Electricity Supply

Utility Demand-Side Management Programs Can Reduce Electricity Use Gao ID: RCED-92-13 October 31, 1991

According to Department of Energy projections, to meet electricity demand in 2000, the nation may need more than 100 new large power plants. Utility-sponsored programs promoting more efficient electricity use--called demand-side management programs--can help avoid the costs and environmental concerns associated with power plants. This report examines (1) the potential for utility sponsored demand-side management programs to cut future electricity demand; (2) impediments to the effectiveness of such programs; and (3) efforts by utilities, states, and federal power-marketing agencies to encourage efficient electricity use.

GAO found that: (1) by 2000, regulators and utilities in nine selected states estimated reductions in total electricity demand as a result of DSM programs to be 15 percent; (2) formidable impediments which face utilities and regulators in implementing utility DSM programs range from consumer behavior to regulatory disincentives; (3) consumers may be unwilling to buy more energy-efficient devices, because they lack the information or funds for purchasing such models; (4) if utilities and consumers are discouraged by the traditional regulatory system for pricing electricity, they may be reluctant to implement aggressive DSM programs; (5) to overcome consumer reluctance, utilities have provided financial incentives for purchasing more energy-efficient devices; (6) state regulators have taken actions to respond to regulatory disincentives by implementing regulations to reduce the revenues that utilities lose as a result of DSM programs and provide financial returns for utilities' DSM investments; (7) utilities and regulators are testing a variety of methods to ensure a higher level of accuracy in DSM electricity savings estimates, since DSM electricity savings were hard to measure; and (8) current efforts to promote conservation programs among the federal power agencies, reflect the differences in which those agencies' statutory authority encourages electricity conservation and efficiency.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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