As practiced until now, DSM programs were designed as utility programs to improve end use efficiency. In the early 1980s, the California Public Utilities Commission led the way in requiring utilities to implement DSM programs. The rationale behind first generation DSM was that DSM can be used to save energy at a fraction of the cost to generate it. Utilities could therefore use DSM to reduce their total energy costs. First generation DSM programs include a wide range of technology options, financial incentives and marketing strategies.
Debate lingers on their cost- effectiveness.
In general, they have not performed as well as originally expected. State and federal rulemaking triggered explosive growth in DSM programs in the late 1980s. Actual data reported by the utilities for 1995 is now being analyzed by the EIA, and their report will be issued in November of this year. According to staff members, preliminary review of the data shows no major changes in DSM spending. Energy savings increased from 45,294 million kilowatt hours in 1993 to 52,483 million kilowatt hours in 1994.