UL 18. NUMBER OF PAGES 19b. TELEPHONE NUMBER (Include area code) Standard Form 298 (Rev. 8/98) Prescribed by ANSI Std. Z39.18

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"Green pricing" is an optional service through which customers can support a greater level of investment by their electric utility in renewable energy technologies. Electric utilities in 29 states are now implementing green-pricing programs. This report examines important elements of green-pricing programs, including the different types of programs offered, the premiums charged, customer response, and additional factors that experience indicates are key to the development of successful programs. The best-performing programs tend to share a number of common attributes related to product design, value creation, product pricing, and program implementation. The report ends with a list of "best practices" for utilities to follow when developing and implementing programs. 15. NUMBER OF PAGES 14. SUBJECT TERMS Utilities; green pricing; electric utilities; green power; green marketing; green energy; green electricity 16. PRICE CODE 17. SECURITY CLASSIFICATION OF REPORT Unclassified

For the first time in many decades, consumers are being given a choice of who supplies their electric power and how that power is generated. One of these choices is to support electricity generation from more environmentally beneficial energy sources. The term "green power" generally refers to electricity supplied in whole or in part from renewable energy sources. More than one-third of all U.S. consumers now have an option to purchase some type of green power product, from either their regulated utility provider or in competitive markets. As competition spreads in the electric power industry, more consumers will have this choice. Green power marketing has the potential to expand domestic markets for renewable energy technologies by making renewable electric service available directly to retail consumers. Traditionally, renewable energy development has been limited by the willingness of regulated utilities to invest in these resources on behalf of all customers. Customer choice allows consumers to effect resource decisions in the retail marketplace. In survey after survey, consumers have expressed a preference for cleaner energy and a willingness to pay more, if necessary, for these sources. 1 Twenty-four states and the District of Columbia have enacted legislation or adopted rulemakings to open their power markets to competition. 2 As of July 2000, green power was being competitively marketed to retail customers in five states: California, Connecticut, Maine, New Jersey, and Pennsylvania. The number of utilities with green pricing programs continues to grow and now totals more than 80. The purpose of this report is to provide descriptive information on green power market trends and programs in both competitive and regulated markets. Overview Competitive Markets Green power marketing refers to the sale of green power in competitive markets, where multiple suppliers and service offerings generally exist. As of July 2000, retail consumers can purchase competitively marketed green power in California, New Jersey, and Pennsylvania, and to a lesser extent in some New England states. Green power is also being sold competitively in wholesale power markets in Illinois and New York (Figure 1). California and Pennsylvania have been the most active competitive markets for green power. In Pennsylvania, market rules were established that have encouraged customer switching-as of July 2000, 10% of eligible customers had switched to an alternative supplier. Of these customers, it is estimated that about 15% have switched to a green power marketer. And while the market rules established in California do not encourage customer switching, readily accessible renewable power sources and state-based market incentives have encouraged a large number of companies to sell green power in the market. Because of these incentives, virtually all residential customers that have switched suppliers, and many commercial customers, are receiving green power.

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