TY  - JOUR
AU  - Arimura,Toshi H.
AU  - Li,Shanjun
AU  - Newell,Richard G.
AU  - Palmer,Karen
TI  - Cost-Effectiveness of Electricity Energy Efficiency Programs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17556
PY  - 2011
Y2  - October 2011
UR  - http://www.nber.org/papers/w17556
L1  - http://www.nber.org/papers/w17556.pdf
N1  - Author contact info:
Toshi H. Arimura
Sophia University
E-Mail: arimura@waseda.jp

Shanjun Li
Cornell University
424 Warren Hall
Ithaca, NY 14853
E-Mail: sl2448@cornell.edu

Richard G. Newell
Nicholas School of the Environment
Duke University
Box 90227
Durham, NC 27708
Tel: 919/681-8663
Fax: 919/684-5833
E-Mail: richard.newell@duke.edu

Karen Palmer
Resources for the Future
1616 P Street, NW
Washington, DC 20036
E-Mail: palmer@rff.org
AB  - We analyze the cost-effectiveness of electric utility ratepayer–funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential long-term demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate.
ER  -