Working Assets Stands
for Renewable Energy

Editor's Note: This article is the third draft received by the Progressive Populist. It was received on the eve of publication, after Jon Entine had replied to an earlier draft. Passages were edited out of both the letter and the reply.

The Progressive Populist recently [June 1997] ran a story by Mr. Jon Entine entitled "Green Shell". This is the latest version of an article Mr. Entine has circulated widely on the internet. The article is riddled with misinformation which would lead any reader to conclusions widely at odds with the truth.

The mission of Working Assets is to be a catalyst for building a more just and sustainable world. Over the past decade, we have produced about $10 million in donations to progressive groups and generated nearly 3 million calls and letters to selected officials on critical matters of public policy.

We have worked to achieve this by being a telephone company, and have recently started considering the energy industry -- one of the most environmental destructive industries in the world. We believe that the energy industry needs a fundamental overhaul.

Unfortunately, most readers of the article would conclude that we favor the destruction of renewable power rather and are in bed with corrupt politicians and greedy utilities.

In fact, we have been strong and consistent supporters of renewable power, working to hold giant utilities accountable, and charging fair prices which are clearly disclosed. What follows is our attempt to set at least part of the record straight. We have set up a special site at "www.wald.com/thefacts" for those who would like additional background.

Some Truths About Working Assets and Green Electricity

A major debate is happening in Washington and in most state capitols over the future of electricity. It is a debate that really matters, and we have worked with many groups to defend the interests of consumers and the environment. Here are six critical positions we have taken, all of which are pro-consumer and pro-environment:

1. Every single utility must incorporate renewable power. Our own citizen action program has generated more calls and letters to Congress in support of these so-called portfolio standards than anyone else.

2. Every single marketer or distributor of energy must be required to disclose the sources of their power.

3. Public financial support should continue for developing renewable power sources.

4. Ratepayers or taxpayers should not bail out nuclear utilities from having to pay for their earlier costly and foolish investments in nuclear power.

5. Much tougher new clean air standards must be imposed on utilities. Again, our own citizen action program has generated more calls and letters in support of such standards than other group[s].

6. Consumers should have the ability to choose an electricity provider other than their local monopoly just as soon as big businesses can do so.

These are our public positions. Mr. Entine, who been informed of them, ignores each one.

Mr. Entine cites a number of individuals expressing concern about deregulation in general, none of whom mention Working Assets. Each one attacks deregulation as potentially damaging renewables. We agree and have a consistent position across a number of critical policies. Under these policies, we believe rates would fall, the environment would be protected, and renewable sources strengthened.

Working Assets Participated in Two Tiny Pilot Programs

Public officials in New Hampshire and Massachusetts conducted two small pilot programs to learn more about how deregulation might work prior to passing legislation to change the market. We participated in these two trials. In New Hampshire, the pilot can last up to two years and could serve no more than 17,000 customers, and in Massachusetts, the pilot will last one year and serve no more than 8,000 customers.

Working Assets would like to be able to construct new renewable power plans to help clean up the air. But nobody would do that for a few customer in a pilot that will end in a year. Mr. Entine ignores this and argues that anything other than building new facilities and actually connecting them with new wires to each home (how about that for an environmental disaster -- doubling the number of power lines!) is a shell game.

Phony Alliance is Red Herring

In the article, Mr. Entine creates an "alliance of convenience" which includes Working Assets with Rep. Tom Bliley and Pacific Gas and Electric. No such alliance exists. Working Assets opposes almost everything that Rep. Bliley and these major utilities support and they oppose almost everything that we support. This is a matter of public record easily accessible for any journalist.

Electricity Rates in New England

Mr. Entine argues that electricity rates have dropped in New England due to below-market pricing by companies seeking to gain a toe-hold in a new market. He may mean below-cost pricing, which is another thing entirely. For the most part, we believe that rates dropped because regulators forced them to drop by not allowing full recovery of the costs of prior nuclear investments. We do know that Working Assets basically priced electricity at our power cost with no margin. So much for huge premiums and gouging.

Misrepresenting Public Officials

Mr. Entine asserts that state officials "say that the pilot has resulted in no clean energy being added into the overall energy mix, despite claims by green marketers who are charging consumers a price premium".

