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How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level

The current movement toward utility restructuring raises questions about the future of utility conservation programs, which have long suffered from illinformed and conflicting perceptions about their ability to affect customer loads. Controversy has arisen because of the inherent difficulty in measuring conservation impacts and because utilities have had clear economic incentives to overestimate impacts. This study uses econometric techniques to examine the aggregate commercial and industrial conservation impacts reported expost by 39 utilities in the Northeast U.S. and California through 1993. The study finds that 99.4% of the reported conservation impacts are statistically observable in system level sales after accounting for economic and weather effects. The results indicate that utility-run conservation programs have, indeed, been effective in reducing customer loads. The study finds no evidence the utilities have systematically overstated conservation effects.

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
D42 - Market Structure, Pricing, and Design: Monopoly
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electricity conservation, policy, electric utilities, DSM, megawatt cost, econometric model, energy efficiency

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-3

Published in Volume17, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.