A recent press release from Governor Patrick’s office joined the unanimous praise for the City of Newton:
Last week, Mayor [Setti] Warren signed a contract requiring 100 percent of municipal and school department electricity needs – equal to 70 million kilowatt hours over the next three years – come from renewable sources starting on July 1, 2012. The initiative will save the city over $300,000 over the next three years…Newton’s decision to power 100 percent of its electricity needs with ‘green’ and renewable power …provides a model for other Massachusetts communities to emulate…Another feather in Newton’s cap.
Going green AND saving $300,000. Who could oppose a win-win deal like this? Without doubt someone at our City Hall—Mayor Davis, perhaps?–is hoping to make Cambridge the first community to emulate Newton’s model.
A little research reveals that the story is misleading on two essential points:
First, the headlines make it appear that Newton saved money because their green energy is cheaper. This clearly does not pass the smell test; even environmentalists admit that the cost of renewable energy is higher than coal and natural gas, although they might argue that it’s worth spending a few pennies to save the planet. Green electricity however costs more than a few pennies. Cape Wind hopes to sell electricity at 18.6 cent/kwh, and residential customers in Massachusetts who choose the “NSTAR Green 100” option (100 percent of their electricity from renewable sources) pay an 87 percent premium of 6.4 cent per kilowatt hour on top of the 7.9 cent/kwh base rate. Under this plan, Newton’s 70 million kilowatts (23,333,333 per year) ought to entail a $1.4 million annual surcharge on top of the base cost of $1.8 million. A far cry from saving $100,000 a year.
Newton reports that it negotiated a rate of 6.6 cent/kwh with Reliant Energy, a Texas energy company. (Reliant, by the way, was indicted on criminal charges in the 2000 California brownout fiasco and along with Enron was among George W. Bush’s biggest campaign contributors—funny how things change when you cloak yourself in green.)
Newton indicates that it got a good deal because they negotiated with power companies through a reverse auction, and, as is the case for all large customers, prices are lower when you buy in bulk. Newton’s Chief Financial Officer Maureen Lemieux however revealed to Newton Tab reporter Chloe Gotsis that the City could have saved $450,000 by contracting for non-green electricity. Rather than saving money, Newton’s green electricity costs an additional $50,000 per year.
What’s more, Newton’s “savings” of 3.33 percent don’t look so impressive when you consider that the price of natural gas is half what it was a year ago and everyone is saving money on their electric bills. NSTAR and National Grid recently announced that they are voluntarily cutting electricity rates by 16 percent, from 7.9 to 6.6 cent/kwh for residential customers, coincidentally the same price that Newton is paying. (The Green Option premium was recently raised in March, and no announcement was made that it will be cut; a 6.4 cent premium on a base rate of 6.6 cent now represents a 97 percent surcharge.)
A second misleading part of the story—and the reason why Newton’s green electricity seems to be so cheap: unlike the NSTAR green option, Newton is not actually using renewable energy, despite Lemieux’s claim that “Newton’s energy will come from 100 percent wind power.” The electrons supplied to Newton will come from nearby gas and coal power plants, not from a real wind farm. New England produces very little green energy—and in fact is shutting down windmills in response to noise complaints. Furthermore, wind power generates a mere 2.3 percent of the nation’s electricity (2010); converting to wind power therefore is hardly a model that every community can emulate.
The Newton Tab article contradicts Lemieux’s statement in the next paragraph, pointing out that Reliant Energy will purchase “renewable energy credits.” Or maybe not: Reliant’s website clearly states that they do not purchase REC’s; rather they use “carbon offsets,” which support “a variety of projects that are certified to keep greenhouse gases from entering the atmosphere.” Projects include sustainable forestry, methane capture at landfills and “livestock biogas.” Reliant also boosts its green credentials by contributing through its EcoShare program to organizations like the Texas Parks and Wildlife Foundation and the Galveston Bay Foundation.
These may be fine organizations, but the end result seems to be this: Newton has locked in a higher rate for three years, in order to levy a hidden tax through the electric bill that purchases bovine flatulence and makes donations to Texas environmental organizations. I hope saner heads prevail in Cambridge.
Peter Wilson lives on Huron Avenue and is Secretary of the Cambridge Republican City Committee.