In a restructured electric system, local governments may be able to craft programs that advance consumer desires for a cleaner power system, while still delivering the financial savings and the greater variety of services and products sought by fans of restructuring. Alternatively, fiscal stress, ideological opposition and daunting challenges in other policy arenas may limit local governments to a minor role in new energy markets. As Nancy Day, the vice president of New Energy Ventures (one of the few power marketers working with local governments) politely phrases the problem, "Local governments are not early adopters."36
The challenges facing a local government wishing to mount a green aggregation initiative are mostly political. Before entering the electricity sector, local governments will need to communicate clearly with their citizens and accumulate political support. In particular, they will need at least to consider the following controversial issues:
How costly is green aggregation?
Clean renewable resources often cost more than dirtier alternatives. Municipal green aggregators will have to develop programs that deliver both economic benefits and a cleaner environment. To do so, they might link investments in cost-effective energy efficiency measures, which can lower customer bills, to investments in renewable energy systems. Municipalities might also divide the savings from electric commodity purchases between direct customer rebates and the purchase of renewable resources. Above all, policy makers must show citizens that the local economy will benefit when their electricity purchases support local companies generating power from local renewable resources, rather than distant power marketers.
Is the expertise available?
The electricity sector is complex and unstable. Local authorities may lack the financial and technical expertise to master the complicated details associated with renewable energy purchasing. Local authorities must demonstrate that their experience in providing diverse services for their constituents - trash pick-up, water, recycling and the like - makes them natural aggregators, competent to master the challenging new electricity market.
Are public green aggregation programs more appropriate than private efforts?
Skeptics of municipal green aggregation argue that private firms can more efficiently exploit the green market - if it exists - than governmental programs. Policy makers seeking to promote renewable energy will need to convey that environmental protection is a public good, perhaps unlikely to be delivered by a competitive marketplace. They must further convince their constituents that a green aggregation by local governments will enjoy lower transaction costs than private efforts, while delivering higher standards of consumer protection. At the very least, local governments must aggregate their own municipal loads to patronize sellers of clean energy.
Does the local government enjoy credibility and citizen support for expanding its role?
Many Americans react warily to the suggestion that government should acquire a new function. To initiate green aggregation activities, local authorities will need to demonstrate clearly the public benefits of a clean power system and assure their constituents that they are capable of carry out the task efficiently.
Can green aggregation permit customer choice?
For many Americans, individual choice is a prized civic right. While some consumers may be delighted to let local governments assume the complicated task of selecting a power provider and negotiating a contract, others may object sharply to what they perceive as a denial of their right to choose. Policy makers will have to design their aggregation programs either to allow citizens to "opt out" or to convince the community that the sustainability of the electricity system requires and justifies forced aggregation by local authorities.
Each of these issues concern political will and credibility. Policy makers will have to demonstrate that green aggregation will benefit citizens and that local authorities can deliver an efficient program.