Erase Your Carbon Footprint for $9 a Month! What's the Catch?

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"You can make a difference. Sign up for our GoGreen Indiana program, and you'll help: add green energy to the power grid, keep CO2 out of the air, reduce dependence of fossil fuels, build more green energy resources."

That's the promise that Duke Energy (DUK) made to its customers in a mailing last year. According to the electricity giant, by voluntarily adding $1.80 more to your monthly electric bill, Indiana residents can buy "two 100-kilowatt-hour (kWh) blocks of green power." That's enough power, says Duke, "to offset the carbon emissions of about 20 percent of your home's energy use."

It's an attractive promise, and it holds the potential to become even more attractive -- but it also contains the risk of confusing Duke customers, and not only in Indiana. In addition to Hoosiers, Duke is making similar offers to customers in Ohio and Kentucky, and in North and South Carolina as well. But what exactly is Duke promising?

The Promise of a Greener Tomorrow...

Through GoGreen and its sister programs, Duke invites customers "to buy more blocks of green energy, and have an even bigger impact" than the initial 20 percent "offset" in carbon emissions. If you examine the fine print of this program, you'll discover that Duke is actually selling the ability to help it buy Renewable Energy Certificates, which the U.S. Environmental Protection Agency says represent "the property rights to the environmental, social and other non-power qualities of renewable electricity generation." You're essentially paying a bit extra to add the environmental benefits of green power to your bill, on top of your usual bill for power, period.

Each REC represents the "green" attributes of 1,000 kWh (one megawatt-hour) of renewable energy. The $1.80 that Duke charges Indiana customers to buy 200 kWh actually thus buys you only 20 percent of one REC. To buy a whole REC would cost five times more -- $9 a month, or about $108 per year.

That's not necessarily a bad thing. After all, if $1.80 buys you "green power" equal to "20 percent of your home's energy use," then $9 should buy you 100 percent. In theory, that should turn your entire electric bill "green," as if you had used nothing but green, renewable energy to power your home for the month. Thus, promises the utility: "It's easy to help support renewable energy through Duke Energy's GoGreen Indiana program."

... for Just $9 a Month

That certainly sounds easy. Simply check a box online and add $9 to your electric bill. Solve global warming with one click.

But consider: According to a U.S. Energy Information Administration report for 2013, the average cost of a home's electricity use in Indiana (and nationwide) is about $110 a month. Adding $9 to that electric bill, to pay for one full REC credit, increases the cost by 8.2 percent. If that were all it cost to buy clean, green, renewable energy, as opposed to "dirty energy" that contributes to global warming, chances are that a lot of consumers would be willing to pay the premium. Even if those $9 just bought the environmental benefits of not using dirty energy, offsetting the damage of burning hydrocarbons to power our homes, that would probably sound like a good deal to environmentally conscious homeowners.

But data from the government, and even from green energy advocates such as, suggest that the true cost of green energy is significantly higher than the 8.2 percent premium that Duke is charging.

How much more? In the Frequently Asked Questions section of the GoGreen site, Duke Energy admits that "green power produced from renewable and environmental sources costs more than traditional power." But asked in an email to be more specific, and if in particular it cost 8.2 percent, Lew Middleton, senior communications consultant at Duke, was only able to say that it "depends on the source and is difficult to quantify."

So let's help with that.

Citing data from the U.S. Energy Information Administration, notes that in the United States in 2012, green energy derived from solar and wind power, two of the more popular "green energy" sources, cost significantly more than electricity produced by burning clean natural gas. Solar power cost more than 20 times the equivalent amount of energy produced by a natural gas-fired power plant, for example. Wind power was 11 times more expensive than gas. Granted, Duke is right that there are other sources of green energy, such as hydroelectric and geothermal, and that the costs of these multiple sources vary. But combined, the two marquee green energy sources of solar and wind average roughly 12 times the cost of electricity from a natural gas power plant -- a 1,085 percent difference, rather than 8.2 percent.

The Upshot for Homeowners

The idea that by paying $1.80 a month you can buy "two blocks of renewable energy" and offset the carbon footprint of "20 percent of your home's energy use" -- or pay $9 to go 100 percent "green" -- sounds too good to be true. And the data suggests that it probably is. The true cost of going green is probably a whole lot more than Duke is charging. That's a real disappointment for fans of green energy, who might have wanted to sign on to the program, willing to bear a somewhat higher cost of electricity in the interests of "saving the planet."

What's even more disappointing, though, even if this promise could be fulfilled, is that according to Duke Energy's Middleton, out of a total of "800,000 residential, commercial and industrial customers in a 23,000-square-mile service territory in 69 of [Indiana's] 92 counties," at last count just over 1,300 customers have signed up. Which suggests that when offered a chance to pay up to convert the economy to sustainable, renewable, "green" energy -- customers just aren't interested.

No matter the cost.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Check out our free report for one great stock to buy for this year and beyond.
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