Under some conditions, utilities--the electricity, natural gas, and thermal energy supply organisations--can play significant roles in market transformation. Public utilities are given special powers, such as limited monopolies in their service territories, and the right to use eminent domain to obtain easements for their distribution networks. In turn, they are subject to varying forms of regulation, including the approval of the tariff rates that they charge to different classes of customers. The role of utilities places them in a unique position to deliver energy efficiency and renewable energy programmes to their customers. They are a source of technical expertise in the supply and use of energy; are in regular contact with their customers; and are in a strategic position to aggregate customer demand to introduce new technologies.
Despite these advantages, utilities historically have had a disincentive to encourage energy efficiency. In the past--and continuing in many jurisdictions--the profits earned by utilities have been based on the volume of their energy sales. In this regulatory climate, if a utility encourages efficiency successfully, its sales and earnings decline. To correct this disincentive, a number of national and state governments are adopting utility reforms. Regulatory programmes are being changed to require utilities to carry out energy efficiency programmes and to allow them to earn a profit on these services--the traditional demand-side management (DSM) model. Where utility restructuring is taking place, utilities are under competitive pressure to reduce costs, which has reduced their investments in DSM programmes. To preserve these programmes, some restructuring legislation is experimenting with mandatory "line" charges-surcharges on each kWh of electricity carried on a transmission line-to create special funds for DSM services, including energy efficiency and renewable energy investments and subsidies for low-income customers.
The features that made utility DSM programmes successful--the technical expertise of utilities and their customer contacts--have lead to the transfer of utility programmes among countries. In Brazil, a comprehensive national electricity conservation programme, PROCEL, conducts R&D, energy audits, equipment testing and rating, and educational campaigns (Geller, 1997). In Thailand, a DSM programme has been initiated through cooperation between the utility and manufacturers. In China, DSM is integrated into a Sustainable Future programme. The rapidly increasing cross-boundary investments in utilities is increasing the potential of this form of technology transfer.
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