This is almost certainly a misrepresentation of the positions of state officials, not a single one of whom is cited by name.

Because of the nature of the pilot, neither Massachusetts nor New Hampshire had the slightest hope that new clean energy would be generated.

Customers Were Fully Informed

We support public disclosure of power sources and have fully informed all of our customers in both pilots about the source of their power by category and will continue to do so. In addition, all customers were informed that the underlying supplier of our power was New England Electric. Far from hiding this fact, we broadcast it widely so that customers would have little fear that we could not deliver the power.

In addition, in Massachusetts, every customer who participated or expressed interest in the pilot was given a booklet explaining the pilot and comparing the power sources for all companies. This disclosure was uniform for all companies and was created by and distributed by an organization called Environmental Futures. Our power sources were described and we have updated our customers since then.

We could have bought power that is just the mixture in the wires, but we chose to purchase power that comes from eleven specific facilities -- facilities which are not nuclear, not coal burning, not pumped hydro, and don't use Hydro-Quebec. The cost of using this cleaner power is greater.

Mr. Entine dismisses this as an accounting device. We call it a trail of money -- and money is one thing that influences utilities. Electrons cannot be traced once in the power grid, but dollars sure can.

Our customers' dollars are being used to increase the demand for clean sources of power. If they demand more because they turn on the television, the owner of the cleaner facilities gets more money and will eventually generate more cleaner power. This is only [a] small piece of a good electricity policy which contains clean air standards, requirements for renewable power and no bailouts for nuclear power.

Our Long Distance Rates Are not Higher than Our Competitors

In a strange detour in the middle of an article about electricity, Mr. Entine suddenly claims that we gross[ly] overcharge our telephone customers.

He is wrong.

Beware of anyone who seeks to compare telephone rates on the basis of a single phone call or a single plan. This is only appropriate for those who seek to make a point not supported by broader comparisons.

Mr. Entine compares a single AT&T promotional plan as the basis for his argument.

In charging its telephone customers, AT&T has filed literally hundreds of rate plans with regulators so it can pick and choose. The rate plan that AT&T is currently promoting, with hundreds of millions of dollars of television advertising, direct mail, and telemarketing, is called One Rate. It is hard to miss but is not the one Mr. Entine considers.

If every Working Assets customers switched to One Rate, they would pay 13% more than if they stayed with us. This is an average. Some would pay more, some would pay less.

Mr. Entine hopes that nobody notices that he compares us to One Rate Plus -- which is not advertised, and compares someone billing over $1,450 per year with Working Assets (our average customer bills about $360 per year). Much of this billing traffic does not even get the 10 cents per minute touted by Mr. Entine. He ignores the fact that customers on One Rate Plus also have to pay monthly fees that total over $59 per year just to get lower rates.

And, even after all that, if all of our customers switched all of their traffic to One Rate Plus, they would still pay 9% more than they do to us. Again, this is an average. Some would pay more and some would pay less.

Interestingly, Mr. Entine also cites a small competitor of ours -- Earth Tones -- as having lower rates and "kicking back a far larger share of profits" to environmental causes. We have great respect for Earth Tones and wish them well as we both attempt to make the world a bit better.

But, they do not charge less and give more. Earth Tones' domestic interstate rates are 15 cents per minute. Our average domestic interstate rates are 13.2 cents per minute.

Working Assets donates 1% of our bills to progressive non-profits in an annual ballot of our customers. When combined with donations from our credit cards and donations to our pool that customers voluntarily add, we have donated about $10 million since we started.

Earth Tones contributes 10% of its profits to environmental campaigns. What Mr. Entine fails to mention, although fully disclosed by Earth Tones, is that all this really means is that Earth Tones is owned by a group of environmental groups, so any profits go to these non-profits -- none to campaigns selected by customers. According to a customer service representative of Earth Tones, contributions to environmental campaigns have totaled about $1,000 so far.

How About Full Disclosure for our Critics?

