacts. He got the project off the ground
in the midst of a very busy schedule which made it much easier to complete than it would
otherwise have been.
Finally, Dr. Barbara Farhar reviewed the paper and made many very useful suggestions, which
helped improve the work immensely. We did not take all her advice, as it would have
necessitated narrowing the scope of the work, though it no doubt would have improved its
scientific value. We appreciate her great insight and dedication to the field more than she could
know.
INTRODUCTION
Electric utilities around the nation are paying increasing attention to consumer expectations of
the industry. In the early nineties, this trend grew in part as a result of a requirement by
regulatory bodies that utilities provide customer input in their Integrated Resource Planning
process. Today, in anticipation of competition in a deregulated market, the driving motivation
among utility managers and energy policymakers is to understand consumers' needs and interests
in order to understand what will motivate a customer to choose an energy supplier or a particular
energy product.
Regardless of the outcome of current efforts to deregulate the industry, whether deregulation is
more or less successful, utilities need to understand consumer interest. Even in the face of
deregulation, it is reasonable to assume some utility regulatory requirements will remain,
especially in those areas considered"public purposes." If a utility is to effectively market
products and work successfully with potential public purpose requirements, it must consider the
expressed interests of its consumers.
There are two somewhat divergent views within the electric utility industry on how best to
compete in the marketplace. One is simply to offer the lowest price. According to this view,
consumers believe electricity is an undifferentiated product and will simply chose a supplier
based on lowest price. Other considerations fall lower in their priorities. The second view is that
consumers desire certain features in their energy services, and price will be only one of a number
2
of considerations, albeit an important one. Some utilities with low average power production or
distribution costs will be well positioned to offer lower priced power. Others will need to
provide unique products to attract and maintain customers. Those utilities that focus on products
and services but not on price will need to understand what consumers really want and what price
they are willing to pay as a result. The need for this information has prompted utilities to seek
consumer feedback.
Even utilities that are not faced with deregulation need customer support. The reasons are most
obvious for public utilities or others with elected officials. Meeting the desires of the consumer
will result in broader support for management as well as for utility goals and objectives. For
regulated utilities, there is always a need for broad consumer support, especially when they.are
dealing with issues before their regulatory commissions. In addition, the very existence of a
utility monopoly is tied closely to the concept of"public service."' A utility actively pursuing
resource objectives that are out of step with the public it serves may be seen as failing to fulfill
its public responsibilities and purposes.
Nationwide, in surveys and focus group studies,' consumers consistently report they are more
likely to identify positively with utilities that support environmentally sound management
practices.- In all surveys reviewed, significant percentages of consumers want their utilities to
acquire environmentally clean resources (conservation or renewables), even if this results in
some increase in what they pay for energy. The majority of consumers indicate they would pay
at least $1 to $5 a month more for energy if they are assured that this would pay for energy
efficiency, new renewable energy generation, or other environmentally benign resources. There
is a smaller, but still sizable, percentage of customers who would be willing to pay significantly
more for green power.
In this paper, we review and summarize recent research done both nationally and, with particular
emphasis, within the Pacific Northwest. Our goal is to review the evidence to determine
consumer interest in green power, renewable energy, and energy efficiency programs.
I Historically,utilities are given rights to monopoly service based upon the concept of natural monopoly,that is,that the investment
in the distribution system is a significant part of total utility cost. Rather than two utilities duplicating service,one utility would be
granted a monopoly. In this concept is embedded the belief that utilities are a public service and that the utility company(if
privately owned)should provide these services either under the oversight of a regulatory or democratically elected body. In the
case of public power,it is controlled by the democratic process by which the board,commissioner,or city looks after the public
interest. This public responsibility has been more or less broadly defined to include services complementary to or supportive of
energy supply.
2 It is important to distinguish between focus group and statistically representative surveys when drawing inferences
from material. This is also true for some surveys with small or self-selecting respondents. Although these should not
be given the same weight as more rigorous,scientific studies,to the extent that the results tend to be consistent,the
evidence they provide is useful in confirming generally apparent issues. In some cases,focus group results are
presented in percentages of participants. Focus groups are useful for developing qualitative information(such as the
thinking behind the attitudes that more scientifically rigorous polls provide),rather than quantitative information. Our
reporting on focus group study results is taken directly from the published results,overheads,or abstracts reporting
them. It should not be implied that,by reporting these numerically(percentages of opinion),we take them to be .
representative of the percentages of public opinion to be found among consumers from which they are drawn.
3
METHOD
Although our primary interest is in Northwest attitudes, we also have reviewed the national
literature on consumer interest in green power, energy efficiency, and renewable resources. This
included reviews of publications, web-site postings, abstracts presented in various professional
meetings and discussions with others who have done related literature review. All studies
referenced have been done since 1990, but the majority was done between 1994 and 1998. We
did a general review of work done throughout the nation to determine if the Northwest findings
are consistent with or similar to the trends in other areas of the country. We were interested in
factors affecting consumer choice of energy suppliers and willingness to pay for certain
resources. For instance, do consumers prefer rate-based financing for new renewables or stand-
alone green products? What demographic factors most affect people's interest in renewable
resources and conservation? By illuminating some of these issues, we hope to help the region
make better policy and market decisions.
SUBJECTS
Green Power, Renewable Resources, and Conservation
For purposes of this paper, the terms "renewable energy" sources and "green power" are used
interchangeably because they are commonly used that way in the literature. We also
occasionally include "energy efficiency" or"conservation" within the meaning of"green
resources" when it is apparent from the literature that those involved in the surveys included
conservation as an element in a green strategy. A few studies, however, explicitly address
conservation separately.
NORTHWEST CONSUMER INTEREST IN EFFICIENCY AND RENEWABLE
ENERGY RESOURCES
Summary
Utilities and others in the Pacific Northwest have conducted a number of surveys and focus
group studies in an effort to determine consumer interest in green power, renewable energy, and
energy efficiency. The results of these efforts have been consistent in showing support for
environmentally sound practices regarding resource acquisition. Almost all studies have
indicated that consumers are willing to pay more for renewable energy and conservation. Some
Northwest utilities have offered green power products in market tests, but acceptance of such
offers has been mixed. This is consistent with results from around the country. It may be too
early to judge the reasons for the difference between expressed willingness to pay and the small
percent of those who select green resources. (First year market share has been estimated
nationally at about 0.5 percent to 1 percent.) Most marketing experts believe that this is to be
expected in a new market in which utilities lack experience and consumers are offered choices
unlike anything they have faced before.
4
Renew 2000
Renew 2000 is a project led by a group called The Northwest Environmental Advocates.
Initially, the group's objective was to inform the public about environmental issues and the
related effects of energy choices on the environment.
Renew 2000 conducted focus groups to determine consumers' attitudes toward various terms
regarding environment and power generation in the Northwest.' The idea was to ascertain what
messages would resonate with the public. Some of the interesting findings were:
• Most people are sympathetic to environmental causes.
• Environmental issues are a significant consideration when selecting products and services,
although not the most significant.
• Most tend to be skeptical of both conservation groups and utilities as sources of information.
Each is viewed as having a vested interest and, therefore, perceived to be biased.
• The term "green" is viewed as positive by some, but has some negative baggage. Some
associate it with militant green politics in Europe, or they think it is a buzzword.
The findings of Renew 2000 regarding environmental concerns reflect similar attitudes found in
Northwest surveys and those we reviewed from other parts of the country. In all but one instance
in the Northwest (we accumulated survey and focus group results from 15 utilities), a majority of
customers indicated they supported renewable energy.
NORTHWEST CONSUMER SURVEY AND FOCUS GROUP RESULTS
Western Montana Generation and Transmission (G&T)
A survey of consumers of member utilities was conducted in July 1995. Sixty-one percent
agreed that their utility should acquire only resources having a positive or neutral effect on the
environment. Seventy percent wanted their utility to promote programs to increase conservation.
