The past, present, and future of U.S. utility demand side management programs

U.S. utility DSM programs have been a highly successful regulatory approach for overcoming shortcomings in the markets for energy services. The foundation for this unique partnership between governmental and utility interests can be traced first to the private-ownership structure of this vertically integrated industry and second to the monopoly franchises granted to it by U.S. state regulators. U.S. electricity industry restructuring calls into question both of these basic conditions, and thus the future of utility DSM, programs. This paper describes the range and history of DSM programs offered by U.S. electric utilities, with a focus on the political, economic, and regulatory events that have shaped their evolution. For the future, we expect DSM programs to continue on two parallel paths reflecting both the changing business interest of electric utilities in a restructured industry as well as the continuing public interest in the environmental consequences of electricity generation.