Optimal energy efficiency policies and regulatory demand-side management tests: How well do they match?
Under conventional models, subsidizing energy efficiency requires electricity to be priced below marginal cost. Its benefits increase when electricity prices increase to finance the subsidy. With high prices, subsidies are counterproductive unless consumers fail to make efficiency investments when private benefits exceed costs. If the gain from adopting efficiency is only reduced electricity spending, capping revenues from energy sales may induce a utility to substitute efficiency for generation when the former is less costly. This goes beyond standard "decoupling" of distribution revenues from sales, requiring complex energy price regulation. The models' results are used to evaluate tests in the 2002 California Standard Practice Manual for assessing demand-side management programs. Its "Ratepayer Impact Measure" test best conforms to the condition that electricity price is too low. Its "Total Resource Cost" and "Societal Cost" tests resemble the condition for expanded decoupling. No test incorporates optimality conditions apart from consumer choice failure.
If 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.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brennan, Timothy J., 2003.
"Electricity Capacity Requirements: Who Pays?,"
The Electricity Journal,
Elsevier, vol. 16(8), pages 11-22, October.
- Brennan, Timothy J., 2008. "Is the Benefit of Reserve Requirements in the “Reserve” or the “Requirement”?," Discussion Papers dp-08-33, Resources For the Future.
- Timothy J. Brennan, 2004. "Market Failures in Real-Time Metering," Journal of Regulatory Economics, Springer, vol. 26(2), pages 119-139, 09.
- Brennan, Timothy J., 2009.
"Energy Efficiency: Efficiency or Monopsony?,"
dp-09-20, Resources For the Future.
- Brennan, Timothy, 1998. "Demand-Side Management Programs Under Retail Electricity Competition," Discussion Papers dp-99-02, Resources For the Future.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:3874-3885. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
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.