Energy Conservation - a Task for Utilities?

Panel: Panel 1: Policy and Programmes - Who can deliver DSM?

Authors:
Uffe Sønderhousen, The Confederation of Danish Industries
Niels O. Gram, The Confederation of Danish Industries

Abstract

Both in some states in the United States and in some European countries utilities play an important role in fulfilling national goals to improve energy effiiiency and reduce environmental impacts of electricity consumption.

The vendors of electricity work so intensively to reduce customersÉ demand for their product for typically three major reasons: It is - for different reasons - profitable to do so; they do so in order to get goodwill - or they aresimply forced to by the authorities.
Until some years ago the function of electric utilities primarily was to be able to supply the steadily increasing demand for electricity. This was the parameter of success -*or directly economic incentive to the investor owned utilities. Ë
On this background it seems natural to create the reverse situation: Make utilities interested in selling less electricity. And this is what has happened among the regulators on both sides of the Atlantic. Since electricity is sold through natural monopolies it is easy for regulators to encourage utilities to r-a&their prices to finance energy conservation activities.

However, it is questionable if utilities always deliver the best and cheapest energy conservations. Utilities tend to give prebedence to investments that are in their own self interest and not social optimal. Consequently, it should be considered to direct the money collected forenergy conservation by utilities to a fund open for everybody. This would make it possible for utilities, consuhancy firms and users to co.mpete on delivering the best and cheapest energy conservation.