TIME Magazine

Look Who's Going Green

Posted Monday, Jun. 03, 1991 Power companies get to play the heavy in more than their share of environmental dramas. If they're not damming scenic rivers or generating nuclear waste, they're burning fossil fuels, contributing to acid rain, urban smog and the buildup of greenhouse gases in the atmosphere. In that regard, American utilities have a lot to answer for. The U.S., with 5% of the world's population, produces a quarter of the global output of carbon dioxide, the major greenhouse gas, of which fully one-third comes directly from the smokestacks of the companies that supply Americans with their heat and electric power.

Lately, however, a handful of utilities has begun to try a new role: as protectors, not despoilers, of the earth's resources. Last week the environmental spotlight was on California, where two big Los Angeles power companies -- Southern California Edison and the Los Angeles Department of Water and Power -- unveiled plans to cut their emissions of CO2 20% during the next 20 years, largely through conservation programs and the use of solar and geothermal technologies. It was the first time any U.S. utility had promised to reduce its output of CO2 to help curb global warming. Southern California Edison chairman John Bryson says the policy "makes good scientific, environmental and business sense."

But these were hardly the first power companies to go green. In January the largest U.S. utility, San Francisco-based Pacific Gas and Electric, announced a $2 billion plan by which it hopes to save 2,500 MW of electricity during the next decade -- equivalent to the output of several new power plants -- by encouraging customers to use energy more efficiently. New England Electric, which has one of the nation's most ambitious conservation programs, sends bright yellow vans into neighborhoods in Massachusetts and Rhode Island, giving away efficient fluorescent lights and wrapping water heaters with heat- retaining blankets. Similar programs have been launched by Central Maine Power, Wisconsin Power & Light and Puget Sound Power & Light.

How can firms stay in business if they encourage customers to buy less? The answer is innovative programs adopted by a growing number of state regulators. Traditionally, the only way a power company increased profits was by selling more power. Under the new rules, utilities can make as much money from promoting conservation as they can from building new plants. In California, for example, utilities that cut costs by not having to generate as much electricity can pass 85% of the savings to their customers and keep 15% for their shareholders. Everyone wins.

Environmentalists applaud these new programs but complain that they are not broad enough. Most U.S. utilities have not yet seen the light, and manufacturers and motorists still do not have enough incentives to conserve fuel. What is needed, says Gus Speth, president of the World Resources Institute, is an initiative like the one adopted by the European Community, which calls for member countries to stabilize their CO2 emissions at 1990 levels. So far, the Bush Administration has refused to commit itself to any such goal. In fact, in the energy plan put forward by the White House in February, conservation was overshadowed by calls for increased energy production.