IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v21y2000i2p23-49.html
   My bibliography  Save this article

Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs

Author

Listed:
  • Joseph Eto
  • Suzie Kito
  • Leslie Shown
  • Richard Sonnenblick

Abstract

Spending on electricity energy-efficiency programs was responsible for most of the growth (and decline), and almost all of the energy savings from U.S. utility demand-side management (DSM) programs between 1990 and 1998. As a result of restructuring, utilities may never again assume such an important role in promoting electricity energy efficiency. However, as governments consider future domestic policies to promote energy efficiency in response to global environmental commitments, the potential of large-scale energy efficiency programs will likely be discussed. This article presents new information on a critical issue that will surely arise in these discussions: how much does it cost to save energy through programs that use monetary incentives and targeted information to influence individual customer decisions? We present findings from a detailed examination of the complete costs and measured energy savings from the largest commercial sector DSM programs operated by U.S. electric utilities in 1992. We extend the methodological considerations first identified by Joskow and Marron (1992) regarding differences among utility cost accounting conventions and savings evaluation methods. We quantify the impact of missing and incomplete data and, to the extent they can be assessed, demonstrate that our assumptions to address them are conservative in that they err on the side of overstating the apparent cost of saved energy. We find that the programs, as a whole, have saved energy at a cost of 3.2C/kWh. When compared to the cost of the energy they allowed the sponsoring utilities to avoid generating or purchasing (in the absence of these programs), we find that the programs, as a whole, are cost effective.

Suggested Citation

  • Joseph Eto & Suzie Kito & Leslie Shown & Richard Sonnenblick, 2000. "Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs," The Energy Journal, , vol. 21(2), pages 23-49, April.
    • Handle: RePEc:sae:enejou:v:21:y:2000:i:2:p:23-49
    DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No2-2
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol21-No2-2
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol21-No2-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Paul W. Parfomak & Lester B. Lave, 1996. "How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level," The Energy Journal, , vol. 17(4), pages 59-87, October.
    2. Joseph Eto & Edward Vine & Leslie Shown & Richard Sonnenblick & Chris Payne, 1996. "The Total Cost and Measured Performance of Utility-Sponsored Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 31-51.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Boogen, Nina & Datta, Souvik & Filippini, Massimo, 2017. "Demand-side management by electric utilities in Switzerland: Analyzing its impact on residential electricity demand," Energy Economics, Elsevier, vol. 64(C), pages 402-414.
    3. van Megen, Bram & Bürer, Meinrad & Patel, Martin K., 2019. "Comparing electricity consumption trends: A multilevel index decomposition analysis of the Genevan and Swiss economy," Energy Economics, Elsevier, vol. 83(C), pages 1-25.
    4. Frondel, Manuel & Schmidt, Christoph M., 2005. "Evaluating environmental programs: The perspective of modern evaluation research," Ecological Economics, Elsevier, vol. 55(4), pages 515-526, December.
    5. Papineau, Maya, 2017. "Setting the standard? A framework for evaluating the cost-effectiveness of building energy standards," Energy Economics, Elsevier, vol. 64(C), pages 63-76.
    6. Kaiser, M.J. & Pulsipher, A.G., 2003. "A generalized modeling framework for public benefit fund program valuation," Energy, Elsevier, vol. 28(6), pages 519-538.
    7. Kenneth Gillingham & Richard G. Newell & Karen Palmer, 2009. "Energy Efficiency Economics and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 597-620, September.
    8. Brown, Marilyn A., 2001. "Market failures and barriers as a basis for clean energy policies," Energy Policy, Elsevier, vol. 29(14), pages 1197-1207, November.
    9. Chomitz, Kenneth M., 2000. "Evaluating carbon offsets from forestry and energy projects," Policy Research Working Paper Series 2357, The World Bank.
    10. David S. Loughran & Jonathan Kulick, 2004. "Demand-Side Management and Energy Efficiency in the United States," The Energy Journal, , vol. 25(1), pages 19-43, January.
    11. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    12. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    13. Dalzell, Nicole M. & Boyd, Gale A. & Reiter, Jerome P., 2017. "Creating linked datasets for SME energy-assessment evidence-building: Results from the U.S. Industrial Assessment Center Program," Energy Policy, Elsevier, vol. 111(C), pages 95-101.
    14. Charles A. Goldman & Ian Hoffman & Sean Murphy & Natalie Mims Frick & Greg Leventis & Lisa Schwartz, 2020. "The Cost of Saving Electricity: A Multi-Program Cost Curve for Programs Funded by U.S. Utility Customers," Energies, MDPI, vol. 13(9), pages 1-19, May.
    15. Kaiser, Mark J. & Pulsipher, Allan G., 2003. "Resource allocation decision modeling for a Louisiana Public Benefit Fund program," Energy Economics, Elsevier, vol. 25(6), pages 639-667, November.
    16. Robert Hahn & Robert Metcalfe & Florian Rundhammer, 2020. "Promoting customer engagement: A new trend in utility regulation," Regulation & Governance, John Wiley & Sons, vol. 14(1), pages 121-149, January.
    17. Horowitz, Marvin J. & Bertoldi, Paolo, 2015. "A harmonized calculation model for transforming EU bottom-up energy efficiency indicators into empirical estimates of policy impacts," Energy Economics, Elsevier, vol. 51(C), pages 135-148.
    18. Ndala Y. Mulongo & Pule A. Kholopane, 2018. "Cost Assessment: Electricity Generating Sources Against Energy Efficiency Measures," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-28, March.
    19. Kaiser, Mark J. & Pulsipher, Allan G. & Baumann, Robert H., 2004. "The potential economic and environmental impact of a Public Benefit Fund in Louisiana," Energy Policy, Elsevier, vol. 32(2), pages 191-206, January.
    20. Barbara Praetorius, 1996. "Nachfrageseitiges Marktversagen auf dem Energiemarkt: Empirische Evidenz, theoretische Aspekte, politische Folgerungen," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 65(2), pages 143-155.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:21:y:2000:i:2:p:23-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.