Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This rule requires the utility to design
alternative resource plans to meet the planning objectives identified in
4 CSR
240-22.010(2) and sets minimum
standards for the scope and level of detail required in resource plan analysis
and for the logically consistent and economically equivalent analysis of
alternative resource plans. This rule also requires the utility to identify the
critical uncertain factors that affect the performance of alternative resource
plans and establishes minimum standards for the methods used to assess the
risks associated with these uncertainties.
(1) Resource Planning Objectives. The utility
shall design alternative resource plans to satisfy at least the objectives and
priorities identified in
4 CSR
240-22.010(2). The utility may
identify additional planning objectives that alternative resource plans will be
designed to meet. The utility shall describe and document its additional
planning objectives and its guiding principles to design alternative resource
plans that satisfy all of the planning objectives and priorities.
(2) Specification of Performance Measures.
The utility shall specify, describe, and document a set of quantitative
measures for assessing the performance of alternative resource plans with
respect to resource planning objectives.
(A)
These performance measures shall include at least the following:
1. Present worth of utility revenue
requirements, with and without any rate of return or financial performance
incentives for demand-side resources the utility is planning to
request;
2. Present worth of
probable environmental costs;
3.
Present worth of out-of-pocket costs to participants in demand-side programs
and demand-side rates;
4. Levelized
annual average rates;
5. Maximum
single-year increase in annual average rates;
6. Financial ratios (e.g., pretax interest
coverage, ratio of total debt to total capital, ratio of net cash flow to
capital expenditures) or other credit metrics indicative of the utility's
ability to finance alternative resource plans; and
7. Other measures that utility
decision-makers believe are appropriate for assessing the performance of
alternative resource plans relative to the planning objectives identified in
4 CSR
240-22.010(2).
(B) All present worth and levelization
calculations shall use the utility discount rate and all costs and benefits
shall be expressed in nominal dollars.
(3) Development of Alternative Resource
Plans. The utility shall use appropriate combinations of demand-side resources
and supply-side resources to develop a set of alternative resource plans, each
of which is designed to achieve one (1) or more of the planning objectives
identified in 4 CSR
240-22.010(2). Demand-side resources
are the demand-side candidate resource options and portfolios developed in
4 CSR
240-22.050(6). Supply-side resources
are the supply-side candidate resource options developed in
4 CSR
240-22.040(4). The goal is to develop
a set of alternative plans based on substantively different mixes of
supply-side resources and demand-side resources and variations in the timing of
resource acquisition to assess their relative performance under expected future
conditions as well as their robustness under a broad range of future
conditions.
(A) The utility shall develop,
and describe and document, at least one (1) alternative resource plan, and as
many as may be needed to assess the range of options for the choices and timing
of resources, for each of the following cases. Each of the alternative resource
plans for cases pursuant to paragraphs (3)(A)1.-(3)(A)5. shall provide
resources to meet at least the projected load growth and resource retirements
over the planning period in a manner specified by the case. The utility shall
examine cases that-
1. Minimally comply with
legal mandates for demand-side resources, renewable energy resources, and other
mandated energy resources. This constitutes the compliance benchmark resource
plan for planning purposes;
2.
Utilize only renewable energy resources, up to the maximum potential capability
of renewable resources in each year of the planning horizon, if that results in
more renewable energy resources than the minimally-compliant plan. This
constitutes the aggressive renewable energy resource plan for planning
purposes;
3. Utilize only
demand-side resources, up to the maximum achievable potential of demand-side
resources in each year of the planning horizon, if that results in more
demand-side resources than the minimally-compliant plan. This constitutes the
aggressive demand-side resource plan for planning purposes;
4. In the event that legal mandates identify
energy resources other than renewable energy or demand-side resources, utilize
only the other energy resources, up to the maximum potential capability of the
other energy resources in each year of the planning horizon, if that results in
more of the other energy resources than the compliance benchmark resource plan.
For planning purposes, this constitutes the aggressive legally-mandated other
energy resource plan;
5. Optimally
comply with legal mandates for demand-side resources, renewable energy
resources, and other targeted energy resources. This constitutes the optimal
compliance resource plan, where every legal mandate is at least minimally met,
but some resources may be optimally utilized at levels greater than the
mandated minimums;
6. Any other
plan specified by the commission as a special contemporary issue pursuant to
4 CSR
240-22.080(4);
7. Any other plan specified by commission
order; and
8. Any additional
alternative resource plans that the utility deems should be
analyzed.
(B) The
alternative resource plans developed at this stage of the analysis shall not
include load-building programs, which shall be analyzed as required by
4 CSR
240-22.070(5).
(C) The utility shall include in its
development of alternative resource plans the impact of-
1. The potential retirement or life extension
of existing generation plants;
2.
The addition of equipment and other retrofits on generation plants to meet
environmental requirements; and
3.
The conclusion of any currently-implemented demand-side resources.
(D) The utility shall provide a
description of each alternative resource plan including the type and size of
each demand-side resource and supply-side resource addition and a listing of
the sequence and schedule for the end of life of existing resources and for the
acquisition of each new resource.
(4) Analysis of Alternative Resource Plans.
