TRC

Court Favors Rate Impact Test for DSM

The Florida Supreme Court has upheld a decision by the state commission (PSC) to test the cost-effectiveness of demand-side management (DSM) programs for the state's four largest investor-owned electric utilities by measuring the impact of the programs on rates for all consumers, whether or not they participate in DSM programs.

It held the Rate Impact Measure (RIM) test consistent with state law directives to avoid discrimination between rate classes for DSM initiatives (em more so than the Total Resource Cost (TRC) test used alone.

California DSM: A Pyrrhic Victory for Energy Efficiency?

California has led the nation in utility expenditures for ratepayer-subsidized energy conservation, also called

demand-side management (DSM).1

With broad-based support from utilities, consumer representatives, environmentalists, the California Public Utilities Commission (CPUC), and the California Energy Commission (CEC), some $1.8 billion has been spent since 1990 (and $

Demand-side Management: Mitigate, Don't Eliminate

Electric utilities nationwide are attempting to retreat from commitments to energy efficiency (em a retreat that will benefit few customers, while damaging many. This retreat is driven by fear of retail wheeling (em that consumers will be able to shop for the lowest prices among competing entities. In turn, the threat of retail wheeling has spurred utilities to a frantic scramble to cut costs and trim rates.

Photovoltaics: A Dispatchable Peak-Shaving Option

PV technology combined with storage offers a cost-effective alternative to capacity additions.By John Byrne,

Young-Doo Wang,

Ralph Nigro, and

Steven E. Letendre

Until recently, both regulators and electric utilities have considered photovoltaic (PV) technology (i.e., solar cells) an unattractive

energy-supply option because of its relatively high cost. Now, however, a number of utilities have shown interest in using PV for peak-shaving.

DSM and the Transition to a Competitive Industry

Over the last decade, the Total Resource Cost

(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.

Must DSM Programs Increase Rates?

As competition in the electric industry increases, so does utility concern about the effect of demand-side management (DSM) programs on electricity prices. Because DSM programs often raise prices, several utilities have recently reduced the scope of their DSM programs or focused these programs more on customer service and less on improving energy efficiency (see sidebar). Whether all utilities should follow suit is, however, open to question. We contend that DSM programs do not always exert upward pressure on prices (em just sometimes.

Florida Approves To Usher Test for DSM

In setting utility conservation goals, the Florida Public Service Commission (PSC) has decided to permit the state's electric utilities to eliminate demand-side management (DSM) programs that increase rates for nonparticipating customers.