Utilities have made massive public commitments to electrification and decarbonization outcomes. But those commitments rely on customer participation rates that continually miss the mark.
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The industry is operating on a compounding mathematical error. Utilities across the country have filed integrated resource plans and published demand-side management (DSM) targets that promise aggressive electrification outcomes over the next decade.
These commitments look excellent in press releases and regulatory filings. But they are built on a foundational assumption that is failing in plain sight.
Every electrification and/or decarbonization target assumes a specific rate of customer participation in utility-funded incentive programs. When those programs chronically underperform, the models break entirely.
The gap between what utilities have promised and what they are actually delivering is widening every quarter. This is the commitment gap.
The numbers exposing this gap are already public. And they show an industry writing checks its customer experience cannot cash.
The $1 billion hole in the math
Start with the money already in the system. Lawrence Berkeley National Laboratory data indicates roughly $1 billion in local electric utility incentives goes unclaimed annually. $5 billion if you include gas and water.
This represents programs that were fully funded, regulator-approved, and rolled out to customers. The utility paid the administrative cost to launch them, but the funds never reached the market.
Leaving a billion dollars on the table is not a sign of fiscal prudence. It is a sign of systemic friction preventing willing customers from claiming available capital.
For an individual utility, the scalable cost of this friction is severe. Consider a utility running $10 million in annual incentive programs.
If that program achieves a 5 percent participation rate against a realistic 20 percent ceiling, the utility leaves $1.5 million on the table every year. That money was rate-based in customer bills to drive specific electrification outcomes that did not happen.
Instead, the utility paid the full administrative cost of running the program while capturing only a fraction of the deployment. The cost was incurred, but the grid and environmental benefits were not.
Failed modeling and the 15 percent fantasy
The problem extends far beyond unspent annual budgets. It threatens the timeline of the entire energy transition.
The International Energy Agency (IEA) Net Zero by 2050 models rely heavily on rapid residential electrification adoption through the mid-2020s. Those models often assume program participation rates of 15 percent or higher.
The reality on the ground is starkly different. Most utility programs struggle to consistently break a 5 percent participation rate.
You cannot build a 15 percent electrification reality on a 5 percent participation foundation. Every quarter participation stays flat, the timeline for grid load flexibility extends.
Utilities are quietly adjusting their internal targets to reflect this underperformance. But the original public commitments remain on the record.
This creates a massive liability. Utilities are banking on a sudden, miraculous spike in customer engagement that their current program infrastructure cannot possibly deliver.
The growing regulatory exposure
Regulators are starting to notice the math does not add up. The conversation around DSM performance is shifting from routine review to active scrutiny.
National Association of State Utility Consumer Advocates (NASUCA) filings show increasing attention on program outcomes. Regulators want to know why approved budgets are consistently going undeployed.
In a single year, a participation shortfall is an explanation. After three consecutive years, it becomes a track record of underperformance.
When utilities consistently fail to deploy authorized funds, public utility commissions ask harder questions. They demand to know why they should approve next year’s budget when this year’s budget was effectively buried.
This scrutiny is compounding with the rollout of federal funds. Department of Energy implementation data for HEEHRA programs shows that states and utilities are under immense pressure to prove they can effectively distribute capital.
Missing an electrification target is no longer just a marketing failure. It is a compounding regulatory exposure that threatens future rate case approvals.
This scrutiny drains finite political capital. Every cycle a utility spends defending its flat participation rates is a cycle it cannot spend advancing new strategic initiatives.
When commissions lose faith in a utility’s ability to drive participation, they do not just write a stern letter. They begin to mandate solutions, forcing third-party administrators or strict design requirements that strip away utility control–this leads to increased overhead to follow commission mandates in the form of systems, consultants and staff hours to ensure compliance.
Funding outcomes, not overhead
The default utility response to this math problem is to spend more on marketing. They run awareness campaigns hoping to force more customers through a broken findability and application process.
This ignores the actual cause of the failure. The customers who abandoned the process did not lack awareness; they lacked a navigable path.
Closing the commitment gap requires fixing the navigation layer between the customer and the incentive. It means stopping the practice of forcing customers to hunt through complex web pages and decipher engineering requirements.
The utilities currently closing the gap have stopped treating participation as an education problem. They treat it as a findability and ease of transaction problem.
They use software to instantly match eligible customers to funded programs, stripping out the friction that causes drop-offs (the largest offender being too much forced education). They make it easier to find what is already funded.
The timeline to reach your electrification targets is slipping right now. The undeployed dollars are compounding.
Are you going to build a better path for your customers, or are you going to explain the missed targets to your commission again next year?
Three things you can do right now
The utilities moving the needle on participation are not running bigger awareness campaigns. They have made three specific operational changes that directly attack the findability and friction problem.
Stop sending customers to educational content when they’re ready to transact. The single largest driver of drop-off is forcing a motivated customer through dense program descriptions, engineering specifications, and equipment requirement pages before they can find out if they qualify. A customer who has already decided they want a heat pump does not need to be taught what a heat pump is. They need a clear answer to one question: does this apply to me? Restructure your program pages so that eligibility, value, and next steps are the first three things a customer sees — not page three of a PDF.
Let customers search in their own language, across every available incentive simultaneously. Customers describe their situation, not your program taxonomy. “My basement is cold.” “I want to lower my electric bill.” “I’m replacing my water heater.” AI-powered search that maps that intent to matched programs — pulling from your utility programs, relevant state programs, and federal incentives in a single result — changes the transaction entirely. Instead of a customer hunting through siloed program pages and missing half of what they qualify for, they get a complete picture of what is available to them and why it applies. That shift from hunting to being matched is where participation rates move.
Build a single command center for your program portfolio before your next filing cycle. Most utility program managers cannot tell you — in real time — where customers are dropping out of their programs, which programs are underperforming against deployment targets, or what their current participation rate is by segment. That information exists, but it lives in disconnected systems. Centralizing program management, analytics, and reporting into a single dashboard makes the underperformance visible while there is still time to respond to it, rather than discovering the gap when it shows up in an annual filing.
The gap between a 35 percent legacy enrollment rate and an 88 percent enrollment rate is not explained by customers suddenly valuing electrification more. It is explained by removing the friction between a willing customer and an available incentive. The infrastructure to do that exists. The question is how many more filing cycles you can afford to wait.
— — —SourcesLawrence Berkeley National Laboratory, Utility Energy Efficiency Program participation and incentive deployment data, 2023.International Energy Agency, Net Zero by 2050 residential electrification modeling.National Association of State Utility Consumer Advocates, DSM program performance filings, 2022–2024.U.S. Department of Energy, HEEHRA program guidance and state implementation data.