Energy conservation in electric utilities: an opportunity for restorative economics at SaskPower

Abstract

Utilities can profit through direct financial and environmental benefits, and increased shareholder and customer value. Where demand side management (DSM) programs cost less per kilowatt-hour than it would cost to generate the same amount of electricity, energy conservation offers a viable supply option, reducing the need for large capital expenditures in generating capacity. It may also improve the efficiency of transmission and distribution assets and reduce operating and maintenance costs. To deliver DSM, utilities can employ awareness/information programs, energy management and technical and training services, financial incentives and tax measures, which may be implemented through voluntary programs, regulation and government expenditures, financial incentives or new business ventures. The lower discount rate in electric utilities, when compared to most customer businesses, makes utility DSM more cost effect than alternative business models. Using SaskPower, a vertically integrated electric utility in Saskatchewan, Canada as an example, this paper demonstrates how selling efficiency rather than power offers utilities both a supply option and a business opportunity. SaskPower can accrue financial and environmental benefit, while meeting and exceeding customer and stakeholder expectations. This paper discusses the challenges and opportunities energy conservation represents for electric utilities.