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The Least Cost Planning (LCP) Approach originated in the electricity industry in the US in the 1980’s [note 7] and has been applied to the water and transport sectors in Australia. The principle of LCP is that customers do not actually need electricity; instead they require the services that are provided by this commodity. In the case of electricity, these services include warming and cooling houses, lighting, refrigeration and so on. The UK Government’s recent Energy White Paper proposes that “…a transformation” is required “in the way suppliers view their relationship with the end consumer, helping their customers save energy, by shifting their focus to the provision of energy services, rather than simply selling units of energy.” [note 8] Energex states in its annual plan that it “has significant non-financial incentives to develop its demand management capability…”. A shift in attitude and incentives in the Queensland electricity industry is clearly needed. Clear targets and financial incentives are required to move the energy companies and thereby the State Government away from its revenue addiction of selling more energy.

The LCP approach recognises that energy services can be provided either by increasing the supply of electricity through new power stations and transmission infrastructure, or, by increasing the efficiency of electricity use. Electricity can be used more efficiently in a number of ways including, for example: replacing existing electrical equipment with more efficient types of equipment, reducing wasteful usage, including street lighting, public education programs, regulation, building code changes and distributed renewable power generation. By following this approach the optimal mix of investment is made before expensive and long-term infrastructure projects are undertaken.