The decline in electricity production costs and the movement toward electric utility industry restructuring raise questions about the future of electric utility conservation programs, Estimates of conservation costs in the late 1980s and early 1990s were incomplete and optimistic, Better accounting suggests that conservation costs may not be lower than generation costs - which have fallen dramatically since 1981, This study uses utility plant data reported in annual regulatory filings to estimate marginal production costs since 1980 for nine utilities in California, Massachusetts and New York, The study also examines projected costs of new generating capacity, including environmental externality costs, Comparing conservation costs to generation costs, the study finds that only 12%-37% of conservation potential now appears cost-effective without externality costs, Median estimates of externality costs for combined cycle gas plants make 35%-73% of conservation potential cost-effective, The study demonstrates that, due to lower fuel and plant construction costs, the economics of conservation are much more dependent on the valuation of environmental externalities than they were in 1980.