A new report from the American Council for an Energy-Efficiency Economy (ACEEE) says that reducing energy waste is the most cost-effective way of providing Americans with energy.

Energy efficiency programs aimed at reducing consumption cost utility companies about $0.03 per kilowatt-hour (kWh), while displacing supply from more costly sources such as fossil fuels that can be two to three times more expensive.

“The cheapest energy is the energy you don’t have to produce in the first place,” says Steven Nadel, executive director of ACEEE. “Our new report shows that when utilities are examining options on how to provide their customers with cheap, clean electricity, energy efficiency is generally the best choice.”

The Best Value for America’s Energy Dollar: A National Review of the Cost of Utility Energy Efficiency Programs report looks at how much it cost to implement efficiency programs in 20 states between 2009 and 2011. The average cost of $0.028 cents per kWh is about one-half to one-third the cost of alternative new electricity resource options such as wind, coal and nuclear power.

“Why build more expensive power plants when efficiency gives you more bang for your buck?” says Maggie Molina, author of the report and utilities, state and local program director at the ACEEE. “Investing in energy efficiency helps utilities and ratepayers avoid the expense of building new power plants and the harmful pollution that plants emit.”

The report also concludes that both electricity and natural gas efficiency programs have been a low-cost resource for utilities over the past decade. Every dollar invested in electric energy efficiency measures can yield between $1.24 and $4 in benefits for all utility customers. These benefits include avoided energy and capacity costs, lower energy costs during peak periods and reduced pollution.