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 promotes the expansion and improvement of electric and natural gas utility energy efficiency programs in the Southwest. We work on legislation and regulations to establish energy savings goals or requirements, decoupling of utility cost recovery and electricity sales, 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 implement energy efficiency programs, and we frequently appear before state utility commissions when utility energy efficiency policies and programs are under review.

Electric utilities in the Southwest greatly expanded their energy efficiency and demand response programs in recent years. As shown in the table below, total funding for these programs was only about $29 million in 2002, SWEEP's first full year of activity. Funding steadily increased to $340 million in 2012 and then to $390 million in 2016.

Electric Utility Spending on DSM Programs in the Southwest, 2002-16

Utility energy efficiency programs in the region are yielding significant benefits. SWEEP estimates that households and businesses will save more than $7 billion as a result of utility DSM programs implemented during 2007-16 (see Table below). These programs have already cut carbon dioxide emissions by about 60 million metric tons, and even greater reductions will occur in the future due to energy efficiency measures now in operation. Utility DSM programs are also cutting load growth thereby reducing the need for costly and controversial new power plants.

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

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

Key Policies Influencing Electric Utility DSM Programs in the Southwest