Power Choice in Newton: Results of the Willingness-to-Pay Survey

In the fall of 2018, the City of Newton plans to enter into a municipal electricity aggregation contract: Power Choice Program. One of the goals of Power Choice is to leverage group purchasing power to increase the level of green electricity used in the City at a reasonable cost. Currently, the price of electricity produced by renewable sources is generally higher than that from fossil fuels though the price differential is decreasing every year. That raises the concern that citizens with constrained budgets may be hurt if the contract stipulates too large a percentage of green electricity—that is, too ambitious a default value.

The City and the grass-roots Newton Coalition for Climate Action have embarked on a vigorous program of public education and dialogue to explain the program and to listen to community voices. To inform the dialogue, Green Newton sponsored a random survey to learn about the willingness of residents to pay for green electricity.

The survey was administered in the fall of 2017 by volunteers stationed at key locations throughout the city: supermarkets, drugstores, post offices, the library, and so on; with the number of completed questionnaires in each zip code proportional to its population size. The questionnaire was neutral in tone, avoiding any advocacy position regarding green energy and climate change. The 380 completed questionnaires produced statistically significant results (at 95% confidence level for statistically minded readers).

People were first asked if they were willing to pay extra for green electricity generated in the region. Those who said “yes” were asked to choose one of several levels of green and associated extra costs. As shown in the table, the extra cost is proportional to the amount of electricity used by a household: an additional monthly $7 expenditure (at today’s prices) will buy 100% green for a household spending $60/month while in a $280/month household it will buy only 30% green.

How much green do extra payments buy? It depends on electricity use

The result—an overwhelming number of respondents (87%) are willing to pay extra for green electricity, while 13% are not. Among the former, 42% of responders would pay for 100% green and about 77% are willing to pay for between 50% and 100% green (at an extra cost ranging between $8 and $15/month). Looking at how much extra people are willing to pay for green electricity, the figure below shows that a great majority are in the $2-12 range, clustering at around $8/month. In an average Newton household currently paying $150/month for electricity, that extra $8 (corresponding to a 5% increase over the current price) would buy 50% green electricity content.

Willingness to pay
Majority in the $2-$12 range, clustered around $8/month Average calculated $10/month

This result is consistent with Brookline’s finding several years ago that people were willing to pay an extra $7/month, and with a WBUR survey of Massachusetts residents in 2017 that people were willing to pay $10/month extra for green electricity.

Overall, the survey suggests that 50% renewable content would present the optimal balance between ecological impact, fair price and high level of community support. Since all electricity sold in Massachusetts already has 13% of renewables, the survey suggests that there is broad support in Newton for an additional almost 40% (in round numbers) of green default level. The survey also shows that there is a large number of households that might potentially opt-up to 100% green.

It must be stressed that any consideration of such an ambitious default level would have to be accompanied by a vigorous outreach to inform residents who cannot afford it to opt-down (to a lower portion of green) or opt-out.

by Halina Brown