Big changes are afoot in the structure of Austin Energy's innovative GreenChoice 100% renewable electricity program. For those who aren't on the program yet, Austin Energy's GreenChoice is an award winning electrical supply offering available to both homeowners and businesses since 2000 and has been at the forefront of enabling citizens to take meaningful actions to advance the shift towards renewable energy as a part of a smart, resilient, domestically-sourced energy strategy.

 

The new program is flawed as proposed and I believe that the City Council should send this proposal back for further development. Of specific concern is that it introduces the false concepts that renewable energy is always more expensive and that it's costs are not fixed over time. 

 

GreenChoice's mission has been a critical one and it has delivered billions of kWh of impact over the past 13 years. In 2012 alone, public documents show that 2 billion kWh (worth $200m @$.10/kWh) of GreenChoice and other renewable energy supplies were delivered to Austin Energy customers. By demonstrating that a significant segment of electricity consumers and businesses are personally committed to the idea that a diversified electrical generation plan must include renewable sources, and who are willing to sign long-term power supply agreements to back up their convictions, Austin Energy (AE) is able to go out and provide power supply contractors with a bankable commercial customer contract with which to get Big Finance guys to fund multi-million dollar construction of wind farms. And those wind farms are in real Texas places, located on Texas ranchland with names that may sound vaguely familiar: Sweetwater, King Mountain, Whirlwind, and Hackberry. New contracts just signed in June will have a huge bump in capacity adding 567MW from coastal wind sources in McAllen, Nueces County, Starr County and Corpus Christi. 

 

As a result of these new contract 150% larger than all the past contracts combined, GreenChoice is evolving its offering. The main characteristic of the past batches, as can be seen on the companion graphic to this article is that customers could choose 100% renewable energy at or above the current price of brown energy but at a fixed price for 10 years. This fixed feature is unique to renewable energy because the "fuel" that powers them is free. Fossil fuel or nuclear plants are not so lucky. Since wind farms typically sell power in multi-year fixed price batches, the product is not saddled with the risk of rising energy costs. The farm is built with long term financing, the wind is free, and Operation & Maintenance costs are baked in with an appropriate labor inflation buffer. And over time, renewable energy has always gotten cheaper. In fact the new coast wind contracts AE procured is for energy at 25-year fixed prices between 2.3 cents/kWh to 3.3 cents/kWh, or a simple average of 2.8cents/kWh. That is below the proposed 2014 variable Power Supply Adjustment (PSA or fuel) charge of 3.7 cents. Indeed in Austin Energy's press release announcing the signing of these fixed-price contract they noted that the new wind farms "are expected to have a favorable impact on the Power Supply Adjustment (fuel) charge when they come on line [beginning Q4 of 2014]."

 

 

However the proposal for the new Green Choice product appears to takes very little of the historical success nor the actual structure of these future supply contracts into account. The new Green Choice product will be A) Variable pricing tied to the PSA and B) higher than the prevailing PSA by 1 cent/kWh or 27%. They may offer a 3 year fix on the pricing but no more. Since Austin Energy's affordability goals state that total billed cost of electricity should not go up more that 2% per year, any chance of a new GreenChoice customer coming out better under any 3-year scenario is nil.

 

So there you go. How about buying the new and improved GreenChoice that always costs more than the going rate, will cost more even if fossil fuel energy spikes, and won't let you hedge your bets on the future cost of power even though Austin Energy is enjoying a 25-year fixed price on that supply? I want to see GreenChoice succeed, but it's hard to imagine that this product structure has been put in front of many focus groups, surveys or even anecdotal research. GreenChoice needs to be structured as a product that is good for sound financial, hedging and even marketing reasons rather than just bleeding hearts or bleeding wallet-types. Renewable energy is for rational types who want a reasonable bet that they might save some money in the long run and as a reward they'll help grow the demand for renewable energy to drive down the price. For the love of GreenChoice, I urge the City Council to kick this idea back to the drawing board.

 

Citizen input will be required to keep Council from rubber stamping this proposal. Please take a moment to email all council members and tell them GreenChoice should continue being a fixed price offering, and share this information with others.