California Power Crisis: Impacting the Green Power Market.

News Editors and Energy/Environmental Writers

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 8, 2001

A national green power non-profit has pooled industry experts and resources to provide an accurate overview of the California energy crisis and its effect on green power choice in the state. The Center for Resources Solutions in San Francisco has put together a striking summary of facts that affected California's green power market and also has recruited leading energy authorities to document events leading to the California energy crisis.

Facts for the media can be can be found on the CRS website: http://www.green-e.org/media/index.html:

-- "How We got into the Energy Crisis" a paper on the complex web of events
leading to the energy crisis by William Marcus of JBS Energy, Inc. and Dr. Jan
Hamrin, executive director of the Center for Resource Solutions can be viewed
at http://www.green-e.org/media/ crisispaper.pdf

-- A list of "The Top Ten Factors that Affected California's Green Power
Market" can be viewed at http://www.green-e.org/media/ topten.pdf

-- A "California Green Power Update" that went out to green power industry
advocates can be viewed at http://www.green-e.org/media/ update.pdf

Three Factors to remember that helped drive the crisis:

California's Green Power Market: Success Despite Disintegration

1. Despite A Flawed Deregulation Bill, Surprising Market Success:

A major flaw in California's restructuring legislation was a

poorly designed retail market. Even though the law made it

virtually impossible for retailers to economically compete

with the incumbent utilities, the green power market appeared

as one of deregulation's few successes. Consider the following

facts:

-- Over 90 percent of the 200,000 consumers who at one time

switched power suppliers in California chose a green power

product from one of eight companies.

-- The amount of power sold by these companies resulted in

the following pollution savings in 1999 alone: 950 tons of

nitrogen oxides (which contributes to urban smog and

respiratory disease) and 114,500 tons of carbon (a major

contributor to global climate change).

-- An audit conducted by the Center for Resource Solutions

(CRS) discovered that consumers received more renewable

energy than they paid for. While some customers opted for

products based on 50-75 percent green supply, the power

they received in 1999 was 99% renewable.

2. Drivers Behind the Market Collapse: Ironically, successful

efforts by utilities to undermine California's retail market,

a necessary requirement if wholesale electricity competition

was to work, has left them facing bankruptcy serving the

millions of customers they successfully captured. Additional

short-sighted actions contributing to the crisis:

-- Natural gas deregulation in 1992-93 eliminated incentives

to store natural gas in back-up reservoirs, adding to the

recent run-up in natural gas prices.

-- Utilities abandoned approximately 2,000 MW of energy

efficiency efforts California -- enough power to supply

two million homes. If implemented, the efficiency savings

could have helped prevent blackouts, ameliorated price

spikes, and provide the conditions for California green

power choice.

-- Almost 1400 MW of renewable and cogeneration capacity (684

MW Edison, 246 MW PG&E, 451 MW SDG&E) was to be acquired

through an auction that was bid but never purchased

because the utilities petitioned the FERC to kill the

auction as discriminatory against other power generators.

Edison claimed that it did not need power until 2004 one

month before it cancelled the conservation on which that

forecast was based (see second bullet below).(a)

California spent $90 million of ratepayer money in AB 1890

(the state restructuring bill) to offset liability costs

incurred by the utilities for killing these contracts and

didn't get a single kilowatt-hour.

3. Green Power Is Succeeding Elsewhere: Green power is

flourishing in other states:

-- The Green-e Renewable Energy Certification Program is

active in Pennsylvania, New Jersey, and other Mid-Atlantic

states, Connecticut, New York, and other New England

states, Ohio, and Texas. These markets feature over 100

thousand green power customers.

-- Utility green pricing programs in deregulated states are

operating in the Pacific Northwest; Tennessee Valley;

Iowa; Colorado; Georgia, Alabama, Minnesota and Wisconsin.

Tens of thousands of customers are purchasing green energy

in these markets.

-- While roughly one percent of California consumers switched

to green power, over 10 percent of Pennsylvanians have

switched to new providers. Rules make the difference --

Pennsylvania made it easier for consumers to save money

when switching.

The Center for Resource Solutions is a non-profit based in San Francisco's Presidio that works across the U.S. and throughout the world to encourage sustainable growth and promote the use of clean energy. More information on CRS is available at www.resource-solutions.org.

(a) Southern California Edison Company, Notice of Ex Parte Communication, I. 89-07-004, July 25, 1994.