Green pricing for electricity allows consumers to voluntarily pay a premium for more expensive energy sources that are considered better for the environment. The initiative presumes that the buying public believes: (1) the existing corpus of environmental regulation has not fully corrected the negative effects of producing electricity from hydrocarbons (oil, natural gas, orimulsion, and coal); (2) nuclear power is not environmentally friendly despite the absence of air emissions; and (3) certain renewable technologies are relatively benign for the environment.

Open-Access Restructuring: Driver of Green Pricing

Electricity typically has been purchased from a single franchised monopolist or municipality. The physical commodity (electrons) and the transmission service were bundled together into one price. The power could be generated (in terms of market share in the United States in 1998) from coal (56%), nuclear (20%), natural gas (11%), hydro (8%), oil (3%), biomass (1.5%), geothermal (0.2%), wind (0.1%), and solar (0.02%). Recently, wholesale and some retail markets have been unbundled, allowing...