Cows are known for producing milk and manure, as well as a healthy steak, but another one of their by-products is generating something else: electricity, and it might give a jolt to utilities exchange traded funds (ETFs) someday.

One farm in Vermont, Green Mountain Dairy Farm, is part of a growing alternative energy program which converts methane gas from cow manure into electricity, which is then sold to the power utility grid. Central Vermont Public Service was one of the first utility companies in the country to draw electricity from cow manure on dairy farms, reports Katie Zezima for The New York Times.

About 4,000 customers contribute by paying a premium on the electricity.

Four Vermont dairy farms are on the grid, wit two awaiting in the pipeline, and the utility hopes to add six more farms by 2010. Both residents and businesses that pay the premium of 4 cents per kilowatt hour pay that rate on top of the typical 12.5 cent rate. Most of that money goes to the farmers, who have to buy their own equipment. They expect to make back their investment in 7 to 10 years.

ETFs that are bordering on cow manure:

• First Trust Utilities AlphaDEX (FXU), down 14.2% year-to-date
• PowerShares FTSE RAFI Utilities (PRFU), down 13.1% year-to-date
• SPDR S&P International Utilities Sector (IPU), down 9.2% since Aug. 22 inception
• Rydex S&P Equal Weight Utilities (RYU), down 15.9% year-to-date

Tags: Alternative Energy, Energy, FXU, Green ETFs, IPU, PRFU, RYU, Sector ETFs, Utilities