Recent studies show that electricity demand-response programs have saved customers millions of dollars and could save billions more. The federal government’s General Services Administration (GSA), for example, saved $1.9 million over five years.
The programs use price incentives to encourage consumers to use less power at times of peak demand, thereby increasing the reliability of the power grid. While benefits from demand-response are potentially large, three main barriers limit their introduction and expansion:
Gulf Power, a regulated utility in the Florida panhandle, was able to effectively overcome these barriers.
The GAO reported three important lessons for such programs to succeed. First, programs must have sufficient incentives to make customer’s participation worthwhile. Second, programs are more likely to succeed if state regulators and market participants are receptive to potential benefits of demand-response programs in their areas. Finally, to achieve these benefits, the design of programs should consider appropriate outreach, the introduction of necessary equipment, and the ease with which customers can participate
Source: “Consumers Could Benefit from Demand-Response Programs, but Challenges Remain,” United States Government Accountability Office, August, 2004. See http://www.gao.gov/new.items/d04844.pdf .