Not sure about the US energy market -- but here in Aus -- the profit is in the baseload kilowatts and not in the peaks. Your cheap Coal plant can produce electricity really cheaply - but when demand spikes you need to fire up the higher cost on-demand generators. You can still sell this electricity - but you may even make a loss on it at the margins.

In fact, one quarter of electricity bills goes to 40 hours of peak demand per year!

http://theconversation.edu.au/air-conditioning-is-peaking-ou...

Having stayed in Melbourne for a while, I am honestly not surprised. Melbourne's climate is normally rather mild, but their short summer periods are brutal.

The network is built to cope with a peak demand that only occurs for a relatively small amount of time. By reducing the peak demand they can delay the capital expenditure of upgrading the network a number of years.

In many states in the US, there are energy targets that must be met or the provider is subject to penalties. Opower is a startup who's entire business model (at least to start) was to work with utilities on hitting these targets. I could be wrong, but I think they were actually the first to use this peer comparison model in this space.

sutterbomb's post is 100% correct. Energy companies are often under strong regulator pressure to reduce consumption or to reduce consumption of specific fuel types (e.g. coal). Compared to wind or solar, a voluntary reduction in use by customers is a much more cost-effective means of meeting such regulations.

They can claim that they take the environment seriously.

Of course, if they are successful in reducing overall energy consumption, they will increase the cost of energy to cover their costs and maintain their profit margin.