• September 21, 2018
  • White Paper

Integrated Resource Planning (IRP) was developed in the 1970’s and 1980’s during what could be called the Soviet era of the power industry. Utilities and their regulators controlled virtually all resources within a jurisdiction. They could decide unilaterally which resources to add, modify or remove in that jurisdiction. It was an age of monopoly or at least hegemony, and thereby an age of central planning.

Modern rate design was developed somewhat earlier – in the 1960’s – but also during the same Soviet era. Consumers had no alternatives to their local utility, and certainly, few if any decisions to make about distributed generation or storage. Consumers had only one choice for power, and utilities and their regulators determined unilaterally what consumers paid for that power.

The bottom line is that both IRP and rate design were based on a monopolist, central planning model. Resource planning generally occurred first and identified the assets required to meet demand, and then rate design occurred second to cover the costs of those assets.

Connect with the Author: Adam Borison

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