One of the great attractions of demand-side management (DSM) lies in its ability to accommodate one-stop shopping. In contrast to the traditional supply-side approach, DSM allows energy utilities to minimize price hikes and maintain environmental quality even while meeting increasing needs.
Nevertheless, some of the initial excitement has waned. For example, The Wall Street Journal reviewed 11 programs in late 1993 and found that 8 realized less than half their projected savings. Sacramento Municipal Utility District (SMUD) also fell short on conservation goals set for June 30, 1993: It cut peak capacity by only 28 megawatts (MW), instead of 42 MW; energy savings came in at 38 gigawatt-hours (Gwh), missing its goal of 65 Gwh.1
Although the president of SMUD's Board ascribed the shortfall to the slowdown of the entire California economy, we should examine what such reports mean for the utility industry. Were expectations inflated for DSM? Will a little fine-tuning cure this underachievement? Upon evaluating recent published reports and private surveys, we suggest that DSM programs will prove more successful over the long term if utilities and regulators concentrate less on technical fixes and more on consumer behavior.
A New Plan for Regulators