Forty-four percent wanted their utility to build or purchase power from wind and solar resources
to meet loads in the future.° Forty-six percent said they would pay ten percent more for
renewable resources, and fifty-three percent said they would pay ten percent more for
conservation. When asked if they feel it is more important to promote energy programs to
increase the efficient use of energy or to keep rates as low as possible the results were split
evenly between the two choices.
Salem Electric Cooperative
After a survey of consumers in June 1995, Salem Electric reported that 78 percent of respondents
strongly supported an investment in renewable energy resources. It is important to note that
respondents felt all ratepayers except the low-income should participate in the investment. The
majority supported a rate increase of between 4 percent and 8 percent to pay for investments in
renewables.5
3 Renewable Campaign Message Testing and Resource Disclosure Focus Groups.
4 Summary of Telephone Survey,Montana G&T.
5 Responses to Weiss article on"Green Power."
5
Eugene Water and Electric Board (EWEB)
EWEB surveyed 400 customers in June 1995. Customers were asked to arrange resource choices
in priority order. The results came in the following order: conservation, wind, central solar,
distributed solar, and geothermal resource. EWEB customers were asked how much more they
would be willing to pay for renewable resources. The choices they were given were in
one-dollar increments from $1 up to $5, then between $6-10 and over $10. Thirty-three percent
would pay from $1 to 5, thirteen percent would pay $6-10, and ten percent would pay more than
$10. Twenty-six percent said zero and the remainder answered, don't know. Therefore
56 percent would pay something extra a month to ensure renewable energy in their utility's
future resource mix. When asked how much they would be willing to pay for more conservation
services, again in $1 increments to $5, 42 percent percent were willing to pay between $1 and $5,
10 percent between $6-10, and 8 percent over $10. Sixty percent, therefore, would be willing to
pay something more for conservation.6
EWEB surveyed 250 people for the green opinion survey in 1998. When asked how they would
prefer to pay for new renewables, 60 percent favored automatic/rate-based coverage, while
32 percent favored having the option to pay extra. Thirty-five percent said they would be willing
to pay $3 a month more for wind projects; 28 percent would pay $5 more; and 18 percent would
pay $10 more. Four percent would pay $15 extra.'
In the opinion survey conducted in 1997, 84.5 percent of customers ranked the environment as
either important or extremely important. Conservation programs were rated either important or
extremely-important by 77 percent. Fifty-four percent said that investing in renewable resources
would be extremely important, and twenty-four percent said it is important. Fifty-four percent
said they would be willing to pay more for renewable power. When asked how much more they
would be willing to pay to have "designated renewable resources," 22.2 percent said $2,
27.8 percent said $5, and 16.2 percent said $10. When asked how important conservation
programs were on a scale of 1-5 with 5 being highest, 53.5 percent rated conservation at 5, and
24 percent rated it as a 4.8
Demographic analysis concluded that, "Those over 50, those earning under$15,000 and those
with no children are less likely than others to want to spend anything more per month.s9 Another
finding was that, "18- to 24-year-olds are more likely than others to feel EWEB should offer
energy efficient home appliances . . .i10
Emerald People's Utility District (EPUD)
A survey sent to 1,831 consumers in May 1995, elicited 926 responses. The priority of resources
preferred was conservation (83 percent), solar(79 percent), wind (77 percent), landfill methane
6 EWEB survey,June 2-11, 1998.
7 EWEB Electric Division Green Opinion Survey.
8 [bid,pages 6-7.
9lbid,page 16.
10 Ibid,page 17.
6
recovery (76 percent), and geothermal resources (66 percent). Nearly 60 percent of residential
respondents indicated a willingness to pay extra on their monthly utility bill to support renewable
energy resources, while 48 percent of commercial respondents indicated a willingness to pay
extra for renewables. Forty-nine percent of residential respondents would pay extra to support
conservation, whereas only thirty-seven percent of commercial customers would do so.l l
(Figure 112)
Figure 1 : Resource Favorable Rating , EPUD
Customer Survey
100% - 79%77% 76% r®m
80% -
60% -
40 JERESOURCE OPTIONS
°/a i � � 3%
20% - 11
0%
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yG v.v .n ����. O V_JG
KENETECH Windpower
In 1995, KENETECH Windpower sponsored a survey that included 801 telephone interviews of
residents of Washington and Oregon. The purpose was to determine the degree of consumer
support for wind power as an energy resource. With this information, KENETECH hoped to
provide potential customer utilities with information verifying customer demand for this
renewable energy source.
Eighty-six percent of respondents indicated they would replace lost hydro capacity with wind.
Moreover, ". . . even when faced with up to a$9 monthly increase in their electric bills, nearly all
said they still would choose wind." (Figure 2.")
The KENETECH paper reported on some demographic factors that support those found in other
studies. Among their findings are that those in the 35 to 49 age group are the strongest
supporters of wind. Males 50 years and older were among the "strongest detractors.1114
11 Emerald PUD Customer Survey.
12 Taken from Emerald PUD Customer Survey.
13 KENETECH Survey.
14 Ibid.
7
Figure 2: "If wind-generated electricity to replace
power from the dams would increase your
monthly electric bill by as much as $31$51$7/$9,
knowing this would you still choose wind to
replace power lost from the dams, or not?"
100% � ®.,
95%
90%
85% 86%
80%
$3 $5 $7 $9
Orcas Power and Light
Orcas Power and Light reported that a survey of its customers indicated 83 percent would like to
be able to choose their power sources. As was reported in the utility's OPALOGRAM 237, "An
unbelievable 55 percent said they would pay 50 percent more for power that was made in an
environmentally friendly manner.s15
Enron/PGE: Environmental Issues and Image Tracking Study
In September 1997, Opinion Dynamics conducted a poll for Portland General Electric. This
telephone survey polled 404 residential customers and 385 commercial customers. The poll
sought customer opinion on a variety of public concerns. Opinion Dynamics asked respondents
to rate these concerns in order of priority. Among the issues raised were concerns related to
environmental and energy resources. Consumers were asked to give their preferences for various
energy resources. Sixty-nine percent of residential customers and fifty-one percent of
commercial customers favored renewables over other resources (Table 1).
In July 1994, PGE conducted 766 random telephone interviews (400 residential and
366 commercial customers). As in the survey cited above, PGE asked customers to prioritize the
types of resources they should pursue first in the next five years. Sixty-one percent of residential
customers and sixty-five percent of business customers wanted PGE to develop renewable
resources first with the order of preference being wind, solar and geothermal." In earlier focus
groups, all of the residential customers felt it was important for the utility to be environmentally
responsible. Nearly all of residential and commercial customers felt that it was important for the
utility to acquire renewable resources. Almost the same number felt conservation programs were
important.
15 OPALOGRAM 237.
16 A Summary of National and Regional Surveys Affirming Consistent Public Support for Conservation and Renewable Energy,
page 4.
8
Table 1
Question: "It's likely that additional sources of energy will be needed to meet the future needs of
the region. Which ONE of the following sources of additional energy would you most want to see
your electric company develop over the next five to ten years?"
Sept. 1997 Jan. 1995
Res Comm Res Comm
Coal 2% 1% 1% 2%
Cogeneration using waste heat from 11% 15% 13% 19%
industrial equipment and
processes
Natural gas-powered turbines 9% 11% 14% 11%
Fuel cells 2% 2% 1% 2%
Geothermal 10% 9% 10% 10%
Hydroelectric 9% 9% 7% 8%
Solar 41% 32% 28% 25%
Wind 9% 10% 19% 12%
Other 2% 3% 1% 8%
Don't Know 5% 5% 6% 7%
r
Taken from Portland General Electric,"1997 Environmental Issues and Image Tracking Study."
To determine the likelihood customers would invest in renewables, PGE posed the following
situation: "Assume that your electric company formed an investment fund to develop additional
alternative energy sources, . . . which would pay a dividend to investors if profitable. On a scale
of 1 to 6, where 1 means `I definitely would not invest' and 6 means `I definitely would invest,'
please rate the likelihood that you would invest in such a fund." The results were that 31 percent
assigned a 5 or 6 in response; in other words, they indicated that they would invest."
