Utility Resource Planning Research Articles

Estimating the flexibility of utility resource plans: an application to natural gas cofiring for SO/sub 2/ control

Electric utility planners must cope with large uncertainties concerning fuel prices, environmental laws, power demands, and the cost and availability of new resources. In this situation, flexibility is valuable. A flexible plan is one that enables the utility to quickly and inexpensively change the system's configuration or operation in response to varying market and regulatory conditions. The authors present a decision tree-based method for quantifying the economic value of flexibility. The method is then used to compare the relative flexibility of natural gas cofiring with other strategies to comply with the acid rain control requirements of the 1990 U.S. Clean Air Act Amendments. For the utility studied, they conclude that cofiring gives the system significantly more flexibility than flue gas desulfurization or switching to low sulfur coal. >

A nonlinear bilevel model for analysis of electric utility demand-side planning issues

An application of bilevel programming in the electric utility industry is presented. The model is nonlinear and is used to analyze various economic issues that affect electric utility planning. The electric utility at the upper level of the model seeks to minimize costs or maximize benefits while controlling electric rates and subsidizing energy conservation programs. Customers at the lower level attempt to maximize their net benefit by consuming electricity and investing in conservation. This model considers factors such as free riders and the rebound effect which affect the net benefits of utility resource plans but are ignored by most planning models. The model's solutions shed light on utility issues including whether there can be a practical difference between various objectives, including minimizing cost (“least cost” planning) and maximizing net social welfare (“value based” planning).

Integrating market processes into utility resource planning

Regulatory oversight of utility resource planning creates explicit or de facto market share allocation rules that determine the balance— or lack of it— among competing alternatives.

Demand-side management and environmental externalities: Ramifications on utility resource planning

As the US electric utility industry enters its second century of service, ‘traditional’ approaches to resource planning have become outdated. Two of the most important contributing factors are the growing significance of demand-side management (DSM) and energyefficiency programmes, and proposals to incorporate ‘environmental externalities’ in the planning process. The former means that future demand growth may no longer be treated as an external variable as most traditional resource planning approaches assume. The latter, if adopted, will add considerable complexity - and uncertainty - to the planning process. The ramifications of these trends on utility resource planning are discussed.

Consumer Rationality and the Status Quo

Received microeconomic theory presumes rational consumers maximize utility over all commodity bundles. Recent analysis, however, suggests that a consumer's status quo may limit economic rationality, bias consumer decisions, and induce serious errors in survey-based valuations of public and private goods. Using regression and choice-theoretic frameworks, we investigate the existence of status quo effects in the consumer valuation of a particular unpriced product—the reliability of residential electrical service. Such valuations have become important in electric utility resource planning and rate making. We find substantial status quo effects, which must be addressed in welfare comparisons regarding electric service reliability.

Status quo bias in the measurement of value of service

Notions of customer value of service have become increasingly important in utility resource planning, capacity expansion and rate making. In order to design and implement value of service policies, utilities have come to rely upon a variety of customer surveys. Unfortunately, theoretical and empirical analysis suggests that responses to such surveys may be seriously distorted by ‘status quo’ effects. Using both regression and choice-theoretic frameworks, we empirically investigate whether status quo effects arise in a contingent valuation survey addressing the value of service reliability for residential customers. We find substantial status quo effects, which must be explicitly understood and addressed.

Review of demand-side data needs for least-cost utility planning

Least-cost utility planning is a new way for utilities and state regulatory commissions to assess consistently a variety of demand and supply resources that cost-effectively meet customer energy-service needs. This new planning paradigm 1. (a) explicitly includes conservation and load-management programs as energy and capacity resources; 2. (b) includes consideration of environmental and social factors, as well as of direct economic costs; 3. (c) involves public participation; and 4. (d) includes careful analysis of the uncertainties and risks posed by different resource portfolios and by external factors. The relative paucity of data on demand-side resources, particularly when compared to the information available on supply resources, poses a significant barrier to integrating these options into utility resource plans. In this study, we briefly compare the data and assumptions available on supply resources with those available on demand-side resources. We then discuss the types of data that are needed to assess existing patterns and trends in electricity use (baseline data), the costs and performance of demand-side technologies, and the effects of demand-side programs. Our analysis suggests that evaluation of program effects is the area with the greatest need for additional attention.

Time-differentiated system load impacts of demand-side management: A case study

Abstract Demand-side management is rapidly assuming an integral role in electric utility resource planning. Detailed time-differentiated system load forecasts are critical inputs for the successful integration of demand-side options. An examination of the expected impacts of demand-side management at the City of Austin's municipally owned utility reveals significant changes in the system load, ranging from considerable load factor improvement to significant reductions in intermediate-load capacity requirements to differential impacts on the relative customer class contributions to the system coincident peak.

Evaluation of demand-side management

Electric utility demand-side alternatives are being evaluated in the utility resource planning process to increasing levels of complexity. This paper describes the levels of evaluation and discusses how demand-side alternatives integrate with overall utility objectives.

The residential demand for electricity by time-of-use: A survey of twelve experiments with peak load pricing

Information on customer response to time-of-use (TOU) rates plays a major part in utility resource planning, particularly in the design of cost-based rate structures and cost-effective load management programs. Several elasticity concepts have been used by economists to analyze customer response to TOU rates. We discuss the interrelationships between various concepts and show that total uncompensated price elasticities are the appropriate measure of customer response. Evidence from twelve pricing experiments involving about 7000 customers indicates that residential peak-period electricity consumption is generally price-sensitive. TOU rates generally reduce peak period electricity use, as well as daily use. Response is generally higher for high use customers. Short-run own-price elasticities of peak consumption range from nil to −0.45. Off-peak elasticities lie in a similar range, but are less statistically significant. This wide range indicates that elasticities are not fixed constants but vary parametrically with several conditioning variables such as level of total (daily) electricity use, composition of appliance portfolio and duration of pricing periods. If proper allowance is made for these interactions, it may be possible to transfer elasticities between utility service areas, thus obviating the expensive and time-consuming need for every utility to conduct its own experiment.