Lessons from Utility Conservation Programs
AbstractThis paper considers the design, incentives and effectiveness of U.S. demand side management (DSM) programs and tries to explain why this ambitious, almost unanimously embraced initiative failed. Problems on the demand side result from consumers' private information that implies that substantial principal-agent slippage must accompany any conservation incentive the utility offers to the consumer. Moreover, the regulatory incentives induce the American utility to select inefficient programs. Therefore, the utility has little to gain from deterring such strategic reactions and cheating by consumers. As a consequence, the reported conservation exists largely on paper but not in reality. This ex-post assessment is important for two reasons. First, European countries (Scandinavia, Germany, Austria and others) have been eager to repeat this American regulatory 'success'. Second, the problems addressed in this paper would apply to another round of conservation programs induced by the concern about global warming.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by International Association for Energy Economics in its journal The Energy Journal.
Volume (Year): Volume21 (2000)
Issue (Month): Number 1 ()
Find related papers by JEL classification:
- F0 - International Economics - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Rob Aalbers & Henri de Groot & Herman R.J. Vollebergh, 2011.
"Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information,"
CPB Discussion Paper
194, CPB Netherlands Bureau for Economic Policy Analysis.
- Aalbers, R.F.T. & Vollebergh, H.R.J. & Groot, H.L.F. de, 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," Discussion Paper 2011-109, Tilburg University, Center for Economic Research.
- Diffney, Sean & Lyons, Sean & Malguzzi Valeri, Laura, 2009.
"Advertising to boost energy efficiency: the Power of One campaign and natural gas consumption,"
WP280, Economic and Social Research Institute (ESRI).
- Diffney, Seán & Lyons, Seán & Malaguzzi Valeri, Laura, 2013. "Evaluation of the effect of the Power of One campaign on natural gas consumption," Energy Policy, Elsevier, vol. 62(C), pages 978-988.
- Frondel, Manuel & Schmidt, Christoph M., 2001.
"Evaluating environmental programs: the perspective of modern evaluation research,"
ZEW Discussion Papers
01-59, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Frondel, Manuel & Schmidt, Christoph M., 2005. "Evaluating environmental programs: The perspective of modern evaluation research," Ecological Economics, Elsevier, vol. 55(4), pages 515-526, December.
- Frondel, Manuel & Schmidt, Christoph M., 2001. "Evaluating Environmental Programs: The Perspective of Modern Evaluation Research," IZA Discussion Papers 397, Institute for the Study of Labor (IZA).
- Arjan Ruijs & Herman R.J. Vollebergh, 2013.
"Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms,"
OECD Environment Working Papers
55, OECD Publishing.
- Arjan Ruijs & Herman Vollebergh, 2013. "Lessons from 15 Years of Experience with the Dutch Tax Allowance for Energy Investments for Firms," Working Papers 2013.56, Fondazione Eni Enrico Mattei.
- Peter Grösche & Christop M. Schmidt & Colin Vance, 2013. "Identifying Free-riding in Home Renovation Programs Using Revealed Preference Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(5-6), pages 600-618, October.
- Arguedas, Carmen & van Soest, Daan P., 2009. "On reducing the windfall profits in environmental subsidy programs," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 192-205, September.
- Wilson, Elizabeth J. & Plummer, Joseph & Fischlein, Miriam & Smith, Timothy M., 2008. "Implementing energy efficiency: Challenges and opportunities for rural electric co-operatives and small municipal utilities," Energy Policy, Elsevier, vol. 36(9), pages 3383-3397, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Williams).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.