Only one person is mentioned by name directly criticizing our New England work. Rob Sargent is the legislative director with the Massachusetts Public Interest Research Group. A reputable journalist subject to fact checking would have disclosed that Mr. Sargent is employed by one of the principal owners of Earth Tones, our direct competitor. This is not a secret, is easily available to journalists, and is known by Mr. Entine. We welcome Mr. Sargent's views and are in agreement with many of his policy positions, but readers deserve to know his organization's financial stake in the outcome.

Quoting Out of Context and Without Permission

Mr. Entine quotes at length from Professor Paul Joskow of MIT. He does not reveal that the cited quotations are from an interview conducted by somebody else. He uses Professor Joskow to argue that participants in the New England trials are having no effect on generating or any positive effect on the environment.

Here is the next sentence from the actual interview:

"However, in the long run, if it's recognized that customers are willing to pay more for green power, it may attract additional investment."

The implication is obvious, which is presumably why Mr. Entine chose to leave off the sentence.

Professor Joskow has many comments on the use of his thoughts by Mr. Entine, all of which are available to the reader at the web site noted above: "www.wald.com/thefacts". ...

The Massachusetts Pilot Was a Success for Green Electricity

One of the goals of the Massachusetts pilot was to determine whether residential customers were even interested in electricity from cleaner sources. If consumers are not interested, there is little reason to include consumer choice in any plan to restructure electricity.

Mr. Entine asserts that the results of this pilot were a failure for green electricity. In fact, the pilot was limited to a small number of participants. Of those who participated, 31% [of residents] chose a green option. This was widely considered a surprising success. The 750 customers who signed up for Working Assets exceeded our expectations dramatically.

Entine's Article has a History

Mr. Entine's article is a familiar one to many on the internet. It has been circulated to literally hundreds of thousands of people over a number of months, as Mr. Entine has sought to find a publisher for it. The material distributed under the title "Green Shell Game" is simply the most recent version of articles recently published by Mr. Entine and distributed by Environment News Service (ENS) on the Envirolink web site. That material also contained many errors and was not fact checked prior to distribution. ...

We have repeatedly told Mr. Entine, who sends us drafts of this article on a regular basis, that his material is full of errors. He has never corrected or retracted a single one. Given his evident hostility and disregard for the truth, we more recently told him that we are willing to fact check his materials only when a publication informs us that they are considering the material for publication. He has consistently refused to do so, and does not inform his editors of this request (including, we believe, The Progressive Populist).

Conclusions

As you consider Working Assets role in electricity, we hope that you will consider all of our positions rather than the outright misinformation provided by Mr. Entine.

Sincerely,

MICHAEL KIESCHNICK,
President
Working Assets
701 Montgomery St.,
Fourth Floor
San Francisco, CA 94111
email: mkieschn@wafs.com

Jon Entine replies:

'If You Don't Ask, They Won't Tell'

"Does the power come from a company owned by the developers and owners of Seabrook nuclear power plant?," reads the brochure sent by Working Assets Green Power to prospective customers in New England. "If you don't ask, they won't tell you."

WAGP was apparently betting that no one would ask. As it turns out, it acts as a green shell, buying all of its power from New England Electric Systems (NEES), part-owner of Seabrook and the "dirtiest utility in New England," in the opinion of the Massachusetts Public Interest Research Group.

The same Working Assets is now betting that the readers of the Progressive Populist will buy its "response" to "Green Shell."

Working Assets CEO Laura Scher and her PR spin artists are trying to shift the focus from its marketing tactics to spurious allegations about the messenger.

Once the innocent, twice the fool.

Specifically, spokesman Michael Kieschnick contends that "no fact checking was done with Working Assets."

None? I have had 16 direct communications with WA dating to March 7, 1997, when I first contacted Laura Scher's office.

* March 14, Scher writes: "I am happy to assist you in whatever way I can ... send me your questions in writing and I will respond in writing."

* March 26: I forwarded WA 64 questions and request for documentation. Received no answers or documents.

* April 8: renewed request.

* April 12: sent Scher early version of article.

* May 2: Sent Scher updated version; from March to June, WA was sent more than a dozen requests for information.

* May 20: called Scher directly; she said she did not want to talk and would not send me documentation.

* Late May: sent Scher current draft of article. No response.

