Demand-side management (DSM) programs are widely used across electricity systems to reduce peak demand and manage overall system costs by influencing electricity consumption. As electricity demand grows and grids evolve, many jurisdictions are expanding DSM as part of broader electricity system planning.
DSM programs typically include energy efficiency and demand response, as well as other demand-side energy resources that help electricity systems meet customer demand more efficiently.
In this report, we assessed and compared DSM frameworks across four jurisdictions — Wisconsin, Ontario, California and Texas — and examined Alberta as a baseline case, as it currently has no formal DSM programs. Our assessment focused on legislative authority, institutional arrangements, governance structures, and regulatory frameworks to understand how jurisdictions legislate, support, and evaluate DSM programs. We also explored how findings from the comparative jurisdictions could be applied in Alberta.
Key findings
- DSM programs are established through legislation or ministerial direction. Legislative authority defines program objectives and establishes the institutions responsible for program delivery, oversight, and funding.
- Institutional arrangements vary across jurisdictions. DSM programs may be administered through centralized program administrators (Wisconsin); delivered directly by electric utilities under regulatory oversight (California and Texas); or implemented through a hybrid model in which a central administrator leads program design and procurement while distribution utilities support local delivery and implementation (Ontario).
- Regulatory oversight and program evaluation are core components of DSM frameworks. Industry-standard cost tests are used in rate applications to consistently measure program cost‑effectiveness. Jurisdictions rely on program reporting, independent evaluation, measurement and verification, and periodic regulatory review to ensure outcomes are accurately measured and transparently reported.
- Program funding approaches differ across jurisdictions. DSM programs are funded through utility charges, centralized program budgets, or regulatory cost‑recovery mechanisms. While funding sources are broadly similar, administrators are compensated differently. In some cases, administrators recover approved program costs only; in others, incentive mechanisms align program delivery with performance outcomes.
- DSM programs have demonstrated measurable customer and system benefits. Programs have resulted in reduced electricity consumption, reduced peak demand, avoided infrastructure investments, and utility bill savings across customer classes.
Insights for Alberta
Our assessment highlights several structural elements that could inform future discussions on DSM legislation and implementation in Alberta. The jurisdictions examined demonstrate multiple approaches to program administration, regulatory oversight, and program funding that could be adapted to different electricity system structures.
Key considerations for Alberta include establishing clear legislative authority for DSM programs, defining institutional responsibilities for program delivery and oversight, and designing regulatory frameworks that support effective funding, cost recovery and administrator compensation. Cost‑effectiveness testing is also critical to ensure DSM programs deliver measurable value for consumers and the electricity system.
The Pembina Institute acknowledges the generous support of the Alberta Ecotrust Foundation.
