Electricity Planning--Today's Improvements Can Alter Tomorrow's Investment Decisions

EMD-80-112: Published: Sep 30, 1980. Publicly Released: Sep 30, 1980.

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Forecasts project that the national demand for electricity could require electrical generating capacity to more than double by the end of this century. Although States have the primary responsibility for regulating electric utilities and overseeing their plans for balancing supply and demand, most States are not well prepared to deal with power planning under changing conditions, and few of them have developed sufficient analytical capabilities to evaluate these projections. Some utility forecasting capabilities could be expanded to better use available methods which deal more explicitly with uncertainty and other key factors, such as price and conservation. States which have taken a closer look at utility forecasts have identified deficiencies and have developed significantly different estimates of future power need from their utilities. Most States, however, continue to rely heavily on utility forecasts and to approve utility investment decisions with minimal scrutiny of forecasting practices and assumptions. Most States lack assurance that the full range of power supply/demand options are thoroughly studied and implemented when found to be more cost effective than conventional nuclear or coal-fired plants. Utilities presently have little positive economic or regulatory incentive to promote energy conservation, solar, and other renewable energy options.

The Department of Energy (DOE) recognizes that it has the authority to assist States and utilities in improving the quality of State, regional, and utility power plans. DOE officials also recognize that serious problems exist in demand forecasting, assessment of feasible alternatives, and public involvement; but they have not taken an aggressive approach to solve these problems. Federal responsibilities relating to electric power are fragmented and involve several energy agencies. Few of the programs implemented by those agencies are specifically designed to improve electricity planning, and are not coordinated through a set of common objectives, policies, or evaluation systems. Under these conditions, there is inadequate assurance that Federal efforts are responsive to the planning needs of electric utilities, State utility regulators, and power consumers. The Federal Government should work to supplement and strengthen, not subordinate, the State's role in the review and approval of utilities' electricity plans.

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