Increase Energy Supply Through Efficiency
Legislators can usually solve energy capacity problems far more quickly and cheaply by introducing efficiency measures than by adding new power plants and other infrastructure. Legislation giving electricity networks or retail companies the duty and the financial means to achieve energy savings in cooperation with their customers can avoid the major expense of constructing additional infrastructure and at the same time curbing emissions.
Legislators can adopt legislation that requires energy companies to determine the cost-effectiveness of reducing electricity use versus increasing capacity by building new power-plants. Reducing energy consumption through efficiency measures rather than by adding new capacity is much more environmentally sound and cost-effective over the long-term.
Higher levels of efficiency can be achieved more quickly and smoothly if energy companies themselves become involved in the process of reducing electricity use. The challenge is for legislators and Public Utility Commissions to create legislation that gives electricity networks or retail companies both the duty and the financial means to achieve energy savings in cooperation with their customers.
Around 20 States in the USA, several European countries, and a number of others have developed two principle ways to achieve this objective.
One method is to create an independent trust, obtaining funds from energy taxes or a levy on electricity prices that all customers have to pay regardless of who their electricity supplier is. The funds are then used for energy efficiency programmes, which can be implemented by energy companies and other bodies.
Another means is to oblige electricity networks or retail companies to achieve energy savings in cooperation with their customers, and allow the programme costs to be recovered through their prices.
Both of the solutions outlined above are examples of how demand-side management by energy companies can focus on obtaining energy savings in cooperation with their customers.