Month: May 2016

PSE and Customers Win with Coordinated Marketing and Outreach

Western Washington is an area of the country widely known for cloudy skies. As the popularity of solar power grew around the country, residents of the Pacific Northwest tended to look the other way, incorrectly classifying solar as not for me. In 2013 as PSE and their 3Degrees support team set out to grow the program, they thought the misconception over solar could actually be used to their advantage.

The effort, coined “Year of the Sun,” was a year-long campaign that positioned solar energy at the core of its marketing and outreach efforts. Of course the resource was always positioned as one of a mix of fuels but by leading with highly recognizable solar, customers could more easily make the jump to what defines “renewables” and get one step closer to understanding the choice before them.

winsolarpanels copy
The campaign plan emphasized multiple impressions that built off of one another along with strict adherence to branding styles across all channels:

  • Digital and print media (paid and earned)
  • Direct marketing through the mail and bill package
  • Person to person outreach
  • Solar and sunshine themed thank you gifts

The Results

By the end of the year, the campaign reached over 100,000 account holders and resulted in 10,000 new PSE Green Power program participants – the greatest increase over a single year in the history of the program. It also earned media attention in several local publications, hundreds of views of the Solar Works video and new social media followers. Traffic to the green power web pages also increased by 58%.

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The Icing

Once target participation and expanded awareness goals were met, the campaign was deemed a success. Just the same, winning an award doesn’t hurt. In 2014 the campaign was recognized at the Renewable Energy Markets conference for its effort in building the green power market as the first ever winner of CRS’ Leadership in Green Power Education.

3Degrees outreach team attended hundreds of events ranging from farmers markets and chamber meetings; and knocked on thousands of doors.

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About PSE

PSE’s Green Power Program is one of the largest in the country and consistently appears on NREL Top Ten lists for participation and overall sales. 3Degrees has partnered with PSE on their Green Power Program since 2009. Since then program participation has increased by 21,000 new accounts. A number of tactics including direct marketing and outreach are used throughout the year to manage attrition and ensure growth.

VPPAs: Understanding Dodd-Frank Requirements

people sitting in an office building, silhouetted against backdrop of a city

Virtual Power Purchase Agreements (VPPAs) are a relatively new way to buy renewable energy, providing companies with a financial hedge against future energy prices and a new mechanism for meeting their corporate environmental goals. But these contracts are also complex and it is important to understand how they work.

With a VPPA, an organization buys two things: a hedge against potentially rising electricity prices, and the environmental benefits associated with that electricity. Under a VPPA, the buyer does not take physical delivery of the electricity (hence the word “virtual” in its title). This is attractive to buyers because it allows them the benefits of a standard PPA agreement without being required to schedule for, accept delivery, and redeliver the underlying electricity.

A VPPA is a “contract for differences”. A renewable electricity generator and a buyer agree to a fixed price for the electricity purchased. This is compared to the price of electricity at a given point on the electricity grid on the settlement date(s). If the price on the grid is greater than the VPPA price, the generator pays the buyer. If lower, the buyer pays the generator. One party pays the other the difference between the market price and the VPPA price, hence it is called a contract for differences.

Dodd-Frank and its implications for VPPAs

The Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as “Dodd-Frank”) was passed in the wake of the 2008 financial crisis and was intended to reign in the misuse of financial derivatives1. Enacted in 2010, Dodd-Frank regulates parties transacting in “swaps,” which are a type of derivative.

A swap is a transaction where there is no physical delivery of a product, but instead there is a cash settlement, based on the movement of an external market price. Swaps are regulated by the Commodity Futures Trading Commission (CFTC).

Although the CFTC has not yet considered VPPAs to determine if they are swaps, it is likely that VPPAs are swaps, making the parties transacting in swaps subject to Dodd-Frank requirements. These requirements can be met with appropriate foresight. Dodd-Frank regulatory requirements include clearing2, margin3, registration, reporting, and recordkeeping. The vast majority of VPPA buyers will be able to take advantage of exemptions from clearing, margin, and registration obligations. Buyers need to have strategies in place for reporting and recordkeeping compliance.

