Abstract
Integrated resource planning (IRP) is the electric utility industry’s version of the microeconomic cost minimization tool. This optimization planning tool considers both electricity—saving as well as electricity—producing resources in finding the least—cost portfolio of resources used to serve electricity consumers’ needs. The nature of IRP embodies some elements of uncertainty, since the valuation of conservation resources is based on an expected avoided cost of the cost—minimizing electricity supply resource portfolio mix. Any deviation from the optimal supply plan changes the cost—minimizing use of conservation resources. This paper discusses this nature of IRP as the “firm’s” cost—minimization model for electric utilities.
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