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This publication presents six case studies of water utilities which have implemented some form of IRP process to illustrate the successes and problems encountered. Chapter 1 of this report introduces the concept of IRP (Integrated Resource Planning) and compares the IRP approach with traditional and least-cost planning approaches. Chapter 2 defines the key terms used throughout the manual and discusses the history of IRP in the energy industry (electric and gas utilities). It addresses the need for IRP in the water industry and sets forth the fundamentals or components of the IRP process. Chapter 3 presents a summary of the water resource management and planning processes of all the water utility participants on this projects. It also provides detailed discussions of the lessons learned from the six case study utilities and the strengths and weaknesses of their approaches. The Massachusetts Water Resources Authority case study was conducted through on-site interviews. The remaining five case studies were conducted through telephone interviews and through a written survey designed by the research team. Chapter 4 synthesizes the information from the previous chapter and discusses strategies and opportunities for achieving success, with a detailed discussion on how to utilize stakeholders effectively. Chapter 5 introduces step-by-step guidelines toward implementing an effective IRP process. Chapter 6 contains insights and detailed discussions on how to calculate avoided costs, how to include externalities in the planning process, and how to conduct cost-benefits analyses of all the planning alternatives being considered. Two appendices follow Chapter 6. Appendix A contains the detailed case studies of the six water utilities. Appendix B contains the actual survey used by the research team to develop the case studies. Finally, the report concludes with a list of references cited in the text and two bibliographies.
As global energy systems electrify, long-term planning processes are evolving to allow flexible economic analysis and acknowledge rapid financial and operational transformation. State-level integrated resource planning (IRP) processes allow oversight of long-term electric utility resource planning. Yet, outdated rules, procedures, and practices may impede utilities in planning for a new energy future. Is the IRP process constrained by technical modeling decisions, when it ought to serve as a platform for stakeholders to shape optimal and just electricity system outcomes? This paper assesses the state of integrated resource planning to inform utility planners, commissioners, and their staffs, along with the array of advocates that participate in such proceedings. I employ a case study methodology to assess docket filings and other relevant materials in recent IRP proceedings for four major utilities in Michigan, Georgia, New Mexico, and North Carolina. Section 3 details modeling software selection and use for those four cases. Section 4 uses capacity value assumptions to illuminate the iterative process around establishing model input assumptions. Section 5 takes a broader view of nascent efforts to include equity and justice into IRP processes. Consistent commission oversight and robust stakeholder processes are integral to ensure that utilities' integrated resource plans reflect the pace of change in the U.S. energy sector. Policymakers can encourage advanced modeling methodologies (software, settings, and assumptions) through three channels: (1) written IRP rules, (2) commission procedure, and (3) intervention in utility processes. Furthermore, as equity and justice come to the forefront of utility planning, policymakers should consider intervenor compensation programs, energy justice assessments, and forms of public ownership to incorporate energy justice principles into the planning process.
Until recently, state regulators have focused most of their attention on the development of least-cost or integrated resource planning (IRP) processes for electric utilities. A number of commissions are beginning to scrutinize the planning processes of local gas distribution companies (LDCs) because of the increased control that LDCs have over their purchased gas costs (as well as the associated risks) and because of questions surrounding the role and potential of gas end-use efficiency options. Traditionally, resource planning (LDCs) has concentrated on options for purchasing and storing gas. Integrated resource planning involves the creation of a process in which supply-side and demand-side options are integrated to create a resource mix that reliably satisfies customers' short-term and long-term energy service needs at the lowest cost. As applied to gas utilities, an integrated resource plan seeks to balance cost and reliability, and should not be interpreted simply as the search for lowest commodity costs. The National Association of Regulatory Utility Commissioners' (NARUC) Energy Conservation committee asked Lawrence Berkeley Laboratory (LBL) to survey state PUCs to determine the extent to which they have undertaken least cost planning for gas utilities. The survey included the following topics: status of state PUC least-cost planning regulations and practices for gas utilities; type and scope of natural gas DSM programs in effect, including fuel substitution; economic tests and analysis methods used to evaluate DSM programs; relationship between prudency reviews of gas utility purchasing practices and integrated resource planning; key regulatory issued facing gas utilities during the next five years.
This report is intended as a guide to the use of multi-criteria decision-making methods (MCDM) for incorporating environmental factors in electric utility integrated resource planning (IRP). Application of MCDM is emerging as an alternative and complementary method to explicit economic valuation for weighting environmental effects. We provide a step-by-step guide to the elements that are common to all MCDM applications. The report discusses how environmental attributes should be selected and defined; how options should be selected (and how risk and uncertainty should be accounted for); how environmental impacts should be quantified (with particular attention to the problems of location); how screening should be conducted; the construction and analysis of trade-off curves; dominance analysis, which seeks to identify clearly superior options, and reject clearly inferior options; scaling of impacts, in which we translate social, economic and environmental impacts into value functions; the determination of weights, with particular emphasis on ensuring that the weights reflect the trade-offs that decision-makers are actually willing to make; the amalgamation of attributes into overall plan rankings; and the resolution of differences among methods, and between individuals. There are many MCDM methods available for accomplishing these steps. They can differ in their appropriateness, ease of use, validity, and results. This report also includes an extensive review of past applications, in which we use the step-by-step guide to examine how these applications satisfied the criteria of appropriateness, ease of use, and validity. Case material is drawn from a wide field of utility applications, ranging from project-level environmental impact statements to capacity bidding programs, and from the results of two case studies conducted as part of this research.