Demand-Side Management for Municipal Utilities: A Practical Guide and Reference Manual

The goal of this manual is to provide a practical, step by step guide to assist municipal utilities in planning and carrying out demand-side management activities.

What is demand-side management?

“Demand-side management is the planning and implementation of those utility activities designed to influence customer use of electricity in ways that will produce desired changes in the utility’s load shape.” Demand-side management seeks cost-effective ways to balance electric supply and demand through activities aimed at the demand side, or customer side, of the meter. Demand-side management (DSM) includes not only strategic conservation, but also load management, and even strategic load growth and electrification. Chances are very good that your utility has done some DSM already!

Why DSM?

In 1995, as electric utilities face the prospect of deregulation, wholesale competition, and possibly even retail competition, there is a tendency to dismiss DSM as a costly frill, implemented at the behest of regulators, that competitive utilities can no longer afford. Utilities and trade organizations are dissociating themselves from the term “demand-side management” and focusing instead on “energy services” and “marketing.” Regardless of the name that it goes by, activity directed toward the customer side of the meter will continue to be an important part of utilities’ business. Many load management programs can decrease generation, transmission and distribution requirements and thereby reduce rates and provide a competitive advantage. Some utilities, including Moorhead Public Service, have power purchase contracts structured in such a way that strategic conservation programs can also reduce rates. Programs that are beneficial to customers can be strategically important to the utility even if a first analysis indicates that they will cause a small increase in rates. Why? Because customer loyalty, customer retention, and retention of market share (e.g., electric vs gas water heating) will have a positive impact on utility revenues and rates in the longer term. Finally, programs may be beneficial to the community as a whole even if they do cause an increase in rates. Municipal utilities are in a unique position which empowers and even requires them to consider the full societal impact of DSM activities, and not just the more narrow rate impact. 

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Demand-Side Management for Municipal Utilities: A Practical Guide and Reference Manual