New market risks have called on utilities to evaluate an expanding array of new resource options—with antiquated tools to evaluate them.
Jonathan Lesser Ph.D., is a senior managing economist with Navigant Consulting Inc. Stephen Derby Ph.D., is a director with Navigant Consulting Inc. William Clarke is a director with Navigant Consulting Inc.
Regulators, who had been focused almost entirely on establishing stranded cost values and overseeing the breakup of electric utilities, are now faced with an industry that is far more complex. Of the traditional oversight activities, the task of ensuring sufficient generation to meet insatiable electric demands-broadly, resource planning-presents today fundamentally different challenges than as little as five years ago.
Today, there are probably few utilities devoting much effort to these sorts of resource planning exercises. Not only have many utilities long exorcised their resource planning staffs, but regulators have been far too mired in restructuring to care. Yet, the need for careful planning has not gone away. The choices faced by utilities in meeting still-present demand obligations have exploded, while the capability needed to evaluate those choices has shrunk.