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Naked City

AE Eyes Higher Green Rate

By Mike Clark-Madison, January 9, 2004, News

The cost of wind power is going down -- to the point where it's as cheap as natural gas (whose price is going up) as an electricity source, or even cheaper. But Austin Energy is asking the City Council today (Thursday) to approve a higher price for new customers for AE's GreenChoice program -- an ironic testament to the program's success and the growing perception of the value of renewable energy.

Under the utility's proposal, new subscribers for "Batch 3" of GreenChoice would pay 3.3 cents per kilowatt-hour, compared to the 1.7 or 2.8 cents per kWh (for batches 1 and 2, respectively) paid by current subscribers to the program. (Those charges will remain unchanged.) The utility plans to buy and sell 130 million kWh of electricity in this new GreenChoice offering -- and may seek to offer even more, depending on customer demand, as it pursues the City Council's goal of having 5% of Austin's electricity come from renewable sources by the end of 2004. (AE's 2002 green-power sales of 252 million kWh already make GreenChoice the nation's largest retail renewable-energy program.) As with the first two GreenChoice offerings, most of this power will come from wind -- notably from Cielo Wind Power's King Mountain facility near McCamey -- with small amounts coming from a bio-gas (methane-to-energy) facility near San Antonio and from Austin Energy's various small solar installations. And as with prior GreenChoice offerings, Batch 3 customers will lock into their kWh rate for 10 years.

This charge is equivalent to the fuel charges paid by AE's traditional-power customers -- which, due to spikes in natural gas prices, have substantially increased in recent months. As of Jan. 1 -- with the last of three installments of AE's fuel-charge hike -- the charge stands at 2.796 cents per kWh, which means customers for the first two batches of GreenChoice are no longer paying a premium for their electricity. Yet AE customers and Austin citizens have repeatedly expressed a willingness to pay a little extra, both for clean energy and for GreenChoice's 10-year guarantee of stable electric rates. As well, the growth in both the urban demand for and the West Texas supply of wind power hasn't been matched by growth in the power-transmission capacity between the two locales, leading to congestion problems and headaches for the managers of the state's power grid, which AE will have to help pay to fix.

The proposed new GreenChoice rate was endorsed unanimously by both the city-appointed Electric Utility Commission and the Resource Management Commission. The RMC, one of the focal points for clean-energy advocacy in Austin, got a commitment from AE for annual review of the charge with an eye toward possible future reductions. Assuming the City Council's approval, AE anticipates having its new GreenChoice offering ready to go by the end of January.

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