Energizing the Energy Policy Process: The Impact of Evaluation

By Roberta W. Walsh; John G. Heilman | Go to book overview

highlighting the potential for a wide variation in evaluation efforts without minimum standards. Last, an empirical example of evaluation results was offered to show how results may be misinterpreted, based on the quality of the evaluation.

The primary incentives for accurate and objective DSM evaluation include short-term performance measurement, cost, and revenue recovery, and the potential for enhanced utility earnings. Longer-term objectives include promoting resource planning. However, there are also the conflicting objectives, which create a degree of risk associated with the evaluation, including external political pressure (from regulators, advocates, and the like) and internal pressure to succeed. There are also conflicting short-term financial goals that may pressure the evaluators to be optimistic.

The recommendations based on the previous discussion include the need to develop some minimum level of DSM standards for program evaluation and reporting. Once these standards are developed and adhered to, program results will be defendable and comparable. Program designers and implementers will then be able to rely on information from other utilities' programs. Evaluators will also be able to compare program results and analyze differences without being overly concerned that the differences may simply be based on the inconsistencies in reporting. Resource planners will be able to incorporate DSM into utility planning, knowing the level of risk and uncertainty in the estimates.

Last, there is a potential long-term risk to society if evaluation results are biased because of the potential short-term gains. These risks are directly related to suboptimal expenditures on DSM. Electricity prices may increase to a point where customers choose to bypass the system and produce their own power or buy it from another supplier, thus pushing prices up even further. These price increases may be brought on by excessive expenditures in uneconomic DSM programs (based on overly optimistic evaluation results) or underspending on economic DSM and overbuilding on the supply side because of pessimistic evaluations that underestimate the benefits of DSM.


NOTE
1.
An earlier version of this chapter appears on pp. 450-455 of Proceedings, energy program evaluation: Uses, methods, and results (CONF-910807), Chicago, Illinois, 1991. This chapter draws from earlier works of Herman ( 1990), RCG/Hagler Bailly, Inc. ( 1991), McRae ( 1990), Stoops and Pratt ( 1990), and Weil ( 1990).

-133-

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