A Review and Analysis of Electric Utility Conservation Incentives

Abstract

During the energy crisis of the 1970s, consumers were responsible for energy conservation; today, a large part of the burden has shifted to the utility. Common energy saving schemes have proven inadequate, prompting state regulators to introduce demand-side management (DSM) incentives which reward either expenditures, savings, or net-benefits. DSM benefts are intended to induce investor-owned electric utilities to promote energy conservation aggressively. Stoft and Gilbert discuss the difficulties of estimating the net social benefit of an incentive program and examine how information influences regulators to select a particular incentive. Currently, most net-benefit incentives, while offering significant expected total rewards.for utility conservation activities, provide only a weak incentive fir conservation. This Article describes how these DSM programs can be tailored to achieve greater energy conservation.