Reporting:

The parties to the swap agreements are required to report on the terms of the swap, post-execution changes to the swap terms, and file quarterly reports to CFTC designated entities. In the terms of the VPPA agreement, it is permissible that this responsibility be assigned to the electricity seller. 3Degrees recommends this approach as a way to allocated this burden to the seller, who is likely more familiar with Dodd-Frank requirements.

Recordkeeping:

Both parties are required to maintain swap transaction records indefinitely, and 3Degrees recommends that parties maintain both hard and soft copies of all swap records.

Additional detail to share with your legal counsel regarding Dodd-Frank compliance can be found here: PDF

Conclusion

VPPAs are a very visible and compelling way to purchase renewable energy, meet corporate environmental obligations, and hedge against a potential rise in future energy prices. VPPAs are complicated, and there are important regulatory obligations that come along with VPPAs. To ensure success, two steps are critical: engage your legal counsel early and pick a trusted partner who can guide you through this process.

This article is adapted from a version published in The Journal on the Law of Investment & Risk Management Products


 

Get more on 3Degrees + Energy Procurement

 

[1] The CFTC Glossary defines a “derivative” as a “financial instrument, traded on or off an exchange, the price of which is directly dependent upon (i.e. derived from) the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement (e.g., the movement over time of the Consumer Price Index or freight rates)…”  See http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/index.htm#D.
[2] The CFTC Glossary defines “clearing” as the procedure through which the clearing organization becomes the buyer to each seller of a futures contract or other derivative, and the seller to each buyer for clearing members. See http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/index.htm#C.
[3] The CFTC Glossary defines “margin” as “The amount of money or collateral deposited by a customer with his broker, by a broker with a clearing member, or by a clearing member with a clearing organization. The margin is not partial payment on a purchase…” See http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/index.htm#M.

Scoping and Mitigating your GHGs

An airplane flying over mountain landscape representing responsibility for GHG

Most human activities emit greenhouse gases (GHGs). The dramatic rise began in the 1800s with the Industrial Revolution and today many GHG emitting activities are considered essential to the global economy. However, that doesn’t mean we are powerless. Here are three steps you can take to mitigate and reduce your carbon footprint. 

  1. Conservation through reduction and efficiency measures. Local utilities and hardware stores often have programs and products that help you use less every day.  
  2. Choosing renewable energy. Onsite generation, direct purchase agreements or matching usage with renewable energy certificates are all ways to get the environmental benefits of clean power for the electricity you do use.  
  3. Balancing carbon emissions. Purchasing carbon offsets allow you to compensate for non-electricity based emissions resulting from boilers, vehicle fleets and travel as examples.

Counting GHGs

To get started we recommend you prepare a GHG inventory following the World Resources Institute’s Greenhouse Gas Protocol. The protocol recommends you sort GHG producing activities by Scope 1, 2 and 3 criteria. Doing so will give you clear understanding of where GHG emissions originate. It will also give you a sense of where you have direct control over changes versus where you simply have influence, such as your supply chain. The separation by scope also avoids ‘double-counting’ of emissions.

  • Scope 1: Direct GHG emissions that occur from sources owned or controlled by the organization, such as emissions from combustion in boilers, furnaces, vehicles, and other assets owned or controlled by the organization.
  • Scope 2: GHG emissions from the generation of purchased electricity consumed by the organization. Scope 2 emissions physically occur at the facility where electricity is generated.
  • Scope 3: GHG emissions that are a consequence of the organization’s activities but occur from sources not owned or controlled by the organization. For example, Scope 3 GHG emissions are those associated with the production of purchased goods, employee commercial flying, or the use of sold products.

Once calculated you may be surprised by the size of your business’ carbon footprint. The good news is each scope category can be addressed:

3Degrees' GHG chart


 

What are greenhouse gases?

The health of earth’s climate is linked to how much sunlight is absorbed and reflected by our atmosphere. Our atmosphere acts like a filmy blanket around the planet, holding in some but not all of the heat. Some common atmospheric gases can thicken the blanket trapping in heat and cause temperatures to rise. These gases are called “greenhouse gases” or GHGs.