Determinants of voluntary electricity demand management program participation

This paper examines the voluntary electricity demand management decisions of commercial and industrial customers (at the firm and facility level) of an electric utility serving a United States Midwestern metropolitan area. Using standard probit analysis, we find that electricity costs are a major determinant of a firm’s decision to voluntarily engage in demand management programs. Specifically, an additional $100,000 in electricity costs raises the probability of participation in an electricity demand management program by 0.3 percent. We also find that companies with multiple sites are 3.7 percent more likely to participate. In terms of demand management program participation, these results indicate a difference between organization and size that warrants further examination.

► We model participation in electric utility demand-side management programs. ► We focus on participation by commercial and industrial entities. ► Electricity cost concerns motivate participation. ► An additional $100,000 in electricity costs raises participation by 0.3 percent. ► Entities with international operations are more likely to participate.