Washington Water Power
The utility surveyed 300 randomly chosen customers during July 1994. They were asked, "Some
utility companies offer incentive programs to encourage customers to purchase equipment that is
more energy efficient. Do you believe that Washington Water Power should offer such programs
or not?" Ninety percent answered yes. Ninety-five percent said yes when asked, "If Washington
Water Power had enough energy to meet its customers' energy needs well into the foreseeable
future, do you believe that Washington Water Power should continue to offer energy-efficiency
programs to its customers or not?" When asked, "Would you still feel that way if you knew that
such programs would be at least partially funded by all energy customers (including yourself) in
the form of higher energy rates?" Sixty-one percent still replied yes.18
Snohomish County Public Utility District
Snohomish County held a focus group with 25 people in August 1995. This discussion revealed
price sensitivity for paying extra for environmentally friendly resources. Some customers found
17 PGE 1997 Environmental Issues and Image Tracking Study.
18 Washington Water Power Application for Demand Side Management Tariff Revisions.
9
10 percent [extra] per month on their utility bill [for renewable resources] tolerable . . . but
increases over 20 percent were intolerable for everyone."" ene 20
Many focus group participants thought there was a need to move toward environmentally
sensitive power resources. They wanted better information on the subject to better understand
the choices.
Ravalli Electric Cooperative, Inc.
This Montana electric cooperative surveyed 200 residential customers in September 1997. When
asked if they would be willing to pay 10 percent more for electricity generated from renewable
energy sources, 22 percent said yes and 26 percent said maybe.
Demographic information regarding "willingness to pay" for the Ravalli survey is similar to
other surveys. The number of respondents who said yes to the question, "Would you be willing
to pay 10 percent more . . . for renewable resources?" varies significantly by age. Thirty-five
percent of males 18-35 years old said yes, compared to 28 percent for age 36-50, 18 percent for
those from 51-64, and 10 percent for those males 65 and older. Professionals were far more
likely than white- or blue-collar workers to say yes at 42 percent, 26 percent, and 26 percent
respectively.21
Conservation and Renewable Energy Systems (CARES)
CARES, a Washington energy and conservation company, created by a consortium of public
utilities districts, provides energy-efficiency services for the public utility districts in Benton,
Clallam, Franklin, Grays Harbor, Klickitat, Pacific, and Skamania Counties. CARES surveyed
412 residential customers and 219 commercial customers in November 1997. Eighty-eight
percent of residential customers said their PUDs should include new renewables as one of their
sources of electricity. Eighty-nine percent commercial customers support using "new
renewables."".
When told that renewables may cost more today but might make sense in the long run, 88 percent
of residential customers still supported them. Forty-five percent strongly supported them, and
forty-three percent said they somewhat support such renewables.23
When given a choice, 74 percent of residential customers said, "it is only fair that all households
and businesses who can afford it help pay." Eighty percent of commercial customers agreed with
this statement.21
19 Snohomish County Public Utilities District Customer Satisfaction-Focus Group Research Executive Summary,page 22.
20 The report did not give actual percentages of those who support the 10 percent increase in utility bills;the reported support was
described in the general terms as given in the quote.
21 Market Research paper,Ravalli County Electric Cooperative,Inc.
22 Study of PUT)Customer Acceptance of Renewable Energy,page 24.
23 Ibid,page 29.
24 Ibid,table 8a,page 54.
10
Twenty-four percent of residential customers said they would definitely be willing to spend an
additional $5 every two months, and another 28 percent said "probably." Nine percent said they
would probably pay $7 every two months, and twenty-three percent said they would definitely
spend an additional $7 every two months. Two percent said they would probably pay $10 in that
period, while 5 percent said they would definitely pay that much. Thirty-one percent of
commercial customers were definitely willing to pay $5 every two months, and twenty-one
percent said they would probably be willing to spend that much."
An interesting demographic item in this survey found that support for new renewable resources is
greater the more one is aware of them. "Among residential respondents who said they are at
least somewhat familiar with all four resources, 61 percent support their public utility districts
adding them. Among respondents not familiar with any of the sources, half of that total
(32 percent) said they strongly support their public utility districts in adding them.,,16 This
suggests that the level of support would increase if more information were made available.
Tillamook Public Utility District
The utility surveyed 300 customers in May 1998. In the only question pertaining to our interest
here, 14 percent said they were very likely to pay 10 percent more for green power and
30 percent were somewhat likely.
Seattle City Light
Seattle conducted a statewide survey of 400 people in November 1997. When asked 27 to rate the
importance of energy conservation programs, 75 percent rated such programs as either important
or very important. The breakdown is 49 percent"very important" and 26 percent "important."
When asked, "How important is environmentally responsible power generation that protects
salmon habitat?" Seventy-three percent ranked it as either important or very important. This
breaks down as 19 percent ranking it as "important" and 54 percent ranking it as"very
important.s28
In a residential survey conducted in 1998, 72 percent of customers indicated they preferred that
the cost of renewable programs be funded through rates, rather than voluntary contributions.
Clark County Public Utilities District(PUD)
Clark County PUD currently is offering a pilot customer choice program called Powerful
Choices that allows consumers to choose one or a combination of various types of resources. To
learn more about those eligible for the pilot program (only a portion of all Clark County PUD
consumers are eligible), Clark surveyed a cohort of 350 selected from 6,000 customers in
September 1998 " Respondents were asked how interested they would be in buying renewable
25 Ibid,page 67,tables 1 la and I Ib.
26 Ibid,page 29.
27 Seattle City Light Poll.
28 Power Comes to the Neighborhoods Community Workshops and TV Town Meetings, Final Report.
29 Clark County Customer Survey.
11
energy resources. Twenty-one percent were very interested, and thirty-eight percent were
somewhat interested. The next question asked was "Renewable energy or `green' power is more
expensive at this time compared to other kinds of electricity. How much more in dollars per
month, if anything, would you be willing to pay for renewable energy on your electricity bill?"
The response was 61 percent said 0, 14 percent said $1 to $9, 9 percent said $10, and 12 percent
said $11.30
In the fall of 1997 and spring of 1998, Clark County PUD surveyed customers regarding
conservation programs. In 1997, 68 percent of those who responded said energy conservation
was very important. In 1998, 72 percent felt it was very important to promote conservation
programs.
Northwest Energy Team (Inland Power& Light, Vera Water and Power, and Kootenai
Electric Cooperative)
In 1992, the three utilities listed above had Market Data Research do a market survey. The report
states that, " . . . 55 percent of all customers in the region believe the electric utilities should
emphasize conservation before developing new resources."
On a scale of 1 to 5, with 5 being highest, consumers rated the statement, "Conserving electricity
makes economic sense"at 4.8. They rated the statement, "My utility should encourage efficient
use of electricity by offering cost incentives for the purchase of energy-efficient appliances or
weatherization" at 4 to 5.31
Bonneville Power Administration
Between April 7 and April 17, 1998, RKS Research and Consulting interviewed 230 residential
consumers in the Pacific Northwest for Bonneville Power Administration. Consumers were
asked, "If you had a choice, would you prefer to buy electricity from a company that has a
reputation for being environmentally friendly or one that has a reputation for low prices?
Fifty-three percent said environmentally friendly, thirty percent said low prices, and nine percent
said depends.
Of those who answered environmentally friendly or depends, the following question was posed.
"If[your utility] offered "green power"--that is, electricity that comes from nonpolluting,
renewable energy sources, would you be willing to pay 20 percent more for your electricity?
(If not willing to pay 20 percent more, depends, not sure ask) and would you be willing to pay
10 percent more? (If no, depends, not sure ask) 5 percent more? The answers were 31 percent
said 20 percent more, 24 percent said 10 percent more, and 15 percent said 5 percent more.32
30 Clark County power base supply is made up,to a significant part,of small hydro. Small hydro is usually listed as a green or
renewable resource.
