Three Decades and Counting: A Historical Review and Current Assessment of Electric Utility Energy Efficiency Activity in the States

Research Report U123


Dan York, Patti Witte, Seth Nowak and Marty Kushler


Providing programs to electric utility customers to reduce their energy use through improved energy efficiency is an innovation with roots in the energy crises of the 1970s. The concept that energy utilities should substitute electricity savings in new and existing end-uses for more costly alternative sources of electricity was a radical departure from the regulatory and business models established and followed by energy utilities since their inception in the early part of the 20th century. From these early roots, energy efficiency programs for electric utility customers have grown rapidly, despite some fluctuations in funding and support. Electric utility restructuring led to a precipitous decline in program funding in the late 1990s. Since then, electric utility energy efficiency programs have grown continuously and rapidly. In 2010, total budgets for these programs were $4.6 billion. Numerous policy and program innovations have occurred to drive such changes and to reach goals established for these programs. Over three decades of experience with these programs have demonstrated their ability to reduce energy use and thereby provide significant economic, environmental, and system benefits. The emergence of energy efficiency as a valuable, cost-effective, and significant energy resource has established the foundation for a new era of energy efficiency, an era marked by continued expansion and innovation.