State Approaches to Demand Reduction Induced Price Effects: Examining How Energy Efficiency Can Lower Prices for All
- Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
Effects (DRIPE) as a real, quantifiable benefit of energy efficiency and demand response programs. DRIPE is a measurement of the value of demand reductions in terms of the decrease in wholesale energy prices, resulting in lower total expenditures on electricity or natural gas across a given grid. Crucially for policymakers and consumer advocates, DRIPE savings accrue not only to the subset of customers who consume less, but to all consumers. Rate-paying customers realize DRIPE savings when price reductions across an electricity or natural gas system are passed on to all retail customers as lower rates (depending upon regulation and market structure, residual savings may be wholly or partially retained by utilities). DRIPE savings, though seemingly small in terms of percent price reductions or dollars per household, can amount to hundreds of millions of dollars per year across entire states or grids. Therefore, accurately assessing DRIPE benefits can help to ensure appropriate programs are designed and implemented for energy efficiency measures. This paper reviews the existing knowledge and experience from select U.S. states regarding DRIPE (including New York and Ohio), and the potential for expanded application of the concept of DRIPE by regulators. Policymakers and public utility commissions have a critical role to play in setting the methodology for determining DRIPE, encouraging its capture by utilities, and allocating DRIPE benefits among utilities, various groups of customers, and/or society at large. While the methodologies for estimating DRIPE benefits are still being perfected, policymakers can follow the examples of states such as Maryland and Vermont in including conservative DRIPE estimates in their resource planning.
- Research Organization:
- US Department of Energy, Washington, DC (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- OSTI ID:
- 1331049
- Report Number(s):
- DOE/EE-1307; 7505
- Country of Publication:
- United States
- Language:
- English
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