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Income Distribution Effects of Electric Utility DSM Programs

Abstract:
This paper uses the Residential Energy Consumption Survey undertaken by the Energy Information Administration in 1990 to estimate the statistical association between household income and participation in electric utility energy conservation programs and the association between participation and the electricity consumption. The results indicate that utility rebates, energy audits, load management programs and other conservation measures tend to be undertaken at greater frequency by high income households than by low income households. Participants in conservation programs tend to occupy relatively new and energy efficient residences and undertake conservation measures other than utility programs, which suggests that utility sponsored programs are substitutes for other conservation investments. Electricity consumption during 1990 is not significantly less for households participating in utility programs than for nonparticipants, which also implies that utility conservation programs are displacing other conservation investments. Apparently, utility programs are not avoiding the costs of new construction and instead are transferring wealth, particularly to high income participating households.

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Energy Specializations: Energy Efficiency; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q42: Alternative Energy Sources, Q21: Renewable Resources and Conservation: Demand and Supply; Prices, D11: Consumer Economics: Theory, Q20: Renewable Resources and Conservation: General, D12: Consumer Economics: Empirical Analysis, Q54: Climate; Natural Disasters and Their Management; Global Warming

Keywords: Income distribution effects, Electric utilities, DSM programs, Residential energy use

DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No4-5


Published in Volume15, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.