A simpler method for calculating the cost of conservation subsidies for an electric utility

This article presents a highly aggregated method of calculating the cost of conservation subsidies for an electric utility company. The cost is expressed in terms of the company's total expenditures on subsidies versus the reduction in electricity demand due to customers' extra conservation investments. We argue that the highly aggregated method would serve as a useful complement to the detailed programme by programme calculations normally performed to determine conservation cost-effectiveness. The simpler method is demonstrated with an application to the conservation programmes of the Pacific Gas and Electric Company.