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The Economics of Utility Residential Energy Conservation Programs: A Pacific Northwest Example

Abstract:
The bottom line for any utility conservation program is its overall worth: whether program costs are justified by the value of the electricity savings. That is, are these programs worthwhile investments to utility customers that participate in the programs, customers that do not participate, the utility system, and society as a whole? How sensitive are estimates of program worth to the input parameters (program-induced energy savings, discount rates, future average and marginal electricity prices)?This paper discusses our assessment of program benefits and costs for the Bonneville Power Administration (BPA) Residential Weatherization Pilot Program. Unlike other assessments, the present work is based on a detailed empirical evaluation of the program. We collected enough data from both program participants and nonparticipants to analyze the actual energy savings that could be attributed to the BPA program. We also obtained information on actual program costs. This information was used to compute the Net Present Worth (NPW) of the program from the perspectives of program participants, the BPA power system, and the Pacific Northwest region as a whole.

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Energy Specializations: Energy Efficiency; Electricity – Policy and Regulation

JEL Codes:
Q55 - Environmental Economics: Technological Innovation
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electric utilities, DSM, energy conservation, Residential weatherization

DOI: 10.5547/ISSN0195-6574-EJ-Vol5-No3-11


Published in Volume 5, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.