Where did the money go? The cost and performance of the largest commercialsector DSM programs

Spending on electricity energy-efficiency programs was responsible for most of the growth land decline), and almost all of the energy savings from U.S . utility demand-side management (DSM) programs between 1990 and 1998. As a result of restructuring, utilities may never again assume such an importan t role in promoting electricity energy efficiency. However, as governments consider future domestic policies to promote energy efficiency in response to global environmental commitments, the potential of large-scale energy ef ficiency programs will likely be discussed. This article presents new infor mation on a critical issue that will surely arise in these discussions: how much does it cost to save energy through programs that use monetary incent ives and targeted information to influence individual customer decisions ? We present findings from a detailed examination of the complete costs and m easured energy savings from the largest commercial sector DSM programs oper ated by U.S. electric utilities in 1992. We extend the methodological consi derations first identified by Joskow and Marron (1992) regarding difference s among utility cost accounting conventions and savings evaluation methods. We quantify the impact of missing and incomplete data and, to the extent t hey can be assessed, demonstrate that our assumptions to address them are c onservative in that they err on the side of overstating the apparent cost o f saved energy. We find that the programs, as a whole, have saved energy at a cost of 3.2 cents/kWh. When compared to the cost of the energy they allo wed the sponsoring utilities to avoid generating or purchasing (in the abse nce of these programs), we find that the programs, as a,whole, are cost eff ective.