Demand-Side Management at a Crossroads: Is There a Future for Electricity End-Use Efficiency in the United States?

Panel: Panel 3: Market Transformation: Innovation, Development and Dissemination

Authors:
Howard S. Geller, ACEEE
Steven M. Nadel, ACEEE
Miriam E. Pye, ACEEE

Abstract

Increasing competition among U.S. electric utilities, or at least the perception that competition is coming, is threatening to disrupt utility DSM programs in the United States. A number of utilities are cutting or proposing to cut their DSM program budgets; others are shifting the focus of their DSM programs so as to minimise their impacts on electric rates. This paper argues that implementation of end-use electricity conservation measures can and should continue to grow in the United States in spite of the uncertainty concerning utility DSM programs.

In an era of stable or declining DSM program budgets, the nature of utility DSM programs is changing. Rebates are bemg used more sparingly and will tend to focus on one-time energy efficiency opportunities, measures that are part of + comprehensive market transformation strategies, customer classes that are underserved by other energy efficiency programs, and energy efficiency measures that are dtfficult to promote through financing, education and standards programs. Utilities are modifying their rebate and other incentive programs in order to reduce utility costs, increase participant contributions, and increase program cost effectiveness. Also, utilities that are interested in promoting cost-effective energy savings are supporting adoption and implementation of stringent building codes and equipment efficiency standards. In summary, utilities are getting smarter about how they ?do DSM.?

Of course, utility DSM programs are not the only mechanism for realizing end-use effxciency improvements. Appliance and equipment efficiency standards are having a significant impact on electricity demand in the United States. Standards already adopted are expected to lower national electricity use 3% by 2000. Some energy efficiency measures, such as power-managed personal computers, ?sell themselves? to a large degree. They have been widely adopted without financial incentives or much utility involvement. And energy service companies are increasing the level of efficrency improvement occurring largely through the private sector. While all of these paths to greater energy efficiency are important, there remains a key supporting and complementary role for utilities to play in promoting cost-effective electricity conservation.