Steven Nadel, Jennifer Jordan, Christopher Holmes, and Kevin Neal

1994

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 minimize 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 being 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 difficult 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."

To meet Clean Air Act requirements for 2000, PSI Energy, a major midwestern utility, must reduce its sulphur oxide emissions by 30% below 1990 levels or buy additional emission allowances. This report discusses how current and proposed DSM programs can play a substantial role in PSI's Clean Air Act compliance strategy by reducing emissions and saving money that can be used to fund other clean air initiatives. It includes results of a detailed dispatch analysis on the role of DSM in PSI's generating mix. Implications for other midwestern utilities are also discussed.

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99 pp., 1994, $17.00 U946

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