31 Summary of Telephone Survey. Western Montana G&T,page 9. (This survey is the one of the oldest cited in this paper. With
changing demographics in the utility's service territory,Inland Power and Light,one of the utilities in which the survey was
conducted,expressed concern that the information may not represent current consumer views. Therefore,the utility is doing
another survey of its consumers early this summer that will provide new information.)
32 Bonneville Power Administration Residential Survey,page 13.
12
CONSUMER OPINIONS FROM OTHER PARTS OF THE NATION
National Surveys
Dr. Barbara Farhar, one of the nation's leading researchers in this area, has constructed tables
from extensive reviews of the literature at the national level that show customer preferences
among energy alternatives." In a December 1990 survey, consumers were asked the question:
"In order to help provide for the country's overall need for energy in the future, which do you
think should be emphasized most?" According to her data, renewables were favored by
59 percent (Table 2). Twenty-five percent said they preferred ways to use less energy. Finding
ways to produce more oil, gas and coal earned only 11 percent support(Table 2).
Table 2. Preferred Approaches for Meeting Energy Needs When Renewables Are
Considered.
Question: "In order to help provide for the country's need for energy in the future,
which do you think should be emphasized most?" (December 1990)
Finding different energy sources such as 59%
solar and wind.
Finding ways to use less energy 25%
Finding ways to produce more oil,gas 11%
and coal.
Don't know 5%
Source: Copied from Barbara Farhat,Energy and the Environment:The Public View,REPP Issue Brief No.3,page 13,Table 1
(1996)using data from Research/Strategy/Management and Greenberg/Lake,The Analysis Group, 1996.
When consumers were asked about funding for research and development (R&D), Farhar reports
that 34 percent supported funding for new renewable technologies and 21 percent supported
development of energy efficiency and conservation. Survey participants were asked not only
which R&D projects should be funded first, but which should be cut first. Again, renewable
energy programs fared far better than fossil fuels and nuclear power (Table 3)34.
Another national survey cited by Dr. Farhar finds, " . . . if given a choice between a utility
company using coal to generate electricity and one using `cleaner, but slightly more expensive
renewables,' . . . three-quarters said they would pay something more (75 percent chose
something in the range of 2 percent to 20 percent more) for renewables.i35
33 Farhar,Barbara. Energy and the Environment: The Public View,page 4.
34 Ibid,page 5.
35 [bid,page 8.
13
Table 3. Preferences Among Energy Alternatives for R&D Funding.
Question: "Which of DOE's programs do you think should receive the highest priority of
funding in DOE's R&D budget? And which do you think should be subject to funding cuts
first?" (December 1995)
Resource Option Highest Priority Cut First
to Fund
Renewable energy involving solar,wind, 34% 14%
geothermal, biomass and hydroelectric power
Technologies to improve energy efficiency an 21% 4%
conservation
Natural gas 9% 5%
Fossil fuels such as oil, gasoline and coal 9% 20%
Nuclear Power 9% 30%
None of these 5% 6%
Don't know 14% 20%
Source: Table by Barbara Farhat,Energy and the Environment: The Public View,REPP Issue Brief No.3,page 13,
Table 2. (1996),using data from Research/Strategy/Management 1996.
Three Texas Utilities' Experience with Town Meetings
In Texas, several utilities conducted experiments to determine customer opinion. The results of
three of these studies, sponsored by Central Power and Light (CPL), West Texas Utilities
(WTU), and Southwestern Electric and Power Company (SWEPCO), are in this report. Several
other Texas utilities used the same methodology (called"Deliberative PollingTM").361 This
includes Houston Power and Light and El Paso Electric Company, whose studies are cited in this
paper. The first step of "Deliberative PollingTM" was a baseline consumer survey using statistical
samples designed to produce high levels of confidence. Then consumers were invited to
participate in town meetings. The purpose of the survey and meetings was to get public input in
guiding the integrated resource planning process for the three utilities."
Two hundred people were selected as a representative sample to ensure they were
demographically similar to the larger group that was invited to attend the town meetings. Using
the Deliberative Polling TM technique, interviewers asked participants about their resource
preferences. The researchers selected a scientifically representative sample from customers of
the utility and were surveyed before the meetings. Meeting participants were invited; though
some of those invited did not attend, so some self selection of the cohort occurred at this stage.
At the meetings, independent moderators led small group discussions of issues. Efforts were
made to present accurate information and to avoid directing conclusions.
36 Deliberative PollingTM was developed by Professor James Fishkin of The University of Texas at Austin.
37 On Electricity Issues: Customer Survey Results,from A Report by Central and South West Services Inc.
14
There were also large group discussions moderated by Ron Lehr, former chairman of the
Colorado Public Utilities Commission. The session included a televised question and answer
format in which participants were invited to ask questions of representatives from the Texas
Public Utility Commission.38 Later, participants were asked if they felt the moderators were
attempting to direct rather than inform. The vast majority did not feel they were directed(see
Figure 7 for results of test for perceived partiality in this process as implemented in the Houston
Power and Light study).
An intriguing result of the survey and town meeting was finding not just that conservation and
renewables were favored but seeing a shift in attitudes from before and after the meeting. The
presumption is that this was due to the education, which resulted from information provided at
the town meetings. (Figures 3, 4, and 539). Participants were asked which of four choices the
utility should support: (1)reduce need for more energy; (2) build more fossil fuel plants; (3) add
renewable resources; or (4) buy and transport energy from outside the company's service system.
Responses prior to the town meeting differed significantly from those at the end of the meeting
(before and after surveys.) For each of the three utilities, "pre-event" consumers recorded a
Figure 3: CPL: How Did Customers' Views Change Before and
After Deliberations?
80% -
70% - 67% O Beforel
60% - ■After
50% - 6%
40% 29°/
0% _
20% -
10%
0% - ..
Energy Efficiency Fossil Fuels Renewable Energy Buy and Transport
38 See Figure 5,from the discussion on Houston Power and Light,which also used the Deliberative Polling TM technique.
39 Figures taken from: On Electricity Issues,Customer Survey Results: A Report by Central and South West Services Inc.,page 18.
Figure 3 does not add up to 100 percent in the original document,presumably due to rounding errors.
15
marked preference for renewables. After the event, energy efficiency is preferred as the first
choice, with renewables following at a close second." °°d 41
Figure 4:. WTU How Did Customers' Views Change Before and
After Deliberations? ®Before
80% - 71
■After
70% -
60% -
50%
40% - 31% 35% { -
30% 0 18%
° 16/o
20/0
10%
0% .
Energy Efficiency Fossil Fuels Renewable Buy and Transport
Resources
Figure 5: SWEPCO : How Did Customers' Views Change
Before and After Deliberations? FIM Befor�
80% -;. _.. ■After
70% 7%
60% -
50%
50% -
40%
28%
30%
20% - 16% 10% 13%
10% - % 6%
0%
Energy Fossil Fuels Renewables Buy and Trans
Efficiency
40 On Electricity Issues: Customer Survey results: A Report by Central and South West services Inc.,page 18.
41 CPL,before"the event' I I percent preferred to reduce need and 67 percent preferred renewables,compared to after"the event'
when 46 percent preferred to reduce need and 16 percent preferred renewables.
WTU,before the event 7 percent preferred to reduce need,and 71 percent preferred renewables. After the event,however,there
was significant change. After the event 46 percent preferred to reduce need and 16 percent preferred renewables. Obviously,
education on the issue influenced peoples'preferences in to a significant degree.
SWEPO,before the event 16 percent preferred to reduce need and 67 percent preferred renewables,compared to after the event
when 50 percent preferred to reduce need and 28 percent preferred renewables.
16
Sustainable Energy Coalition
The Sustainable Energy Coalition released a report on December 1996, presenting the results of a
national survey of 1,000 voters.42 The respondents were asked the following question: "Which
one of these research and development programs do you think should receive the highest priority
for funding in the Department of Energy's research and development budget?" (The choices
were renewable energy,technologies to improve energy efficiency, natural gas, fossil fuels,
nuclear, none of these, and don't know.) The results were 34 percent renewables, 22 percent
efficiency improvement, 10 percent fossil fuels, 10 percent natural gas, 10 percent fossil fuels,
and 8 percent nuclear.
