The author appreciates the opportunity to participate in this NARUC conference and to offer some thoughts on the implications for demand side management (DSM) resulting from increased competition in the electricity and gas businesses. The dominant theme of almost every professional conference in both gas and electricity is that the markets are becoming increasingly competitive and furthermore that increased competition benefits customers and affords opportunities to providers of energy services. However, only part of the effects of increased competition occur through utility DSM programs. A competitive marketplace for electricity and gas would indeed have an effect on utility conservation programs and on utility customers. The following are some of the implications of a competitive market. My presentation is an explanation and defense of these five propositions. (1) Economic efficiency will be enhanced - which increases the level of economic well being of customers and increases the productivity of the U. S. economy. (2) Energy efficiency will decrease, which may also increase our level of economic well-being and economic productivity. (3) Some DSM conservation programs will end, because they fail to pass the market test of competition. Those DSM programs that contribute to the efficient use of energy resources will prosper under competition. (4) The economic well-being of lower and middle income customers will be enhanced, first, by abolishing the DSM based subsidies to high income customers and second by pricing separately the reliability of electric services. (5) Policy goals will have to be justified on their merits - which is the worst fear of some, but the best outcome as viewed by others.
