Pacific Gas & Electric Seeks to Offer Another Value-Added Product to Bundled Customers

Pacific Gas and Electric has applied at the California PUC to establish a Green Option Tariff, to be available to all PG&E bundled electricity customers.

"PG&E's customers, as well as governmental and public leaders in PG&E's service area, have requested that PG&E offer a Green Option electricity rate to its customers, so that customers can choose to support renewable energy beyond the Renewables Portfolio Standard ('RPS')-eligible content of PG&E's standard electricity rates," PG&E said.

The Green Option Tariff would allow the customer to elect 100% green power, under which PG&E would purchase incremental Green-e Energy RECs in an amount equal to the difference between the green power provided under the RPS and the customer's actual usage.

The Green Option Tariff would alternatively allow customers to purchase blocks of RECs.

"Based on current estimates, PG&E expects to initially price the Green Option program at a modest premium above the bundled electricity rate otherwise applicable to a participating customer. In order to provide flexibility in light of likely changes in market prices for RECs and actual program costs, PG&E will have authority to adjust the Green Option price either down or up, but not to exceed 2 cents/kWh above the otherwise applicable bundled rate. PG&E will exercise this pricing flexibility through no less than three months' notice to customers and a Tier 1 advice filing," PG&E said.

PG&E expects that participating residential customers will pay on average about $6.00 each month.

All administrative, marketing, and procurement costs incurred by PG&E to fund the Green Option will be borne by participating customers only.

Over the course of the program, costs in excess of revenues received from participating customers, to the extent that they are not recovered through rates charged to participating customers, "will be borne by PG&E."

"In order to maximize the ability to attract customers to the Green Option early in the program, PG&E expects to contract all or a significant portion of its marketing and REC procurement requirements to a third-party provider with existing experience and a record of success in 'green pricing' programs," PG&E said.

"PG&E intends to include reasonable incentives in the third-party contract in order to manage both start-up and ongoing marketing and REC procurement costs and price risks consistent with industry 'best practices' and renewable energy market benchmarks achieved by other 'green pricing' programs across the country. The third-party provider would operate under the active management and direction of PG&E, and the third-party's costs would be recovered solely from program participants. Likewise, any REC procurement costs that PG&E incurs itself and associated internal costs would also be borne by participating customers only," PG&E said.

Every five years or earlier if PG&E terminates the Green Option, PG&E will file an advice filing for Commission approval for the disposition of any revenues PG&E may have collected above the actual costs of the Green Option during the life of the program. PG&E will not earn a profit or any incentive payment under the program.

PG&E's most recent value-added retail offering, a carbon offset product called ClimateSmart, attracted only 31,000 customers over four years, with its $16 million in costs borne by all ratepayers. The program was terminated at the end of 2011.