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DSM and Energy Efficiency


Following a 2004 investigation, based on the certificate of need law (Indiana Code 8-1-8.5), the Indiana Utility Regulatory Commission (IURC) issued a decision in 2009 that required the state's investor-owned electric utilities (e.g., Northern Indiana Public Service Company, Vectren South, Indianapolis Power and Light, Duke Energy, and Indiana Michigan Power) to achieve an energy savings target of 2% within 10 years. Additionally, the IURC established the need for two third-party administrators - one for program implementation and another for the evaluation, measurement, and verification of the reported statistics. The method for reducing consumption was focused on demand side management (DSM) practices.

DSM is defined by the U.S. Department of Energy as "the process of managing the consumption of energy, generally to optimize available and planned generation resources." Broadly speaking, DSM encompasses initiatives such as demand response (DR) and energy efficiency (EE). For example, demand response programs are designed to shift the timing of energy consumption, but do not affect the overall level of consumption. EE programs, on the other hand, are designed to reduce consumption. For example, to make one's home more efficient, consumers may install ENERGY STAR appliances or schedule a home energy audit. By implementing these processes, individuals and companies may lower their overall energy usage, thereby helping customers achieve bill reductions and utilities plan for future energy resources.

Since the issuance of the IURC's decision, interested stakeholders, under the umbrella of the Demand Side Management Coordinating Committee, have worked collaboratively to implement and publicize the programs. However, this past year concerns were raised about its overall expense. Consequently, during the 2014 legislative session, Senate Enrolled Act 340 was enacted into law so that the General Assembly could examine the IURC's program. Although the law allows Indiana utilities to continue offering DSM programs, it lets the statewide program expire on December 31, 2014.

Governor Pence's Request

In his letter, dated March 27, 2014, Governor Pence requested that the IURC make recommendations on DSM and EE policies and programs, so that they may serve as a framework for potential legislation in the upcoming 2015 session of the Indiana General Assembly. Specifically, the Governor asked that the IURC's recommendations accomplish the following:

  • Include appropriate EE goals for Indiana;
  • Reflect an examination of the overall effectiveness of current DSM programs in the state;
  • Reflect any and all issues that may improve current DSM programs;
  • Reflect a thorough benefit-cost analysis of the cost impact to ratepayers of possible DSM programs; and
  • Allow for an opt-out whereby large electricity consumers can decide not to participate in a DSM program.

In order to ensure transparency and promote public engagement, the IURC issued a General Administrative Order (GAO) on April 9, 2014 explaining how written comments could be submitted to the agency for consideration. To view GAO 2014-1, please click here.

On October 9, 2014, the IURC submitted its letter in response to Governor Pence's March 27, 2014 request for recommendations on DSM and EE policies and programs.

Submitting Comments

Comments on DSM and EE policies and programs may be submitted to the IURC in writing. Details are provided below. The deadline for the submission of written comments is June 9, 2014.


Mail: General Counsel Beth Krogel Roads
Re: IURC's EE/DSM Recommendations
Indiana Utility Regulatory Commission
101 West Washington Street, Ste. 1500 E
Indianapolis, IN 46204

Related Documents

  • Public comments
    • All public comments submitted to the IURC are posted to this webpage and grouped by the week received.
  • Demand Side Management Report to the Indiana General Assembly (Submitted 8/15/2014)
  • Phase I DSM and EE investigation under Cause No. 42693
    • This investigation, opened in July 2004, explored DSM and EE policies and practices in general.
  • Phase I decision under Cause No. 42693
    • This Phase I order, issued in April 2008, made certain findings related to the opportunities associated with DSM and opened a Phase II of the proceeding to develop the framework for a statewide program in Indiana.
  • Phase II decision under Cause No. 42693
    • This Phase II order, issued in December 2009, identified the five Core Programs, created the energy savings goals for years 2009 through 2019, and recognized the need for two third-party administrators. These five programs (home energy audit; low-income weatherization program; residential lighting program; energy efficiency schools program; and a commercial and industrial program) have served as the foundation for the Energizing Indiana campaign. A complementary set of programs, designed by the utilities were also encouraged to help them meet the goals. These programs became known as the Core Plus Programs.
  • EM&V Summary Report under Cause No. 42693 S1
    • Each year a third-party administrator is responsible for reporting on the evaluation, measurement, and verification of the DSM and EE programs and their related energy savings. The first report was submitted on July 9, 2013. The third-party administrator's second annual report is due this summer.
  • Self-direct investigation under Cause No. 44310
    • This investigation, opened in February 2013, explores "whether the DSM expense allocated to certain large customers for Core and Core Plus Programs should be utilized to fund a self-direct DSM program, whereby qualifying customers may access the funds, or receive credits, to complete defined energy efficiency projects subject to evaluation, measurement, and verification."
  • Large customer opt out investigation under Cause No. 44441
    • This investigation, opened in January 2014, explores "the continued reasonableness of certain large customer participation in utility sponsored and Commission regulated DSM programs."