Definition of Least-Cost Planning
Least-cost planning is a process by which electric utilities
evaluate the costs, benefits, and risks of different resources for meeting
electric power demand (including traditional power plants and energy
efficiency) in an effort to arrive at the mix of resources that will meet
future demand at the lowest cost while still providing reliable electric
service.
Twenty-seven states have a least-cost planning process (also
known as an integrated resource planning process). A twenty-year planning horizon is most common
among states with a least-cost planning process. The recommendations in a least-cost plan are
not binding, but the utility would have to justify to the Commission why any
departures from the plan were prudent and reasonable.
Why West Virginia Needs Least-Cost Planning
- There
is currently no process by which the Public Service Commission reviews the
long-term plans of electric utilities in order to ensure that they are
indeed making long-term investment decisions that are in the best
interests of the public.
- Appalachian
Power's residential rates have increased more than 50% since 2006. Mon Power and Potomac Edison residential
rates have increased more than 30% since 2008. Rising electric rates are having a
serious impact on the budgets of residents, especially low-income
residents or those on fixed incomes.
- Our
electricity system is facing serious challenges from potential retirements
of old and inefficient coal plants in next several years. Three of Mon Power's coal plants, for
example, are more than fifty years old and will likely have to be retired
or retrofitted with pollution control equipment in the next few
years. Appalachian Power has
already announced the retirement of units at the Kanawha River and Philip
Sporn power plants.
- Our
utilities are failing to invest significantly in demand-side resources
like energy efficiency, even though investing in saving money through
efficiency is cheaper than building new power plants. Mon Power and Potomac Edison, for
example, recently proposed an energy efficiency plan to the Public Service
Commission that would save only 0.5% over 5 years, even though their
parent company is required to achieve savings of 0.8% and 1% in two years
in Ohio and Pennsylvania, respectively.
Proposed Legislation
We are proposing legislation that would:
ñ Require
the Public Service Commission to establish guidelines for least-cost planning
ñ Require
the state's major electric utilities (Appalachian Power, Mon Power and Potomac
Edison) to file a least-cost plan by the end of the 2012 and every two years
thereafter
ñ Require
the Commission to review the plans to ensure that they are in the public interest
ñ The
plans will not be binding but the utilities will have to justify deviations
from the plans to the Commission
|