Creating the Future: Integrated Resource Planning for Electric Utilities

Integrated resource planning (IRP) helps utilities and state regulatory com missions assess consistently a variety of demand and supply resources to meet customer energy-service needs cost-effectively. Key characteristics of this planning paradigm include: {a) explicit consideration of energy-efficiency and load-management programs as alternatives to some power plants, (b) consideration of environmental factors as well as direct economic costs, (c) public participation, and (d) analysis of the uncertainties and risks posed by different resource portfolios and by external factors. IRP differs from traditional utility planning in several ways, including the types of resources acquired, the owners of the resources, the organizations involved in planning, and the criteria for resource selection (Table 1). References 1-5 discuss IRP and its development. This paper reviews recent progress in IRP and identifies the need for additional work. Key IRP issues facing utilities and public utility com missions (PUCs), discussed in this paper, include:

1. Provision of financial incentives to utilities for successful implementation of integrated resource plans, especially acquisition of demand-side management (DSM) resources;
2. Incorporation of environmental factors in IRP;
3. Bidding for demand and supply resources;
4. Treatment of DSM programs as capacity and energy resources;
5. Development of guidelines for preparation and review of utility resource plans; and
6. Increased efforts by the US Department of Energy (DOE) to promote IRP.

Many other planning issues are important, but are not discussed in this paper. Such issues include alternative ways to organize planning within utilities; the role of collaboration and other forms of nonutility involvement in planning (6, 7); the relationships among competition, deregulation, and utility planning; treatment of electricity pricing as a resource; fuel switching (primarily between electricity and gas); treatment of uncertainty in utility planning and decision making (8, 9); the appropriate economic tests for utility DSM programs; ways to measure the performance of DSM programs (10); development and use of improved data and planning models; and transfer of information among utilities and commissions. Many of these topics are covered in (11).