Energy Efficiency Options for the New England Demand Response Initiative (NEDRI) – Framing Paper #4

The central conclusion of this framing paper is: cost-effective energy efficiency programs make electricity markets more competitive and more efficient, significantly improve the reliability of the electric system in New England, and reduce the costs and environmental impacts of electric service. Therefore, the states and region should consider regulatory, institutional, and market reforms that would increase the region's reliance on energy efficiency as a resource, together with other beneficial demand-side resources. Many policy makers in New England appear to agree. For example, in July 2001, the Coalition of Northeastern Governors issued an Energy Policy Statement that included the declaration: "Conservation, energy efficiency, and demand management are viable and cost-effective strategies for meeting energy needs, and are necessary components of a balanced national energy strategy." The discussion and analysis in this paper are built upon the foundation laid in Richard Cowart's report prepared for NARUC, Efficient Reliability: The Critical Role of Demand-Side Resources in Power Systems and Markets. This NEDRI framing paper builds upon Cowart's report in two main ways, by broadening the discussion to include all system needs (not limited just to reliability), and by narrowing the focus to explore energy efficiency as one of several valuable demand-side resources.