What is Demand Side Management?

Columbia Gas of Ohio has asked the Public Utilities Commission of Ohio for permission to create a comprehensive energy conservation program that would benefit its residential and small commercial customers. These programs are sometimes referred to as Demand Side Management, or DSM, programs. No matter what you call it, it's all about saving energy — and money. Let's look at the key concepts behind the term:

Demand drives customer bills

As the name implies, DSM programs focus on the demand for energy. There are two parts to a customer's monthly natural gas bill — the gas commodity portion and the gas delivery portion. At today's gas costs, the commodity portion now represents 80 percent of the average customer's bill. While Columbia Gas of Ohio's gas delivery rates have remained the same since 1994, gas costs have risen dramatically in recent years.

Conservation reduces customer bills today

While increasing supplies could bring natural gas price relief, the most direct and immediate way that customers can reduce their gas bill is by reducing their gas usage today.

There are barriers to conservation

A customer may wish to significantly reduce their energy consumption, but it's easier said than done. They may not have the money to install a high-efficiency furnace or to upgrade their insulation or air seal their home. They may lack reliable information on effective efficiency measures, or they may lack the time to solicit and evaluate contractor bids.

Simplicity + Incentives = Results

If the utility company can simplify the process of identifying cost-effective energy efficiency improvements and provide financial incentives like rebates, customers will respond by installing conservation measures that they wouldn't otherwise have done.

Everyone benefits

While the program directly benefits the participant by significantly reducing their gas bills, the potential benefits don't stop there. As more and more people install efficiency measures and use less and less gas, that reduces demand pressures on the market and could bring down prices over time. And, as less natural gas is burned, less carbon dioxide is emitted into the air, and our environment benefits.

Return on the investment

The small amount of money invested in energy efficiency measures is more than offset by the savings in gas costs over time. For instance, the $47 million Columbia proposes to spend on DSM and WarmChoice are projected to result in $102 million in savings.