Demand-Side Management

Demand-side management (DSM) refers to any policy that seeks to influence the demand for a good or service. DSM is practiced in both the public and private sectors, and can be used to either increase or reduce demand through direct or indirect methods. The use of DSM is most associated with regulated utility companies, most of which adopted tiered-pricing schemes during the 1980s to encourage energy conservation, but DSM is increasingly being used to address a wide range of capacity issues associated with sustainability. Building standards that require installation of dual-pane windows; purchase rebate programs for energy-efficient water heaters; moral suasion campaigns to reduce, reuse, and recycle; gasoline taxes; and turnpike tolls are all examples of DSM in practice.

Prior to the energy crisis of the ...