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DSM Programs Must Target Consumers, Not Just Technology

Fortnightly Magazine - January 15 1995

formation of a National Data Base on Energy Efficiency Programs (DEEP) marks a step along the way to a more a complete picture of consumer behavior. DEEP has taught us a good deal about programs that achieve high participation rates, energy savings, and manageable costs. Nevertheless, this information is not always available to the program analysts involved in designing, implementing, and evaluating programs conducted by their own organization.

In any case, remember this about DSM "shortfalls": What you think you see may not be what you are actually seeing. The matter is not black and white; too many variables abound. Original assumptions could include errors.

"Take-back" effects are another concern; some households actually use more hot water after installing low-flow shower nozzles. Greater-than-expected conservation by nonparticipating customers (the control group) will attribute small net energy savings to the program. And then we have the most common source of apparent program shortfalls (em quality-control problems that occur during the installation of energy-control measures. Utilities tend to underestimate these factors. To the public they are all but invisible. Cost-conscious utilities that are anxious to trim budgets, but wary of political fallout from cutting high-visibility programs, may rely on reports of poor performance to justify discarding DSM programs and avoid backlash.

Dire Predictions

Uncertainty over the impact of new federal energy laws, combined with reports of shortfalls in DSM program savings, have led some to predict that utilities will soon abandon DSM programs in their efforts to become "low-cost providers." But we think a more likely scenario will see a new round of DSM programs springing up over the next few years. These programs will focus on education, on

capturing the currently unrealized potential in existing DSM programs, and on building a strong relationship with customers.

The first wave of DSM programs focused on technology. They brought compact fluorescent bulbs, low-flow showerheads, programmable thermostats, and

weatherization materials. The second wave, education, can teach consumers how to use all that equipment. Utilities riding this wave will improve relations with customers and boost their long-term results from DSM. As education takes hold, the market will reflect a change in consumer behavior.

A study performed in 1991 for the Edison Electric Institute (EEI) revealed that although Americans still want economic growth, a rising standard of living, and reliable and affordable electricity, by a margin of over two to one they would sacrifice economic growth to protect the environment.4 The report recommended three steps for electric utilities seeking to earn customer satisfaction in the 1990s: 1) Identify with environmental protection as a core American value, 2) Define the environmental benefits of electricity, and 3) Make superior environmental performance a defining attribute of the electric utility industry. As this study indicates, consumers are motivated by financial incentives, but also by ideals. People aspire to learn in a context where learning makes sense.

Utilities that have invested in DSM programs to date, but without stressing consumer education, will discover that a shift in focus can boost actual load-shifting and energy savings to meet targeted goals. Meanwhile, those that have already embraced