* Mid-July: faxed WA modified version of March questions. No documentation, just a two-page letter reiterating company propaganda.

Working Assets now claims that it has "repeatedly told Mr. Entine ... that his material is full of errors." Indeed it has. It just has never identified the errors, nor supplied any documentation of its claims. On the other hand, its claims of offering "nuclear free energy" have mysteriously disappeared from its web page.

Does WAGP Increase the Generation of 'Clean' Energy?

From its response, we are assured that WA is pure as the driven snow, has the best of intentions and that its "mission" is to achieve a "just and sustainable world."

Now for substance: Will the green marketing free-for-all pioneered by WA result in more renewable energy or less? Here's a primer.

* Did the pilot projects in NE result in the generation of even one new "green" or clean electron? A: No.

* Did WAGP disclose the energy mix going to its customers? A: Not in NH [at least before this year]. There was a limited disclosure in MA.

* Did WAGP supply solar and wind power to fulfill the commitment it reportedly made? No; there is zero solar or wind energy in the NE energy grid.

Scher has gotten fried by environmentalists. Her mea culpa on WA's web page: "Time constraints limited our ability to incorporate more renewable sources and work more closely with environmental groups." ...

Phony Alliance is a Red Herring

Throughout our history, there have been innumerable alliances between political opposites, each betting that their policies would prevail. In some cases, the alliance blows up in the face of those who believe they are the "good guys." In this instance, conservatives like Rep. Bliley, who have joined hands with WAGP in support of green energy, understand deregulation is a windfall for corporate customers which will get almost all the benefits. Rural communities will be hit hard, and consumers will be asked to pay for debts from unprofitable investments in nuclear plants. As the deregulation wave sweeps across the United States, whose policies can we expect to ultimately prevail -- Bliley and his corporate allies or Working Assets and its "good intentions"?

Electricity Rates/Customers Saved Money

Kieschnick claims that "all we know is that Working Assets basically prices electricity at our power cost with no margin." According to New Hampshire officials, pilot participants are charged 2.29¢/kilowatt hour to 3.5 cents. WAGP is the most expensive -- 53% higher than the lowest-cost supplier. According to NEES, in Massachusetts rates ranged from 2.3 to 3.41¢/kWh. WAGP charges 3.35¢ -- 46% more.

Customers Fully Informed?

WAGP writes that it supports "requiring every single marketer ... to disclose the sources of their power." That's its alleged intention. What's the actual practice?

It claimed that its energy is "nuclear free" when it wasn't. According to the San Jose Mercury News [and apparently its own web site before a recent alteration], WAGP was committed to supporting non-polluting power, such as solar or wind generators. ... In reality, it bought access to ZERO solar and wind power.

In Massachusetts, "disclosure" was limited to a booklet published by NEES subsidiary Massachusetts Electric which had a one sentence description of energy sources. Environmental Futures, which wrote the brochure, says that the pilot was primarily designed to address "metering and billing" issues.

"We're trying to ensure that misleading claims never happen again," says Jonathan Raab, facilitator for the New England Disclosure Project. In the wake of the NH fiasco, the Disclosure Project was set up by regional utility commissioners with input from sixty stakeholder groups. "People know that Working Assets is getting flamed. Everyone now knows that if they screw up they'll get caught. Power marketers will not be able to get away with questionable and undocumented claims."

New Hampshire Customers Are Saving?

What's the difference between buying "unit contracts" of already-generated electricity and adding clean energy to the mix?

Kieschnick claims that WAGP"s tactic of buying "unit contracts" of already-generated energy contributes to a greener environment.

On April 22, I e-mailed my article to MIT department chairman and NEES board member Paul Joskow. He e-mailed back: "I am aware of the points in your note ... Unless 'green power' is done differently, it will give the environmental movement a black eye. If you would like to ... you can call me." I called.

Joskow said that green marketers in New England purchased no additional clean energy, but merely rearranged existing contracts -- WAGP with NEES and NU with itself. According to Joskow, they duped consumers. "I think that people who sell green power have an obligation to reveal precisely what it is they're selling," he said in a recorded interview. "In some cases you can sell green power and you use the money to develop new power sources that wouldn't have otherwise been developed and they're environmentally benign. In New England, they're basically reselling contracts ... designated for hydroelectric facilities that have no short-run effect whatsoever on the dispatch of generation in the area, and have no positive effect on the environment."

