Incentives for DSM in Deregulated Markets

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

Authors:
Hans Otto Haaland, The Research Council of Norway
Dan W. York, MSB Energy Associates Inc.

Abstract

Restructuring and deregulation of electric utilities to introduce competition is a rapidly growing international trend.

The role of DSM in deregulated markets is not yet clear. A consequence of deregulation both in Norway and England has been reduced interest and activity by the governments and utilities in DSM. In the US major reductions in DSM program budgets have been proposed as utilities respond to the potential for a competitive market structure.

In this paper we identify and discuss the major mechanisms to provide incentives for DSM in deregulated markets.

We discuss the rationale for DSM intervention in deregulated markets and the role of institutional frameworks in the design of DSM incentives. Using design criteria we develop, we evaluate the different types of incentives based on the experiences with DSM in the US, Norway and other countries. This paper provides both a conceptual framework for the design of DSM incentives and a practical guide to the different types of DSM incentives that have been proposed or implemented.