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Southwest Energy Efficiency Project Southwest Energy Efficiency Project

Utility Program Overview

Utility energy efficiency and load management programs, also known as demand-side management or DSM programs, are a primary strategy for increasing energy efficiency in the Southwest and throughout the United States. Utilities educate customers, provide rebates and other financial incentives, and offer technical assistance in order to increase the adoption of cost-effective energy efficiency measures. The rationale for such programs is that it is far less costly to save energy than to supply energy from any new source, and it is better for the environment too.

SWEEP actively promotes the expansion and improvement of utility energy efficiency programs in the region. We work on legislation to establish energy savings goals or requirements, convenient program cost recovery, and financial incentives so that utilities and their shareholders are not penalized when they help their customers save energy. We advise utilities as they design and operate energy efficiency programs, and we frequently appear before state utility commissions when rules or plans for utility energy efficiency programs are under review.

Electric utilities in the Southwest greatly expanded their energy efficiency programs in recent years. As shown in Table 1 below, total funding for these programs was only about $29 million in 2002, SWEEP's first full year of activity. Funding steadily increased to $284 million in 2010 and approximately $335 million in 2012.

Table 1: Electric Utility Spending on DSM Programs in the Southwest, 2002-11

State DSM program budget
(million $ per year)
2002 2004 2006 2008 2010 2012
AZ 4 4 19 45 94 120
CO 11 21 18 28 66 98
NV 3 11 30 55 46 37
NM 1 1 1 10 24 27
UT 9 16 27 36 51 49
WY ~0 ~0 ~0 ~0 3 4
Region 29 54 95 174 284 335


Utility energy efficiency programs in the region are yielding significant benefits. SWEEP estimates that households and businesses will save nearly $4.6 billion as a result of utility DSM programs implemented during 2003-12 (see Table 2 below). These programs have already cut carbon dioxide emissions be over 28 million metric tons, with even greater reductions in the future due to energy efficiency measures now in operation. And the programs are reducing load growth and thus reducing the need for costly and controversial new power plants.

Table 2: Electricity Savings, Net Economic Benefits, and Avoided CO2 Emissions from Utility DSM Programs in the Southwest

Year First-year Energy Savings
Energy Savings from Cumulative Programs
Net Economic Benefits from Annual Programs1
(Million $)
Avoided CO2 Emissions2
(1000 metric tons)
2003 175 175 113 122
2004 239 414 146 290
2005 280 694 189 486
2006 476 1,170 256 819
2007 743 1,913 332 1,339
2008 1,046 2,959 459 2,071
2009 1,510 5,230 649 3,661
2010 1,690 6,920 726 4,844
2011 1890 8,810 864 6,167
2012 2075 10,885 904 7620
Total 10,885 -- 4,683 28,441

The growth in DSM activity has been heavily influenced by policies enacted in recent years. Table 3 summarizes the key policies affecting DSM efforts in each state. In short there are many more policies in place today compared to five or six years ago.

Table 3: Key Policies Influencing Electric Utility DSM Programs in the Southwest

Energy efficiency goals or standards X X X X
Integrated Resource Planning X X X X X  
Use of Societal or Utility Cost Test as sole/primary cost-effectiveness test X X X   X  
Convenient DSM cost recovery mechanism X X X X X X
Financial Incentive for utility shareholders X X X
Electric decoupling or lost revenue recovery mechanism X     X    
Gas decoupling or lost revenue recovery mechanism X     X X X
Collaboration in DSM program design/analysis X X X X X  
Industrial self-direction option X X X   X X


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For more information about SWEEP's utilities program, please contact:

$20 Billion Bonanza

“By investing a total of $17 billion in best practice utility energy efficiency programs, the Southwest region could realize $37 billion in utility system and public health benefits —meaning $20 billion in net benefits or $2650 for every household in the region today.”


Follow these links for information on utility energy efficiency programs currently implemented in each state: