United States: Green Power Latest Casualty of California Crisis

Starting last fall, California has seen a steady exodus of green power suppliers. The Center for Resource Solutions, the organization that administers the Green-e program, gives several reasons for this decline, including the inability to acquire the credit necessary to purchase power at high supply prices and the fact that electricity transactions were linked to the now-defunct California Power Exchange clearing price. Some suppliers structured their prices so that they charged a percentage discount off the PX price. When the price for power became too high, however, this discount became financially unsustainable. Currently, only Commonwealth Energy and Power Source are still open for business in California (Commonwealth, as of January 2001, has 57,000 customers).

If the previous deregulation legislation and market conditions created problems for green power marketers, new developments are only making it worse. New state legislation is in place that allows California to buy long-term power on behalf of the utilities. However, that same legislation also bars customers from switching providers. The government currently is securing deals at high prices and wants assurance that customers will continue to pay the high cost of electricity even if market prices fall. While a number of green power marketers had left the state before the legislation was introduced, the new market rules virtually guarantee the end of competition. Sen. Debra Bowen is working on a supplemental bill to clarify how alternative providers can continue to operate, but there has been little agreement. Go-Green.com, Utility.com and Green Mountain Energy are the latest casualties of the California market.
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