The Demand Side Management Act

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Act XVIII of Energize America

Contents

Objective

1) To provide incentives for utility companies to reduce energy consumption, and 2) to provide users with timely and actionable information on the cost of their electricity.

Description

Utilities are often in the best position to reduce both aggregate and localized energy consumption for businesses and consumers alike. However, under the current regulatory framework where ‘more income’ is derived mainly from selling ‘more power’, utilities are not financially motivated to implement meaningful demand reduction solutions for their customers. Furthermore, business and residential customers often lack the detailed information and tools necessary to make informed decisions on their energy consumption, especially during times of supply constraints such as a prolonged heat wave in the summer.

The Demand Side Management Act will decouple utility profits from their traditional role of energy generation, transmission and distribution, and will allow utilities and businesses to profit from energy savings that they create for their customers. Elements of the act include: a) Tax credits for energy audits and energy-saving investments on behalf of customers, up to 50% of the net energy saved over five years, b) Accelerated depreciation for all qualifying energy efficient and renewable energy investments, c) Accelerated depreciation of the entire project for buildings that meet the highest ‘Leadership in Energy and Environmental Design’ (LEED) standards. d) a requirement that an at least 2.5% of all utility revenues be invested in Demand Side Management programs, not including investments in renewable energy sources. This will include creating programs for home and facility energy audits of no less than once every ten years. With a financing program to aid homeowners and commercial enterprises follow-up on recommendations from those audits.

Benefits

By 2020, the Demand Side Management Act will reduce will reduce electricity consumption by 20%. Furthermore, this act will provide a competitive, market-based framework that allows utilities to create energy-savings opportunities for customers, and for customers’ businesses to make informed and timely decisions on how, where and when they consume electricity.

Investment

The Demand Side Management Act is estimated to cost $25 billion through 2020.

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