But Frank Graves, a principal in the utility and finance teams at the Brattle Group, said current efficiency efforts won't deliver the type of results that federal energy and climate proposals demand.
"At some point they are going to say, 'This isn't going to make sense,'" Graves said. "We are pricing increasingly what looks like a fantasy. ... The mechanisms are set up to reduce, say, maybe 100 to 200 megwatts and some demand response that works fine. No one is going to freak out at that level. But 2,000 megawatts of load growth, then it starts to be more of a fistfight."
And electricity customers and politicians are likely to be unhappy when they realize that reducing power use does not necessarily mean electricity costs are going to fall, said Bob Grant, vice president of operational excellence at KEMA, an energy policy and technical consulting company.
"This was the dirty little secret in the 1970s," Grant said. "You can do conservation, but we are going to charge you more for it because there is still a certain amount of investment that has to be paid for by somebody. That plant investment has to be covered."
A big difference this time: Utilities have technology on their side, Grant said.
"The saving grace ... is your products are going to be more efficient, but there will be more conveniences around you," he said. "People will pay for that ... if they can use those kind of devices more efficiently and make their life better."
Helping consumers make better choices about their energy use through "smart grid" and other technologies could provide new opportunities for utilities -- maybe even make up for revenue losses, some experts say.
"I have run into some CEOs that think this is fantastic and want to move into the value-added end of services," Brattle Group's Graves said. "Others think of themselves in a passive way, more of a platform for services, and want to let the services play out on top of them."
Lovins, the energy efficiency advocate, said smarter utilities are already figuring out how to sell customers what they want before someone else does. "Utilities ... know their customers, are technically skilled and have huge cash flows," he said. "These assets can be redeployed in different ways at better costs, lower risks."
Many see this also as an opportunity to bring real competition to concentrated markets.
Beyond efficiency and energy management, utilities and independent parties are also starting to compete in distributed generation and demand response -- which are alternatives to the large central power plant.
While there is debate about how much of future energy supplies will be made up of small power sources -- typically, those of less than 100 megawatts capacity and usually of just 10 or 15 megawatts -- most experts say distributed generation will have a strong presence in the nation's future fuel supply makeup.
In most cases of distributed generation, a property owner buys the generation equipment himself and then consumes the electricity, selling any extra power back to the grid or offsetting any grid electricity he consumes. But buying and maintaining power equipment is prohibitively expensive for many homeowners and companies.
So utilities see an opportunity to generate electricity and meet renewable electricity standards -- possibly even getting emission-offset credits -- by renting rooftop spaces, installing their own equipment and owning the electricity that is generated. Southern California Edison and Pacific Gas & Electric Co. are each undertaking projects worth several million that involve the ownership of rooftop solar panels, and Duke also has a pilot program in North Carolina (Greenwire, Oct. 7, 2008).