Understanding Third Party Green Electricity Providers

Updated October 27, 2017

For those who want to search for a renewable electricity provider and want to skip the Q&A, Green-e provides a search tool to find Third Party Electricity Providers that source electricity from renewable sources. To use their search tool: Go to Green-e Certified: Find Certified Products and Companies and search for Residential Renewable Energy in New Jersey.

Why should I care about my electricity provider?

According to the EPA, 32% (2012 data) of U.S. greenhouse gas emissions are produced from burning fossil fuels to generate electricity [1]. In New Jersey, 23% (2009 data) of greenhouse gas emissions produced by the state are produced from electricity generation [2]. Generating electricity from a renewable source instead of fossil fuels can significantly reduce U.S. greenhouse gas emissions and their impact on climate change. Since it may not be feasible to generate your own renewable electricity, switching to a Third Party Electricity Supplier (TPES) provides a way to support the generation of renewable electricity.

What are Third Party Electricity Suppliers?

In 1999, legislation was passed to allow consumers to shop for their energy provider opening up the market to providers other than traditional utility companies. Today, consumers like you have several electricity providers to choose from, and many of them claim to provide cheap or green electricity.

What is Renewable Electricity? What is Green Power?

Renewable electricity is electricity generated from a source that is not depleted when used, such as wind or solar power. Some renewable electricity technologies, such as large-scale hydroelectric, can have environmental trade-offs associated with them.

Green Power, while often used synonymously with renewable electricity, is defined by the EPA Green Power Partnership program as a subset renewable energy that represents only those renewable energy resources and technologies that provide the highest environmental benefit, including solar and wind.

A number of TPES claim to provide Green Power. To understand how the electricity provider is providing Green Power, you must first understand the options that exist.

What options do I have?

Among TPES that claim to provide electricity from renewable or green sources you will find three models:

- a Renewable Energy Certificate (REC)-only option

- RECs combined with electricity from any source, which could include fossil fuels or nuclear energy

- RECs combined with generated renewable energy (sometimes referred to as a Green Power Program)

What is a REC?

A REC is simply a certificate that represents the environmental benefits that were accrued when some renewable electricity was generated somewhere.

How much “do” RECs actually help the development of renewable electricity is currently a matter of debate. Furthermore, RECs are traded in a relatively non-transparent marketplace, making it difficult for an end-consumer to know the true cost of the RECs.

What should I take into account when deciding on a TPES that claims to provide renewable electricity?

The age and location of a green energy project are considered two of the most important criteria in determining how much the project promotes the growth of renewable electricity.

A TPES that sources electricity from local green energy projects that have been built within the last 15 years are considered ideal. Green-e is a non-profit organization that provides a tool to search for TPES available to New Jersey residents and organizations. Their tool can help you identify a TPES that sells electricity from local renewable energy projects as well as those that offer a Green Power Program.

When in doubt, one should examine the Environmental Disclosure Statement (EDS), which is required for all TPES and lists the fuel used to generate the electricity you are buying.

Do I have to pay more for renewable electricity?

Renewable electricity may be more or less expensive than electricity drawn from conventional sources, such as coal. Prices for electricity, both from conventional and renewable sources, do fluctuate, so when prices for conventional electricity are high, renewable electricity may be cheaper. To determine if the TPES rate for renewable energy is cheaper than the conventional supply from your utility, locate the Price to Compare (PTC) on your electricity bill. If the TPES price per kWh is less than your listed PTC, you could save money by choosing the TPES supplier. 

What kinds of plans are available?

TPES offer various plans. Some plans offer a fixed price for electricity per kilowatt-hour for a specified amount of time that can range from 1 to 12 months. TPES may also offer variable rate plans where the price of electricity per kilowatt-hour can change from month to month. Variable rate plans allow consumers to benefit from falling market prices, but they also have increased risk for higher rates if electricity prices spike due to natural disasters, cold winters, or adverse market conditions. Some may also include an early cancellation penalty. Before deciding on a plan, be sure that you understand how the cost of your electricity may change and read through the TPES agreement or contract carefully.

[1] http://www.epa.gov/climatechange/ghgemissions/usinventoryreport.html

[2] http://www.nj.gov/dep/sage/ce-ggi.html