In addition to expressing their preferences in order for resources, the respondents were asked if
they felt utilities should be required to invest in renewables. According to this study, " . . . a
large majority (69 percent), [off voters favor requiring utilities to invest in energy efficiency
programs, either strongly (37 percent) or at least somewhat (32 percent)".43 Support for
mandatory utility investments in a deregulated environment is strong also, at 78 percent in favor.
While willingness to pay for conservation was not discussed in this report, support for mandatory
requirements for renewables was high with 53 percent favoring investments in renewables even
if this meant an increase in $1.00 a month for consumers electric bills.
The study included some demographic data such as age, area of the country, military experience,
race, education level, income, political party affiliation, and political ideology(five gradations
from very liberal to very conservative).44
The authors reported on some correlation between certain demographics and respondents'
answers. Higher education levels equated with more willingness to support renewable energy
and conservation. For example, 61 percent of college graduates support the Environmental
Protection Agency's Green Lights and Energy Star program, compared to 41 percent support
among high school graduates.
Similarly, higher-income people support these programs more than those of lower income. Only
46 percent of those with annual incomes under $25,000 support these programs, while 51 percent
of respondents between $25,000 and $50,000 support them. Fifty-five percent of those who earn
above $50,000 express support.45
Center for Energy Efficiency and Renewable Technologies (CEERT) California Survey
The firm of Fairbank,Naslin, Kaullin and Associates conducted a statewide interview in
California for the CEERT in September 1996. The firm posed the question, "If you were sure
42 America Speaks Out on Energy: A survey of 1996 Post-Election Views.
43 lbid,page 7.
44 Although demographic data were gathered during the poll,some demographic relationships were not noted in the results. This
may have been because the authors saw no significant relationships. There was no mention of how age related to choices in the
report,although we assume that this can be extracted from the data that were gathered.
45 Ibid,page 10.
17
that the money you spend for electrical energy was paying for clean alternative sources of power
and not for electricity from nuclear or coal plants, how willing would you be to pay
approximately 10 percent more on your monthly energy bill, very willing, somewhat willing, not
very willing;or not at all willing?" A majority, 66 percent, reported that they were willing
(30 percent were very willing and 36 percent were somewhat willing). Thirty percent reported
that they were unwilling a6
Demographic breakouts were done by age, gender, and race. Consistent with other studies, there
are significant age/gender differences. Among those who responded to the question regarding
willingness to pay more for renewable energy, men aged 50 years or older were 57 percent
willing and 38 percent unwilling. However, men between the ages of 18 to 49 were 71 percent
willing and 27 percent unwilling.
There is a similar, although less significant, gap by gender. Women, 50 years or older, are
64 percent willing and 36 percent unwilling. Women aged 18-49 were 81 percent willing and
18 percent unwilling. It is apparent that a somewhat different picture emerges of what
consumers want depending on the age group and gender surveyed. For example, the perspective
derived from speaking to men 50 years or older would be significantly different from that
derived from talking to younger women (Tables 4 and 5).
Table 4
Question: If you were sure the money you spent for electrical energy was paying for clean
alternative sources ofpower, . . . how willing would you be to pay approximately /0 percent
more on your power bill. "
AGE 18-29 30-39 40-49 50-64 65+
Very willing 29% 38% 32% 27% 26%
Somewhat willing 50% 35% 36% 32% 29%
Not very willing 7% 12% 15% 14% 13%
Not at all willing 12% 13% 15% 21% 26%
(Don't know) 2% 2% 2% 6% 5%
Total willing 79% 73% 68% 59% 55%
Total unwilling 18% 26% 30% 35% 40%
Taken from CEERT Study,Fairbanks,Naslin,Kaullin&Associates(1996)Table 60.
46 Fairbank,Naslin,Maullin&Associates Survey,table 60.
I
18
Table 5
Question: Ifyou were sure the money you spent for electrical energy was paying for clean
alternative sources ofpower, . . . how willing would you be to pay approximately 10 percent
more on your power bill. "
Gender M F
Very willing 28% 32%
Somewhat willing 34% 38%
Not very willing 13% 11%
Not at all willing 21% 15%
(Don't know) 4% 4%
Total willing 62% 70%
Total unwilling 34% 26%
Taken from CEERT Study,Fairbank,Masliu,Kaullin&Associates,(1996)Table 60.
Houston Lighting and Power Company (HL&P): Partners in Planning
In January 1998, HL&P held a two-day meeting with 200 customers to discuss electrical issues.
The purpose was to seek consumer opinions regarding resource acquisition planning, that is, the
utility's Integrated Resource Plan. The process also used Deliberative PollingTM, which has been
described earlier. The question posed was, "Assuming the cost is the same, which option should
HL&P pursue first?"
1. Generating electricity using renewable technologies such as wind and solar power.
2. Providing services and products to customers, which reduce the need for additional electric
generation.
3. . Generating electricity using fuels like natural gas or coal.
4. Purchasing power from another producer of electricity.
Customers were asked to rank their choices. Fifty-eight percent selected renewable resources as
their first choice. Twenty percent selected energy efficiency as their preferred choice.
When asked which they would do second, 51 percent selected energy efficiency. Customers said
they would be willing to pay increased monthly bills of$10.93 (the mean) or$6.50 ("midpoint")
for wind and solar energy. They said they would be willing to pay $7.04 (the mean) or $3 (the
"midpoint") for efficiency actions to reduce need."
47 Houston Lighting and Power Company Partners in Planning: Summary of Results,pages 5-7.
19
The Houston study also did demographic comparisons. The following participants chose
renewables as their first choice (given no differences in cost):
82 percent of those aged 18-35
55 percent of those aged 36-45
50 percent of those aged 46-55
32 percent of those aged 56-65
There is almost a linear drop in percentage preference for each increasing decade in age. The
trend is reversed over the age of 65, however, where preference for renewables is back up to
55 percent.48 (Figure 649) Likewise when asked about a voluntary choice to purchase electricity
from solar and wind,the results showed the following were very likely to buy.
64 percent of those aged 18-35
39 percent of those aged 36-45
44 percent of those aged 46-55
19 percent of those aged 56-65
15 percent of those over 65. 5a
Figure 6 : How Did Participants' Choice of
Renewables ,as the Option they Thought
HL&P Should Pursue First Vary by Age?
100% - °
55% 50% 55%
50% - 32%
0%
18-35 yrs 26-45 yrs 46-55 yrs 56-65 yrs Over 65 yrs
Clearly, age is a significant determinant in likelihood to buy green. It appears anyone marketing
green resources would be wise to target the younger market.
The Deliberative PollingTm results for all five Texas utilities showed changes in the larger-scale
survey and in the post-town-hall discussion polls of participants. Since there were dramatic
shifts among preferred alternative resources, it is important to note that participants did not feel
48]bid,page 53.
49 Houston Lighting and Power Company Partners in Planning: Summary Results,page 53.
50 Ibid,page 55.
20
led to conclusions. When asked, 80 percent of the participants report they disagreed strongly
with the following statement: "The group leader often tried to influence the group with his or her
own views." (Figure 751)
Figure 7: Did the Leader Try to Influence Group
with Personal Views? mAgree
Strongly
■Neither Agree
or Disagree
■Disagree
Strongly
®Agree Mildly
®Disagree
mildly
®Don't know
Southwest Town Meeting on Electrical Issues
In August 1997,El Paso Electric Company held meetings similar to those held in Houston and by
the three Central Texas utilities reported above. The Deliberative Pollinem was the same as that in
the other Texas cities. The poll asked the question, "Assuming the cost is the same, which of these
should your utility pursue first:
1. Providing programs/technologies that increase the energy efficiency of homes and businesses to
decrease the need for additional electric generation facilities.
