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Exploring the relationship between planning and procurement in western U.S. electric utilities

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  • Carvallo, Juan Pablo
  • Sanstad, Alan H.
  • Larsen, Peter H.

Abstract

Integrated resource planning is an important regulatory process used in many U.S. states to formulate and evaluate least-cost and risk-assessed portfolios to meet future load requirements for electric utilities. In principle, effective implementation of integrated resource planning seeks to assure regulators and the public that utility investment decisions, given uncertainty, are as cost-effective as possible. However, there is no empirical assessment on the effectiveness of integrated resource planning and its implementation. This paper compares planning outcomes and actual decisions for twelve utilities across the Western U. S. from 2003 to 2014. The authors find that subsequent plans differ significantly due to changes in the planning environment, which limited amount of information produced during planning is ultimately used during the procurement process, and that the latter process relies extensively on the most recent information available for decision making. These findings suggest that states' integrated resource planning rules and regulations mandating long-term planning horizons with the same analytical complexity throughout the planning period may not create useful information for the procurement process. The social value of a long-term planning process that departs from procurement and the balance between transparency and complexity of the planning and procurement processes is an open question.

Suggested Citation

  • Carvallo, Juan Pablo & Sanstad, Alan H. & Larsen, Peter H., 2019. "Exploring the relationship between planning and procurement in western U.S. electric utilities," Energy, Elsevier, vol. 183(C), pages 4-15.
    • Handle: RePEc:eee:energy:v:183:y:2019:i:c:p:4-15
    DOI: 10.1016/j.energy.2019.06.122
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