An early example is the National Energy Conservation Policy Act of 1978 in the U.S., preceded by similar actions in California and Wisconsin.
[11] Electricity use can vary dramatically on short and medium time frames, depending on current weather patterns.
This allows for very precise tuning of demand to ensure that it matches supply at all times, reduces capital expenditures for the utility.
[citation needed] In general, adjustments to demand can occur in various ways: through responses to price signals, such as permanent differential rates for evening and day times or occasional highly priced usage days, behavioral changes achieved through home area networks, automated controls such as with remotely controlled air-conditioners, or with permanent load adjustments with energy efficient appliances.
[citation needed] Demand for any commodity can be modified by actions of market players and government (regulation and taxation).
Whereas real prices of various energy forms have been decreasing during most of the industrial era, due to economies of scale and technology, the expectation for the future is the opposite.
[citation needed] In centrally planned economies subsidizing energy was one of the main economic development tools.
[18] Efficiency improvements can be implemented nationally through legislation and standards in housing, building, appliances, transport, machines, etc.
[19] In more service-based economies, such as Australia, electricity network peak demand often occurs in the late afternoon to early evening (4pm to 8pm).
[20] Therefore, it makes great sense for utilities (electricity network distributors) to manage residential storage water heaters, pool pumps, and air conditioners.
Their plan also includes improving the efficiency of energy-using items and giving financial incentives to consumers who use electricity during off-peak hours, when it is less expensive for energy companies to produce.
[26] Another example is that with demand side management, Southeast Queensland households can use electricity from rooftop photo-voltaic system to heat up water.
The power generated to meet the peak demand has higher costs—both investment and operating costs—and the pollution has a significant environmental cost and potentially, financial and social liability for its use.
[citation needed] Moreover, because electric energy is generated and consumed almost instantaneously, all the facilities, as transmission lines and distribution nets, are built for peak consumption.
[32] One of the main goals of demand side management is to be able to charge the consumer based on the true price of the utilities at that time.