Demand Side Management or DSM means the actions of a Distribution Licensee, beyond the consumer’s meter, with the objective of altering the end-use of electricity - whether it is to decrease it, or to shift it between high and low peak periods, or manage it when there are intermittent load demands - in the overall interests of reducing Distribution Licensee costs. Alternatively, DSM is also defined as “a set of initiatives undertaken by the utility on the consumer side of the meter to bring about a desired change in consumer demand and/or demand profile maintaining, or even enhancing the service provided to the consumer in terms of quality, reliability and cost of service”.

DSM is used to describe the actions of a utility, beyond the customer’s meter, with the objective of altering the end-use of electricity- whether it to be increase demand, decrease it, shift it between high and low peak periods, or manage it when there are intermittent load demands - in the overall interests of reducing utility costs. DSM refers to the cooperative activities between the utility & its customers (sometimes with the assistance of third party such as energy services companies and various trade allies) to implement options for increasing the efficiency of energy utilization, with resulting benefits to consumers, utility and society as a whole. DSM is closely associated with efforts to alter utility-load patterns. DSM is also associated with specific kinds of planning, often referred to as "integrated resource planning" or "least-cost planning," in which demand reduction and supply increase are given equal weight by a utility when making investment choices.

By definition, DSM requires a better understanding of consumer requirements. As a result, power utilities implementing DSM are more responsive and more likely to make socially appropriate investment decisions than would traditional supply-oriented utilities. DSM allows an "integrated look at technology options, customers' needs and utility considerations" and recognizes that "customer needs" (demand) are not fixed and can be manipulated by both economic and pricing incentives.