2. Acquiring energy from electric generation facilities that use coal or natural gas.
3. Acquiring energy from electric generation facilities that rely on solar power,wind power,or
other renewable sources."
The results showed 44 percent of those surveyed preferred energy efficiency as their first choice,
while 42 percent made renewable resources their first choice. For their second choice, 37 percent
chose efficiency and 39 percent opted for renewable resources. When asked how much more they
51 Houston Lighting and Power Company Partners in Planning: Summary Results,graph,page 46.
21
would pay on monthly bills for generation by wind and solar, the results were$6.99 (mean) and
$5 (midpoint). For efficiency,the results were$4.52 (mean) and $2 (midpoint).12
The El Paso study did some demographic separation on the basis of income. Customers were
asked, "Using a scale of 0-10, where 0 stands for not at all important and 10 stands for extremely
important . . . how important is it for El Paso Electric to tailor energy-efficiency programs to make
sure that low-income customers can participate?" Sixty-five percent of those with annual incomes
under$15,000 thought it extremely important, while 36 percent of those over$15,000 felt it was
extremely important. Interestingly, 36 percent of those above $15,000 thought it was important."
Sacramento Municipal Utility District(SMUD)
In February 1995, SMUD surveyed a random sample of customers for their opinions on energy
conservation and renewable resources and the deregulation of the electrical utility business. The
survey reached 401 residential customers, 392 business customers, and 25 large industrial
customers. Residential customers selected"environmental responsibility as an important utility
service"by 87 percent. An only slightly smaller number(72 percent) supported"promoting
renewable electricity production" as an important service. Eighty-five percent of business
customers supported being environmentally responsible, and 72 percent were for promoting
renewable electricity production. Industrial customers were much more interested in keeping
outages low(100 percent)and keeping prices low(100 percent). Seventy-two percent considered
being environmentally responsible as important, with 32 percent choosing to promote renewable
electricity production.
Forty-three percent of residential customers were willing to pay five percent more for renewable
resources,with thirty-eight percent willing to pay five percent more for conservation. Businesses
were willing to pay 5 percent more for renewables while 36 percent were willing to pay 5 percent
more for conservation.s" It appears SMUD consumers feel that the environment is important. Of
those who rated service as an important issue in making a choice among utilities, 87 percent rated
environmental responsibility as important. Keeping rates low was important to somewhat more
people at 95 percent of the respondents
Public Power Customer Insights
In 1998, RKS Research& Consulting surveyed a scientifically selected national cross section of
1,002 electric bill-paying residential Public Power customers(heads of households). The American
Public Power Association supplied sampling information in the form of ZIP codes,nationwide,
from areas served by public power. Interviews covered a representative sample of public power
nationally. One question asked was, "If you had a choice,would you prefer to buy electricity from
a company that has a reputation for being environmentally friendly or one that has a reputation for
low prices?"
52 Southwest Town Meeting on Electrical Issues: Summary of Results,pages 8,9 and 11.
53 Ibid,page 41.
54 SMUD 1995 Integrated Resource Plan,tables 4 and 5.
22
Of the 60 percent who responded"Environmentally Friendly"or"Depends," a further probed. "If
(your utility) offered `green power'--that is, electricity that comes from nonpolluting,renewable
energy sources, would you be willing to pay 20 percent more (if no, depends, not sure ask [whether
they would be willing to pay]) 10 percent more? (if no, depends, not sure, ask [whether they would
be willing to pay]) 5 percent." Of the 606 customers who were in this category, the responses
showed that 33 percent were willing to spend 20 percent more, and 24 percent were willing to
spend 10 percent more(Table 6)."
Table 6
Question: "If[your]utility offered 'green power'--that is, electricity that comes from
nonpolluting, renewable energy sources, would you be willing to pay 20 percent more,
10 percent more, [etc.]. . . "
Total U.S Willing to Pay More
20 percent more 33 percent
10 percent more 24 percent
5 percent more 14 percent
Not willing to pay more 16 percent
It depends 4 percent
Not sure 9 percent"
Taken from"Hometown Connections;Residential survey,"RKS Research,Consulting,Table from Appendix C: question 10d,page 13.
North Dakota
A 1994 study of North Dakota residents found that 83 percent said "developing resources such as
solar and wind is as important as development of fossil energy resources . . ." Sixty-one percent
said they would pay something more for electricity generated from renewables. The breakout
shows:
19 percent would pay $045
45 percent would pay$6-$10
11 percent would pay$11415
9 percent would pay $21 or more."
CONCLUSIONS
Conservation's Place in a Green Strategy
Increasingly, surveys intent on learning consumer interest in green energy options have focused
more on renewable energy sources and less on conservation. In addition, while many utilities
have focused on consumer choice in various market surveys, they are not sharing this
information as it is considered proprietary. In the era of impending deregulation, attention has
55 Hometown Connections: Residential Survey,page 13,Appendix C: Questionnaire.
56lbid,page 13.
57 Harmon and Wind.
23
focused on green power product development, which is often associated with renewable
generating resources, and, less frequently, on conservation.
This means current information on conservation is not as readily available. However, we do
have a few examples, both within the region and outside, that clearly demonstrate consumer
interest in conservation. Since most studies in recent years focus on renewable resources or
bundle conservation within the discussion of green resources, we will summarize them together.
In our conclusions, however, we will discuss these separately. It is somewhat difficult to display
information on each of these two separately as they often are not listed as separate choices in the
same survey. Therefore, to clearly understand customers' preference for green or clean energy
options, the two need to be looked at together.
Are Conservation and Renewables the Same in the Public's Mind?
When we ask people to compare their resource preferences, there is opportunity to add to our
own confusion in our understanding of what consumer's desire when we separate out
conservation and renewables. For example, if you ask someone to rank an order of preference--
conservation, nuclear, coal, gas and renewables--you could end up concluding that only a
minority support renewables if 30 percent rank conservation as a first choice and 30 percent rank
renewables as first choice. But the real point may be that 60 percent.prefer either conservation or
renewables over thermal resources.
The authors of a study called "Green Power, Customer Choice and Clear Air" suggest that people
prefer renewable energy because the implication is that its end effect is that of a clean source of
energy. Conservation may also be seen in this same way, while each of the other fossil fuel
resources may be viewed as less environmentally desirable. In other words, conservation and
renewables may be seen as combined alternatives to fossil fuel rather than ranked as individual
choices.58
Consumer Attitudes toward Conservation and Renewables and Willingness to Pay
The evidence clearly demonstrates that there is very strong and broad public support for
renewables and conservation. As Barbara Farhar reports, in 1990, 59 percent preferred an
emphasis on renewables before oil, gas and fossil fuels, which all came in at 11 percent each.
When asked about research and development priorities for the Department of Energy, 34 percent
supported renewables first and conservation second. Natural gas, other fossil fuels (oil, gasoline
and coal) and nuclear all shared third place at 9 percent each.
Among five Texas utilities, all but one poll favored renewables over fossil fuel and over
importing energy from other States. In this instance, according to pre-town meeting polls, people
favored conservation above all other resources (conservation and renewables together were
chosen by 62 percent of consumers). When conservation and renewables were taken together,
58 McMahan,Ronald L.,Todd A.Myers,Jason McHahan,Michael Me Neill and David Mallery. The authors suggest that those of
us in the energy policy field tend to ask,"what"kind of resources customers want,when we would learn more by asking"why"
they want a particular kind of resource. We may miss the point if we"what"rather than"why." In other words,if customers want
clean alternatives to fossil fuel we need to look more broadly than just the optional generation choices we normally think of
24
consumers of all five utilities had strong preferences for green solutions for future resource
needs.
In 1996, the Sustainable Energy Coalition found that people preferred that renewables receive
first priority for research and development funding, followed by conservation. Fossil fuels and
natural gas came in third, with nuclear in fourth place.
At SMUD, nearly three-quarters of those surveyed preferred renewables as a first choice.