"Working Assets ... produced results that were less than exemplary," agrees Michael Vickerman of RENEW Wisconsin, a renewable energy activist group. "They did not get us what we want: new renewables on the ground to displace dirty power."

Marketing Failure?

In her defense, Scher says her intention is to create a critical mass of demand so she could offer green energy sometime in the future. Joskow was skeptical. "In the long run," he said, "if it's recognized that customers are willing to pay more for green power, it may attract additional investment." But that's a long-shot, in my opinion. If consumers want to pay boutique prices in hopes that, in the future, renewable energy might actually be brought on line, so be it.

WAGP tries to fill a near-empty glass by claiming that "31% chose a green option." What's the reality? While 31% of residents chose a green option, WAGP does not say that only 60% of the energy available was subscribed. Moreover, According to EF, only 1.2% of eligible participants chose green and 10.1% of the total amount of energy selected was "green." The real shocker: only 3% of small businesses chose "green" -- a disturbing figure, since the vast majority of deregulated energy will go to business customers. ...

Inside the 'Green Shell' Telephone Reseller

Behind Working Assets' hyperventilation is: assets of course! Let's be clear: WA has no products of its own. It is a shell that buys products at wholesale (long distance access, Internet, paging, electricity), then slaps on a green label and a steep green premium.

A recent Working Assets Long Distance advertisement in Mother Jones claimed "lower" rates than competitors (it now claims rates are "competitive"). Are they?

California Energy Markets wrote in June that, "Working Assets has become a target for environmental groups, primarily because it charges a substantial premium for its phone services." How big is this premium? It's almost impossible to compare its rates to competitors since it has what in my opinion is probably the most consumer-unfriendly structure in the business. Its rate chart has three time periods, 11 mileage bands, and until recently had two time limits -- 66 separate cells. According to its web page, its basic rates range from 10.64¢ per minute to 33.73¢.

So, let's compare rates using publicly available information. WALD has twice modified its rate structure since word of its premium prices stirred a controversy ... We'll give it the best break possible and include a 5% rate cut that took effect July 15 (after its complaint letter).

If you live in Miami and phone Seattle, how many one-minute calls could you make in a month using various companies if you had a $40 budget?

WALD MCI AT&T Sprint

Daytime 173 333 (+92%) 351 (+98%) 160 (-8%)

Evening 249 333 (+34%) 351 (+37%) 400 (+38%

Night/Wkd 358 333 (-8%) 351 (-2%) 400 (+12%)

Note: WALD (25% discount), MCI One Rate (12¢), AT&T One Rate Plus (10¢ + $4.95/month), Sprint Sense 25¢/day, 10¢ night/wkd.

Greenkeepers customers pay a flat 9.5 cents; and it gives 5% of revenue to charity, 500% more than WALD's rate. For $40, consumers could make 421 calls -- 144% more than with WALD during the day.

What's the conclusion? The "majors" are considerably cheaper, unless you make most of your calls when the rest of society is asleep or on weekends. If you're determined to spend with a "green" company, you can save a minimum of 18% up to 144%

WALD brags in ads: "Finally, Straight Talk from a Telephone Company." You decide.

Soap Opera

In the final analysis, the most important issue isn't Working Assets -- its market-driven ethics are now public record, and consumers have the right to pay boutique prices for commodity services -- but the future of renewable energy. Still, one has to be struck by the experience in New England, where the overall energy pie remains the same. Every "green" slice of electricity offered by Working Assets has resulted in an identical "browner" slice going to NEES' other customers. No green electrons, no wind or solar energy, has been generated. In the electricity industry, that's called "greenwashing."

Are you listening Laura Scher?

Editor's Note: The Wall Street Journal reported on July 23 that the Federal Trade Commission, reacting to criticism of marketing tactics during a pilot test in New Hampshire, is considering "establishing rules on what environmental claims utilities may make."

We welcome letters to the editor on this or other topics. But please limit them to appxoximately 250 words.

Working Assets Stands for Renewable Energy