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Why green-power premiums may fade

Pricier options may become obsolete if government requires utilities to bring more renewables on line.

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Voluntary programs could increase their impact in years ahead as more Americans warm to the importance of renewables, says Larry Chretien, executive director of the Energy Consumers Alliance of New England, a pro-environment advocacy group in Boston. He's urging lawmakers to require utilities to retain and promote voluntary programs.

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"The point … is to bring more renewable energy into the grid than would happen otherwise," Mr. Chretien says. Mandated levels "aren't nearly [high] enough to make the changes to our energy system that many of us believe need to happen.... We want to be sure the voluntary consumer is given a chance."

Observers say green-purchasing programs have helped utilities inform the public that shifting to renewables has a cost, Mr. Crisson says.

By documenting a growing interest in renewable power, these programs have also helped convince lawmakers to press ahead with minimum standards and target dates, Ms. Bird says.

Now that those goals have largely been accomplished, the question becomes: What purposes, if any, will these programs serve in the future?

Voluntary buying programs aren't likely to vanish anytime soon. Both Mr. Moline and Crisson expect utilities to keep offering them as a service to environmentally minded customers who may not be able to harvest power themselves. But rather than beef up expensive marketing for these programs, Crisson says, utilities are likely to start asking: "What's our exit strategy?"

"One lesson that's been learned over time is that you have to reach out to [customers] and make them aware that the program is being offered," Bird says. Once customers sign up, she says, they tend to be "sticky" and keep paying premiums even as mandates take effect, and despite a rough economy.

Free marketers, who generally prefer voluntary programs to government-mandated quotas, counter that most customers aren't drawn to pricier options in the first place.

"When people are faced with a choice, they generally move away from expensive power," says Jerry Taylor, a senior fellow at the Cato Institute, a free-market think tank in Washington, D.C.

Meanwhile, utilities are eyeing other options to help them reach renewable-energy targets. In Florida, where some voluntary purchasing programs have attracted just a few dozen buyers, municipal utilities see more promise in providing incentives to homeowners to install solar panels and sell power back into the grid, Moline says.

Florida municipal utilities "have migrated to a different type of a program," he adds. "They're now saying to customers: 'Instead of paying a buck a month, you can invest in photovoltaic [solar panels], and we'll pay you 15 cents per kilowatt hour. That's a much better deal for you, and it gets more renewable energy into our community faster.' "

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