Research among a nationally representative sample of public utilities found that over half
preferred buying power from environmentally friendly utilities. Detroit Edison's customers
support renewable options over any other choice. Hawaii Electric Light Company customers
also favor renewables; in fact, 89 percent think the utility should use solar generation rather than
installing new line extensions.
In every instance, either renewables or conservation led polling results (Table 7).59 This pattern
is consistent with Barbara Farhar's findings in her 1993 work and again in her 1996 work. In
addition we have poll results from EWEB where 54 percent of respondents to a poll conducted in
Table 7: Surveys Ranking Renewables in Priority with other Resource Options
Survey Location % That Prefer Renewables
National. (Which new resource do you 59% (funding ways to use less energy was
prefer to fund first? Farhar) supported at 25%)
Sacramento Municipal Utility District 72%
Sustainable Energy Coalition 34% (conservation was second at 22%)
South Western Electric Power Company 28% (reduce need was first at 50%, fossil
fuels third at 13%)
Houston 58% (conservation was second at 20% )
El Paso 42% (conservation was first at 44%)
Information taken from surveys cited in this paper.
59 please refer to footnote 2 for discussion on using results from focus groups. The pre-survey from the three Texas utilities cited
here shows support consistent with the post-town-meeting results. This pre-polling data appears to be from scientifically selected
samples.The most significant change from pre-meeting polling and post-meeting results was a shift from support for renewables
first to support for conservation first. In either case,green options were more strongly supported.
25
1998 said they would be willing to pay an optional add-on charge to the electric portion of their
bill.60 However a large percentage of EWEB customers also felt that the cost of renewables
should be put in the rates of all ratepayers. (The respondents were asked, "On a scale of 1-5 with
1 being least preferred and 5 being most preferred, Please rate the following ways to pay for
renewable resources." The choices were: (A) Automatic, which was explained as meaning the
costs of renewable development would be covered in the rates of all customers; (B) Optional,
which means the option of an add-on charge for all customers; (C)None; and (D) Other.
Thirty-five percent of EWEB's customers gave automatic a 5, most preferred, and 25 percent
gave this option a 4, for a combined positive score of 60 percent.
In addition to the EWEB study, the 1997 CARES survey adds more recent evidence to show that
Dr. Farhar's conclusions in 1996 continue to be consistent with work completed in more recent
years.
When combined, the results of green choices far outweighed other options. This evidence for
green choices is consistent around the nation. Similar support exists in the Northwest. In the
Renew 2000 study, 59 percent of participants were sympathetic to environmental causes. At
Western Montana G&T, 61 percent agreed their utility should acquire resources having a neutral
or positive impact on the environment, but even more, 70 percent felt their utility should also
promote conservation.
At Salem Electric, 78 percent of respondents strongly supported investments in renewables.
EWEB customers rated their priority of resource choices with conservation first, wind second,
solar third, distributed solar fourth, and geothermal resources fifth. EPUD customers ranked
solar second behind conservation, with wind third. Sixty-one percent of PGE customers wanted
the utility to select various renewable resources as a first choice, while 100 percent felt it was
important for the utility to be environmentally responsible. Among CARES utilities, 88 percent
of customers said their PUDs should include renewables as one of their sources of electricity,
even when told they may cost more.
Northwest Consumers' Willingness to Pay
Northwest consumers appear to be as interested in renewables as the nation as a whole. They
want their utility to be environmentally responsible, and they clearly see renewables as a part of
any strategy to achieve that. But, does this mean that people are willing to pay more? The
available information on consumer willingness to pay consistently shows that large percentages
of people will pay something extra for green resources6t The evidence gathered, however, is not
always easily compared, nor are the conclusions of one study easily understood in light of
another. For instance, a number of studies ask only if consumers would be willing to pay
10 percent more for renewable energy. Since evidence shows that willingness to pay decreases
with the increase in amount, we only know from this question how many would pay 10 percent,
not how many would pay something less or more.
60 EWEB Green survey Analysis.
61 Farhar,Barbara C.and A.H.Houston.
26
When asked questions about willingness to pay, respondents in one national survey cited by
Barbara Farhar indicated that as many as 69 percent would be willing to pay between $6 and
more than $21 per month. Twenty-nine percent of these were willing to pay monthly increases
of$6 to $10, and 21 percent were willing to pay from $11 to $20 more per month 62
Ninety-five percent of SMUD customers were willing to pay something more for renewable
resources. This breaks out to 43 percent willing to pay 5 percent more, 27 percent willing to pay
10 percent, and 23 percent willing to pay between 15 and 20 percent more fi3 In Texas, over
80 percent of consumers in each utility (CPL, WTU, and SWEPO) were willing to pay from
$1 to more than $10 per month.64
In EWEB's survey, 56 percent indicated they would pay from $1 to over $10 a month.
Thirty-eight percent were in the range of$5 to above $10 more a month. In Orcas Power and
Light's study, 55 percent said they would be willing to pay 50 percent extra for renewable
energy. Sixty-six percent of CARES customers were definitely willing or probably willing to
pay $1 every two months. Fifty-eight percent said they were definitely or probably willing to
pay $3 every two months. Fifty-two percent were definitely or probably willing to pay $5 every
two months, and thirty-two percent were willing to pay $7 more every two months. Among
CARES commercial accounts, the percentages were about the same as for residential.es In
Ravalli, customers were asked if they would be willing to pay an additional 10 percent. Of those
who had an opinion, more (48 percent) answered yes or maybe, and, therefore, are open to the
possibility, as compared to the 47 percent who said no.' (Table 8)"&es
Survey responses varied from location to location with most indicating that consumers would
pay something extra. The range of amounts varies considerably, in part due to how the questions
were presented, and possibly also due to demographic factors. One factor that may account for
variations, if the CARES study is indicative, is the amount of prior knowledge and information
available in the community regarding conservation and renewable resources.
Should Green Resources Be Rate-Based?
Only a few surveys asked consumers whether they would prefer to "rate-base"renewables and
conservation. Those that did ask elicited very strong support for sharing renewable costs among
all ratepayers who can afford to pay. The CARES study found that, when given a choice,
residential and commercial customers overwhelmingly agreed "that it is only fair that all
households and business who can afford it help pay." Washington Water Power customers were
62 Farhar,Barbara. Energy and the Environment: The Public View,page 8.
63 ]bid,page 8 and table 10.
64 On Electricity Issues: Customer Survey Results.
65 EWER Electric Division Green Opinion Survey.
66 From Market Research paper,Ravalli County Electric Cooperative,Inc.
67 It is important to realize that,when given a choice between renewables,conservation,and a set of other options,renewables and
conservation will likely take some share from each other absent the other choice. If the premise that consumers see renewables
and conservation as both providing the same benefit,a less negative environmental impact,then it would be reasonable to combine
the two options to determine the numbers supportive of green resource strategies.
68 See footnotes number 2 and 53. The information in this table should not be considered equally weighted as it results from polling
data,self selected survey's and post town meeting polling.
27
Table 8: Survey Results Regarding Willingness to Pay Extra for Clean Energy Resources
Percentage willing to Amounts or Range
pay more
Cambridge report,National (Reported by 60% $6 to more than $21 pe
Farhar) month.
SWEPCO 84% $1 to +$10
WTU 87% $1 to +$10
CPL 86% $1 to + $10
EWEB 56% $1 to +$10
CARES 66% $1 every two months
(same CARES study) 58% $3 every two months
(same CARES study) 52% $5 every two months
Orcas Power and Light 55% 50% more
North Dakota 72% Something more (45%
said $6-$10)
Ravalli 22%yes, 26% maybe Willing to pay 10% more
Information from surveys cited in this paper.
asked if they would still support conservation programs if they knew that such programs would
be at least partially funded by all energy customers in the form of higher energy rates. About
two thirds said they would. The result was the same at EWEB. Seventy-two percent of Seattle
City Light customers preferred that cost should be put in everyone's rates, rather than paid for
through voluntary contributions.
