Steven Nadel

August 2000

Abstract

Utilities have offered energy efficiency and other demand-side management (DSM) programs to their customers for approximately two decades. Programs began in several regions and gradually expanded until by 1993 annual expenditures approached $3 billion and peak demand savings exceeded 20,000 megawatts (MW). Through the mid-1990s, programs gradually shrunk as utilities sought to cut costs in preparation for restructuring. However, as programs shrunk, so did savings, contributing to high demand growth and current reliability problems. In the past few years, as part of restructuring, many states have adopted public benefit funds that recognize that programs to save energy, assist low-income households, and promote renewable energy serve important public purposes and should not be a casualty of restructuring. To date, twenty states have adopted such programs and initial results look promising. Based on the success of these historic and recent programs, we recommend that additional states adopt public benefit programs, and that the federal government establish a matching fund to co-fund state public benefit efforts.

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15 pp., 2000, $11.00, U007