Electricity Supply:

Utility Demand-Side Management Programs Can Reduce Electricity Use

RCED-92-13: Published: Oct 31, 1991. Publicly Released: Dec 5, 1991.

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Pursuant to a congressional request, GAO examined: (1) the potential electricity savings that could result from demand-side management (DSM) utility programs designed to reduce future electricity use; and (2) efforts by utilities, states, and federal power 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.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress has considered GAO-recommended legislation, including S. 2166, which provides that the Southeastern and Southwestern Power Administrations require that nonregulated utilities with contracts, and the Tennessee Valley Authority, establish an integrated program for planning and selecting new energy resources to provide adequate and reliable service at the lowest system cost.

    Matter: In order to encourage the efficient use of federal electric resources and to maximize the role of federal power agencies in promoting the efficient use of electricity, Congress may wish to consider enacting legislation that would authorize the Southeastern, Southwestern, and Alaska Power Administrations to link power allocations or power rates to customer utilities' DSM programs.


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