Demand Side Management Programs


When did the investigation begin, and what were the findings?

On July 28, 2004, the Indiana Utility Regulatory Commission ("Commission") initiated an investigation to review demand-side management ("DSM") issues and programs in the state of Indiana. The Commission decided to complete the investigation in two phases. Phase I dealt with the analysis of the current landscape, and Phase II dealt with specific action regarding the implementation and evaluation of the programs.

The Phase I order highlighted and considered the following characteristics about Indiana:

  • Inconsistent Patchwork of DSM Programs: The current approach to DSM in Indiana provides an inconsistent patchwork that excludes some customers (geographically and by sector) from the benefits of energy efficiency services.
  • Low Overall Spending on DSM: Indiana lags well behind its neighboring states--and the nation as a whole--with respect to spending on DSM. Indiana currently ranks 31st nationally and 6th among 7 Midwestern states in spending for electric energy efficiency - both on a per capita basis and as a percentage of utility revenue.
  • High Energy Consumption: Indiana has high energy consumption, even when compared to other manufacturing intensive states, which offsets low energy prices and results in overall energy costs that could be reduced through energy efficiency.
  • Benefits of Reduced Energy Costs: Where attainable in a cost-effective manner, reduced energy costs provide overall benefits to the economy.
  • Environmental Issues: Environmental issues regarding new or increased regulatory requirements associated with energy generation and consumption provide additional justification to increase emphasis on energy-efficiency.

Were the hearings open to the public, and did consumers have the opportunity to comment on the pending case?

Hearings for this case were open to the public and the media. All hearings were publically noticed and published as required by law. Additionally, all utilities were notified of the process and participated either directly or through self-selected proxies.

Consumers could have contacted the Indiana Utility Regulatory Commission or the Indiana Office of Utility Consumer Counselor to file comments on the pending case. All comments that were submitted were entered into the case record and considered when the Commission made its final decision.

Where does the IURC get its authority?

The Commission receives its authority from Title 8 of the Indiana Code. Numerous court decisions further define the Commission's function. The Commission also promulgates its "Rules and Regulations Concerning Practice and Procedure" as well as "Rules and Regulations and Standards of Service" to govern each type of utility under Title 170 of the Indiana Administrative Code.


What is DSM, and why is it necessary?

According to the Energy Information Administration, DSM is “the planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand.”

According to a report prepared by the State Utility Forecasting Group, Indiana electricity rates are projected to increase 12 percent over the next four years. Additionally, the report projected a need for 540 megawatts of baseload resources, 480 of peaking and 300 of cycling by the year 2015. In order to meet this demand in a cost-effective manner, our state must consider all alternatives including traditional generation, renewable energy and, most importantly, energy efficiency.

What is required of the state’s jurisdictional electric utilities?

Through a reasonable but aggressive timeline, the utilities are expected to achieve an annual energy savings goal of 2 percent within 10 years with interim savings goals for years one through nine.

Additionally, the utilities must offer and implement the following core programs:

  • Residential lighting program: Incentives for ENERGY STAR qualified lighting measures;
  • Home energy audit program: Walk-through audits and direct installation of low-cost energy saving measures for interested customers;
  • Low income weatherization program: Comprehensive energy efficiency retrofits for income-qualified households;
  • Energy efficient schools program: Information and energy efficiency kits for K-12 schools, school building energy audits and access to prescriptive incentives available for commercial customers; and
  • Commercial and Industrial Program: Prescriptive incentives for common technologies such as T -8 or T -5 lighting, high efficiency motors and pumps and HV/AC equipment.

Why are independent third party administrators needed?

Taking the state’s current program structure into account and those of other states, the Commission created a hybrid approach to the DSM initiative. While the utilities will retain responsibility for the program offerings, including the management and implementation of DSM programs that go beyond the core program offerings, an independent third party administrator will oversee and coordinate the core programs for the utilities. An evaluation administrator or administrators will also be needed to undertake the evaluation, measurement and verification of the DSM programs to ensure their effectiveness.

The benefits of this approach include the uniform and systematic implementation of the core programs as well as the coordinated utilization of technologies and research, market assessments, and potential studies. In addition, the utilization of an independent third party administrator for this purpose is likely to create administrative efficiencies while facilitating coordination and consistency across participating utility service territories.

Where are we at in the process?

The Commission issued its final decision on December 9, 2009. In its order, the Commission required the formation of a DSM Coordination Committee that is charged with, among other things, developing program designs for all core programs, coordinating the development and maintenance of a statewide database for all program results, and creating periodic joint reports for the Commission on the status of the DSM programs.

The Coordination Committee submitted its first report on January 22, 2010 and its second report on March 2, 2010.

Where can I find the two requests for proposals (RFPs) posted by the Coordination Committee?

The two RFPs are available through these links, which will remain posted until May 26, 2010:

Vendors and bidders with questions regarding the RFPs should contact PowerAdvocate via the information in the linked documents.

Will I have to pay for upgrades to my home to make it more efficient?

The core programs are designed to benefit Hoosiers who wish to become more aware of conservation efforts and energy efficiency practices. Concerns have been raised that the home energy audit program is mandatory for all households. This is not true. Rather, it is a service that the utility company is required to offer to its customers.

Many utilities already have programs like this in place and have helped numerous customers identify ways to reduce their energy consumption and costs.

Will our town be penalized for adding new business or expanding current business?

In no way is the Commission imposing limits on economic growth and development. Many businesses are already considering ways to reduce the amount of energy they consume. By identifying ways to cut down on energy costs, businesses have the opportunity to pass those savings along to consumers.

Are the utilities required to file reports with the Commission detailing their progress?

Yes. On July 1, 2010, the utilities must submit their first DSM plans to the Commission to address progress with respect to their annual DSM savings goals. Subsequent DSM plansmust be filed with the Commission on July 1, 2013, 2016, and 2019, with annual supplemental updates in the interim periods.

How much will I be charged, and what are the benefits?

In other states that have implemented annual savings goals, rates have increased minimally. However, it should also be noted that participating consumers have decreased the amount of energy for which they are charged, which, in turn, counters an increase in rates.

Effective DSM programs act to reduce energy costs and can provide overall economic benefits. Additionally, the increased utilization of DSM can mitigate environmental issues and lessen the costs associated with new or increased regulatory requirements regarding energy generation. As recognized in Governor Daniels’ Homegrown Energy Plan, Indiana must become a self-sufficient leader with respect to its energy needs and such an effort is not limited to building new generation.


Where can I find the Commission’s order and news release for Cause No. 42693?

Please click here for a copy of the order.

Please click here for a copy of the news release.

Where can I find testimony related to the case?

Testimony from all parties can be found on the Commission’s Electronic Document System at Click "search cases" and enter the five-digit cause number, 42693, in the "docket number" field. After clicking “search” you will be directed to the case file where you can find the final order, hearing dates and filings by all parties who participated in the case.

Where can I find additional information about Indiana’s demand for energy?

Every other year, the State Utility Forecasting Group prepares an electricity forecast report for Indiana. The 2009 report can be found here:

What are some useful tips on conservation and energy efficiency?

The U.S. Department of Energy has created a Web site dedicated to identifying ways consumers can save energy and reduce their utility bills at the same time. To access information about energy efficient appliances, weatherization practices and heating and cooling recommendations, please visit:

What programs are currently offered by my utility company?

For a list of utility company incentives and policies that promote renewable energy and energy efficiency in Indiana, please visit: