Hydro-Québec energy savings programs: ‘Watt’ are they worth?

c power projects with investment in energy savings and intends to spend $1.9 billion from 1992 to 2000 and $2.0 billion from 2001 to 2010 on the venture. This is expected to reduce electricity demand by 9.3 TWh in 2000 (5.4% of the business as usual forecast) and by 18.0 TWh in 2010 (9.1% of the business as usual forecast). We perform a cost-benefit analysis of the programs, taking into account the financial criteria underlying electricity rates paid by consumers. We find that the programs should lead to present value benefits ranging from $2097 million to $4493 million over the 1992–2010 period, depending on the size of the electricity savings. Annual benefits range from $181.0 million to $387.7 million. Consumers are the main beneficiaries and Hydro-Québec is a marginal beneficiary. Government, however, is a net loser. The precise size of the benefits and their distribution among the three parties are sensitive to the extent of the electricity demand reduction effected by the programs.