ABSTRACT Electronic timers were installed in 1998 to control 365 mercury vapor and high pressure sodium lamps in a large tool and die shop. The energy savings were 71,200 kWh per month. An economic analysis based on average 1997 power costs and ignoring lamp life indicated a savings of $5553 per month. When the impact of peak demand and incremental cost was considered, the savings dropped to $3169 per month. Because of peak demand charges, 58 percent of the savings initially came from 15 percent of the lamps: the ones which were shut off during the daytime. In the year following the project electric power was deregulated in Pennsylvania. The average power cost came down, but the incremental (last bracket) power cost went up. The project savings increased to $3345, but the impact of peak demand dropped by 59 percent. The return on investment plus any savings calculations which might be used in a performance contract depend a great deal on the regulatory environment as well as how and when the lighting is c...