Currently a great deal of focus is on marketing efforts to sell green. People's environmental
values are strongly correlated with support for renewables. At SMUD, 87 percent of residential
customers were largely in favor of their utility being environmentally responsible. The public
power survey conducted by RKS Research and Consulting also indicates strong support for the
environment. The firm asked consumers to rank the importance of attributes they would want
their utility to demonstrate. "Environmentally friendly" ranked first with low prices coming in
second. Of those who indicated environmentally friendly first, 71 percent said they would pay at
least 5 percent more. The Renew 2000 project found that 59 percent of focus group participants
rated the environment as a significant consideration when selecting products." Most
(59 percent) are sympathetic to environmental causes.
69 We want to make clear that focus group percentages are not to be taken with the same validity in terns of statistically representing
consumer interest. However,it is interesting to note the similarity between this focus group and other more statistically tested
results.
28
The Western Montana G&T survey found that 61 percent agreed that their utility should acquire
only resources having a positive or neutral effect on the environment. The report on the
Snohomish focus group discussion said that many participants thought there was a need to move
toward environmentally sensitive power resources. Seattle's statewide survey found that
73 percent reported that environmentally responsible power generation that protects salmon
habitat was either important or very important (Table 9).
Table 9: Survey of Those who Support Environmental Issues or Good Utility
Environmental Practices
Percentage
Sacramento Municipal Utility District 87% (72% in favor of renewable energy
resources)
Public Power(RKS survey)National 52% (ranked first in list of attributes ahead of low
cost at 31%)
Western Montana G&T 61% (agreed that utility should acquire resources
with a positive or neutral environmental effect
first)
Seattle (Washington statewide survey) 73% (reported that environmentally responsible
power generation that protects salmon habitat was
either important or vary important)
Survey constructed by the authors using information from surveys cited in this paper.
Demographic Variables and Support for Green Resources
Some customers are motivated to pay more for green resources than are others. Demographic
analysis shows variable support among different groupings. Younger people and women are
more likely to support renewables and conservation (see examples of individual studies in
Tables 3 and 4). In addition, people with higher incomes and more education are more likely to
support green resources. The sustainable energy coalition reports that 61 percent of college
graduates support the EPA Green Lights Program, compared to 41 percent of high school
graduates. Fifty-one percent of people with incomes between $25,000 and $50,000 support these
programs compared to forty-six percent of those earning under $25,000.
Utilities seeking more support and loyalty among younger consumers and women should
consider these demographic factors. Utilities will be more likely to develop customer loyalty if
they take actions consistent with their consumers' interest in environmentally sensitive resources.
Consumer Awareness and Green Resources
The more consumers know about green resources, the more they are likely to choose them. If
green power is added to a utility's resource base, there is likely to be a strong base of support. In
29
Texas, where support was measured for green resources before and after town hall meetings,
support for conservation and renewables increased (Figures 3, 4, and 5) after the meetings.
Among CARES utilities;support for green resources was greater depending on the degree of
knowledge about these resources. It follows that public education and increased awareness
regarding renewables and conservation should increase support.
Consumer Attitudes Toward Conservation and Willingness to Pay
Currently, utilities and policymakers are focusing on renewable energy resources, often asking
customers about these resources while neglecting conservation. When consumers are asked
about conservation as a green option, it is supported as well (Tables 2 and 3). Barbara Farhar
cited studies that showed conservation as a strong second to renewables as a choice for emphasis
in national energy policy. At Montana G&T, 70 percent wanted their utility to promote
programs to increase conservation. In the EWEB study conducted in June 1995, customers
ranked conservation as the first priority for energy resource choices. Conservation was first
choice of 83 percent of EPUD customers, followed by various renewable resources.
Conservation Interest Increases with Education
When people are provided additional information about renewables and conservation, they may
well move from ranking renewables higher than conservation to the other way around (Figures 3,
4, and 5). In CPL prior to the town hall meeting, only 11 percent indicated that the utility should
pursue conservation first, but after the discussions at the town hall meeting that number rose to
48 percent. Prior to the meeting, 67 percent supported renewable resources first, but after the
meeting this number went to 16 percent. WTU and SWEPCO had similar results before and
after the meetings.
Support for the Environment Correlate to Conservation Support
Support for conservation programs seems to correlate highly with consumers' attitudes toward
environmental quality. For instance, at Western Montana G&T, 61 percent of consumers felt
that utilities should acquire resources with a positive or neutral effect on the environment, and
70 percent wanted their utility to promote programs to increase conservation. At Sacramento
PUD, 87 percent strongly supported the environment, while 72 percent supported conservation.
The Enron/PGE study rated consumers'judgments about their individual degree of involvement
in environmental activities. Thirty-three percent rated themselves as very active, and forty-eight
percent rated themselves as moderately active. The percentage of people supporting solar as first
priority (41 percent), wind (9 percent), and geothermal (10 percent), compared to coal at
2 percent and natural gas at 9 percent, indicates a high level or support for renewables. This
correlates with the high and moderate levels of environmental activities.
Low Income
The few surveys that addressed the issue found that consumers support low-income programs.
While support for subsidized programs is higher among low-income consumers, it is still
reasonably well supported (according to the available data) by higher-income consumers.
30
Overall Findings
Conservation support seems to be stronger in the Northwest than in the rest of the nation, at least
in terms of relative standing with renewables. Both are very popular among consumers. Without
question, there is very strong support for environmentally benign resource options in the
Northwest and nationwide. Whether faced with a deregulated market or not, it is obvious that the
demand for environmental stewardship is a theme utilities must recognize.
However, until utilities have more experience in marketing green power and until utility
commitment to renewable energy is reflected in aggressive marketing strategies, full consumer
support for green energy products will remain untapped. Education and good marketing can help
consumers better understand choices and will improve market penetration.
Further Research Opportunities
Questions have been raised about the approach of marketing green power as a separate product.
If consumers are reluctant to take on the risk of renewable energy, they may wish to see the risk
shared. Since renewable energy is favored for its effects on the environment, it is possible that
many people see the benefits as something shared by everyone. COZ, after all, is a problem that
knows no boundaries. This implies that cost for development and support of renewable energy
resources and conservation is more reasonably spread among all consumers. Further research
could determine if the support that appears to exist for rate based renewables development is
strong in the northwest and nationally.. It would then be useful to understand what the underlying
assumptions supporting this are within the public.
Many questions have arisen during this paper regarding success of green power products.
Survey's do not always correspond to the actions people taken when given.the opportunity to
purchase these products. Early reports from some green marketing offers do not seem consistent
with what would be expected if people acted consistent with the data from the surveys cited in
this paper. Is this due to consumer reluctance to actually pay more when resources are fairly
compared and understood? Do consumers who support green feel that these products are not
what they really want? Or is it possible that people believe that all consumers should be charged
for clean products added to the resource base? How are green power products selling compared
to expectations for other premium products at the same point in the market cycle? Is the
packaging of the product done in a way that insures consumers "see or feel"that the energy is
clean? The perceived support for clean energy resources would suggest that the demand is there.
If consumers are not purchasing the product is it because we do not understand how to market
the product? How can we best satisfy this demand?
Research on sub-regional differences in support for renewables would also be useful. The .
evidence we have suggest that support for conservation and renewables ranges from very strong
to moderately strong in most parts of the region. In some instances a majority may not have
indicated a willingness to pay more for renewables and conservation, but, in these cases, the
options provided were limited. In at least two of the surveys consumers were asked if they
would pay 10 percent more. Since the range of support for paying more was limited the numbers
indicating support were smaller. Even in these cases support was strong. Care needs to be taken
31
to ensure we understand the issues. After all, an amount as small as a 5 percent or even a
2 percent increase in rates would provide significant advances in the amount of renewables or
conservation developed in the region.
Compelling Conclusion
The compelling conclusion from a review of the evidence is that Pacif c Northwest consumers,
like their counterparts in the rest of the nation, consider conservation and renewables as
environmentally important. Clearly,Northwest consumers prefer that their utilities practice good
environmental stewardship when selecting new resources.
32
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