Utility DSM Programs from 1989 Through 1998: Continuation or Cross-Roads?

Abstract

Over the past five years, the Energy Information Administration (EIA) has been collecting data annually from US electric utilities on their demand-side management (DSM) programs, both current and projected. The latest data cover activities for 1993 and projections for 1994 and 1998. In 1993, 991 utilities operated DSM programs. That year, they spent $2.8 billion, a 13% increase over 1992 expenditures. These and earlier DSM programs saved 44,000 GWh of energy and reduced potential peak demand by 40,000 MW, 30% and 22% increases over the 1992 values, respectively. While some people predict the demise of electric-utility DSM programs, the data do not paint so bleak a picture. In most parts of the country, DSM programs grew in 1993 and utilities (as of Spring 1994) projected continued growth through 1998. Expenditures grew from 1.3% of revenues in 1992 to 1.5% in 1993, and are expected to grow 2.5% per year faster than inflation, which is equivalent to revenue growth. Thus, DSM spending is expected to stay constant at 1.5% of revenues through 1998. Because of the cumulative effect of DSM programs, energy savings are expected to grow from 1.2% of sales in 1992 to 1.6% in 1993 and 3.0% in 1998. Potential-peak reductions are expected to increase from 5.9% of peak demand in 1992 to 6.8% in 1993 and 8.9% in 1998. However, the growth in spending is not as rapid as the 8% annual real growth projected a year earlier. Actual expenditures in 1993 were 6.5% lower than projected early that year. Energy savings, on the other hand, were the same as projected earlier. Potential peak reductions were actually 9% higher than previously projected.