Least Cost Utility Planning, A Handbook for Public Utility Commissioners, Volume 2: The Demand Side: Conceptual and Methodological Issues

Currently, seventeen states require least-cost planning in the utility sector. Many other states are establishing similar planning procedures an regulations. These developments represent a trend toward greater regulatory and public participation in resource planning. As a result of this trend, regulators need a better understanding of the technical-methodological aspects of least-cost planning.

The experience so far with least-cost planning (LCP) has highlighted many areas where technical-methodological issues need to be resolved if we want to effectively implement least-cost planning policies. These issues can be grouped into three broad areas:

1. quantification, comparison and integration of supply options;
2. quantification, comparison and integration of conservation and load management options; and
3. comparison and integration of demand-side with supply-side options.

Complexities and uncertainties on the supply side may, on the whole, be larger than those on the demand side, though both are significant. On the supply side, some of the difficulties arise from economies and diseconomies of scale, lead times, construction cost escalation, unit sizes, reliability, availability, fuel prices and escalation, patterns of electricity output over time, environmental impacts, etc. The problem of environmental and other externalities makes the costing of supply sources especially uncertain.

See Volume 1 of this publication here.