(TRC) test has become the dominant method of comparing the costs and benefits of demand-side management (DSM) programs. Yet the TRC test fails to recognize the negative rate impacts from reduced kilowatt-hour consumption. DSM advocates argue that more extensive DSM programs will compensate for this flaw. If all customers have an opportunity to participate in a DSM program, they claim, customers' total bills will fall in spite of rising rates that pay for the DSM investments. This argument rings hollow in an electric industry increasingly governed by market forces. The price increases needed to pay for large-scale DSM programs will undermine a utility's competitive position in that market.
Some jurisdictions are attempting to address this issue by requiring a Ratepayer Impact Measure (RIM) test that eliminates programs with any meaningful impact on sales. Several proposals have sought a middle ground between TRC and RIM, but these proposals tend to be short on tangible techniques to assist regulators in screening programs. They typically require the quantification of unquantifiable theoretical variables, adding an additional layer of uncertainty to an already uncertain analysis.