This report argues that the NSW electricity sector requires three critical conditions to embrace aggressively cost-effective energy efficiency and other forms of demand-side resources, such as customer-owned generation and demand-side management. Demand Management (DM) refers to measures undertaken by a utility business to meet customer needs by shifting or reducing demand rather than by increasing supply. In order to consider what regulatory reform is needed, this report focuses on the most comprehensive attempt in Australia to date to remove the regulatory barriers to demand management: the NSW 'D-factor'.