Recently, a number of states have instituted conservation policies under which utilities are allowed to design their own consumer programs and compensation schemes to encourage conservation. These Utility-Tailored Incentive Programs (U-TIPS) are opposed by some who feel that they will just crowd out consumers' own conservation investments or that they will result in inefficient conservation intiatives. Others support the program, arguing the utilities have the necessary knowledge to implement such programs and can overcome information and contracting problems likely to arise. In PWP-002, Lewis develops a methodology for examining and implementing U-TIPS within a framework of incentive regulation of demand-side management. He shows that performance-based compensation to utilities can be used to induce efficient use of the U-TIP option by the utilities.