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How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level

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  • Paul W. Parfomak
  • Lester B. Lave

Abstract

The current movement toward utility restructuring raises questions about the future of utility conservation programs, which have long suffered from illinformed and conflicting perceptions about their ability to affect customer loads. Controversy has arisen because of the inherent difficulty in measuring conservation impacts and because utilities have had clear economic incentives to overestimate impacts. This study uses econometric techniques to examine the aggregate commercial and industrial conservation impacts reported expost by 39 utilities in the Northeast U.S. and California through 1993. The study finds that 99.4% of the reported conservation impacts are statistically observable in system level sales after accounting for economic and weather effects. The results indicate that utility-run conservation programs have, indeed, been effective in reducing customer loads. The study finds no evidence the utilities have systematically overstated conservation effects.

Suggested Citation

  • Paul W. Parfomak & Lester B. Lave, 1996. "How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 59-87.
    • Handle: RePEc:aen:journl:1996v17-04-a03
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    1. Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Brown, Marilyn A., 2001. "Market failures and barriers as a basis for clean energy policies," Energy Policy, Elsevier, vol. 29(14), pages 1197-1207, November.
    3. Horowitz, Marvin J. & Bertoldi, Paolo, 2015. "A harmonized calculation model for transforming EU bottom-up energy efficiency indicators into empirical estimates of policy impacts," Energy Economics, Elsevier, vol. 51(C), pages 135-148.
    4. van Megen, Bram & Bürer, Meinrad & Patel, Martin K., 2019. "Comparing electricity consumption trends: A multilevel index decomposition analysis of the Genevan and Swiss economy," Energy Economics, Elsevier, vol. 83(C), pages 1-25.
    5. Dalzell, Nicole M. & Boyd, Gale A. & Reiter, Jerome P., 2017. "Creating linked datasets for SME energy-assessment evidence-building: Results from the U.S. Industrial Assessment Center Program," Energy Policy, Elsevier, vol. 111(C), pages 95-101.
    6. Isamu Matsukawa, 2005. "The Benefits of Information on the Efficient Usage of Consumer Durables," Others 0501005, University Library of Munich, Germany.
    7. Papineau, Maya, 2017. "Setting the standard? A framework for evaluating the cost-effectiveness of building energy standards," Energy Economics, Elsevier, vol. 64(C), pages 63-76.
    8. Boogen, Nina & Datta, Souvik & Filippini, Massimo, 2017. "Demand-side management by electric utilities in Switzerland: Analyzing its impact on residential electricity demand," Energy Economics, Elsevier, vol. 64(C), pages 402-414.
    9. Joseph Eto & Suzie Kito & Leslie Shown & Richard Sonnenblick, 2000. "Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs," The Energy Journal, , vol. 21(2), pages 23-49, April.
    10. Wang, Xia & Feng, Wei & Cai, Weiguang & Ren, Hong & Ding, Chao & Zhou, Nan, 2019. "Do residential building energy efficiency standards reduce energy consumption in China? – A data-driven method to validate the actual performance of building energy efficiency standards," Energy Policy, Elsevier, vol. 131(C), pages 82-98.
    11. Maya M. Papineau, 2015. "Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes," Carleton Economic Papers 15-04, Carleton University, Department of Economics.
    12. Thomas, Brinda A. & Azevedo, Inês L., 2014. "Should policy-makers allocate funding to vehicle electrification or end-use energy efficiency as a strategy for climate change mitigation and energy reductions? Rethinking electric utilities efficienc," Energy Policy, Elsevier, vol. 67(C), pages 28-36.
    13. Chomitz, Kenneth M., 2000. "Evaluating carbon offsets from forestry and energy projects," Policy Research Working Paper Series 2357, The World Bank.
    14. Nic Rivers & Mark Jaccard, 2011. "Electric Utility Demand Side Management in Canada," The Energy Journal, , vol. 32(4), pages 93-116, October.
    15. 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.

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