Guidelines for Assessing the Value and Cost-effectiveness of Regional Market Transformation Initiatives

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Restructuring of the electric and gas utility industries is causing fundamental changes in the design and implementation of energy-efficiency programs. Until recently, energy efficiency programs were an essential element of least-cost planning for electric and gas utilities. Now many policymakers are re-examining the continuing need for, purposes served by, and manner of delivering energy-efficiency programs in light of utility restructuring policies across the Northeast and the nation. In parts of the country where support for utility energy-efficiency programs has been strong for years (such as the Northeast, Northwest, California, and Wisconsin), continuing recognition of the important public benefits provided by these programs, in particular the reduction of negative environmental consequences of electricity generation, has inspired both regulatory and legislative efforts to preserve ratepayer funding for them. These efforts also generally recognize that the former utility resource acquisition orientation of these programs has given way to a broader societal perspective that emphasizes the overall economic and environmental benefits provided by energy-efficiency programs.

An emerging focus for energy-efficiency programs in a restructured electricity industry is market transformation. Much attention is now being devoted to implementing energy-efficiency programs that have been explicitly designed to effect lasting beneficial changes in markets. Successful market transformation programs hold the promise of improving the functioning of markets to the point where publicly funded programs are no longer needed. To facilitate regional market transformation efforts, Northeast Energy Efficiency Partnerships, Inc. (NEEP), a nonprofit regional organization, was founded in 1996 to increase and coordinate energy-efficiency efforts in New England, New York, and the Mid-Atlantic region.

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