The utility shall describe and document its assessment of the relative
performance of the alternative resource plans by calculating for each plan the
value of each performance measure specified pursuant to section (2). This
calculation shall assume values for uncertain factors that are judged by
utility decision-makers to be most likely. The analysis shall cover a planning
horizon of at least twenty (20) years and shall be carried out on a
year-by-year basis in order to assess the annual and cumulative impacts of
alternative resource plans. The analysis shall be based on the assumption that
rates will be adjusted annually, in a manner that is consistent with Missouri
law. The analysis shall treat supply-side and demand-side resources on a
logically-consistent and economically-equivalent basis, such that the same
types or categories of costs, benefits, and risks shall be considered and such
that these factors shall be quantified at a similar level of detail and
precision for all resource types. The utility shall provide the following
information:
(A) A summary tabulation that
shows the performance of each alternative resource plan as measured by each of
the measures specified in section (2) of this rule;
(B) For each alternative resource plan, a
plot of each of the following over the planning horizon:
1. The combined impact of all demand-side
resources on the base-case forecast of summer and winter peak
demands;
2. The composition, by
program and demand-side rate, of the capacity provided by demand-side
resources;
3. The composition, by
supply-side resource, of the capacity supplied to the transmission grid
provided by supply-side resources. Existing supply-side resources may be shown
as a single resource;
4. The
combined impact of all demand-side resources on the base-case forecast of
annual energy requirements;
5. The
composition, by program and demand-side rate, of the annual energy provided by
demand-side resources;
6. The
composition, by supply-side resource, of the annual energy supplied to the
transmission grid, less losses, provided by supply-side resources. Existing
supply-side resources may be shown as a single resource;
7. Annual emissions of each environmental
pollutant identified pursuant to
4 CSR
240-22.040(2)(B);
8. Annual probable environmental costs; and
9. Public and highly-confidential forms of the capacity balance spreadsheets
completed in the specified format;
(C) The analysis of economic impact of
alternative resource plans, calculated with and without utility financial
incentives for demand-side resources, shall provide comparative estimates for
each year of the planning horizon-
1. For the
following performance measures for each year:
A. Estimated annual revenue
requirement;
B. Estimated annual
average rates and percentage increase in the average rate from the prior year;
and
C. Estimated company financial
ratios and credit metrics; and
2. If the estimated company financial ratios
in subparagraph (4)(C)1.C. are below investment grade in any year of the
planning horizon, a description of any changes in legal mandates and cost
recovery mechanisms necessary for the utility to maintain an investment grade
credit rating in each year of the planning horizon and the resulting
performance measures in subparagraphs (4)(C)1.A.-(4)(C)1.C. of the alternative
resource plans that are associated with the necessary changes in legal mandates
and cost recovery mechanisms.
(D) A discussion of how the impacts of rate
changes on future electric loads were modeled and how the appropriate estimates
of price elasticity were obtained;
(E) A discussion of the incremental costs of
implementing more renewable energy resources than required to comply with
renewable energy legal mandates;
(F) A discussion of the incremental costs of
implementing more energy efficiency resources than required to comply with
energy efficiency legal mandates;
(G) A discussion of the incremental costs of
implementing more energy resources than required to comply with any other
energy resource legal mandates; and
(H) A description of the computer models used
in the analysis of alternative resource plans.
(5) The utility shall describe and document
its selection of the uncertain factors that are critical to the performance of
the alternative resource plans. The utility shall consider at least the
following uncertain factors:
(A) The range of
future load growth represented by the low-case and high-case load
forecasts;
(B) Future interest rate
levels and other credit market conditions that can affect the utility's cost of
capital and access to capital;
(C)
Future changes in legal mandates;
(D) Relative real fuel prices;
(E) Siting and permitting costs and schedules
for new generation and generation-related transmission facilities for the
utility, for a regional transmission organization, and/or other transmission
systems;
(F) Construction costs and
schedules for new generation and generation-related transmission facilities for
the utility, for a regional transmission organization, and/or other
transmission systems;
(G) Purchased
power availability, terms, cost, optionality, and other benefits;
(H) Price of emission allowances, including
at a minimum sulfur dioxide, carbon dioxide, and nitrogen oxides;
(I) Fixed operation and maintenance costs for
new and existing generation facilities;
(J) Equivalent or full- and
partial-forced-outage rates for new and existing generation
facilities;
(K) Future load impacts
of demand-side programs and demand-side rates;
(L) Utility marketing and delivery costs for
demand-side programs and demand-side rates; and
(M) Any other uncertain factors that the
utility determines may be critical to the performance of alternative resource
plans.
(6) The utility
shall describe and document its assessment of the impacts and
interrelationships of critical uncertain factors on the expected performance of
each of the alternative resource plans developed pursuant to
4 CSR
240-22.060(3) and analyze the risks
associated with alternative resource plans. This assessment shall explicitly
describe and document the probabilities that utility decision-makers assign to
each critical uncertain factor.
(7)
The utility decision-makers shall assign a probability pursuant to section (5)
of this rule to each uncertain factor deemed critical by the utility. The
utility shall compute the cumulative probability distribution of the values of
each performance measure specified pursuant to
4 CSR
240-22.060(2). Both the expected
performance and the risks of each alternative resource plan shall be
quantified. The utility shall describe and document its risk assessment of each
alternative resource plan.
(A) The expected
performance of each resource plan shall be measured by the statistical
expectation of the value of each performance measure.
(B) The risk associated with each resource
plan shall be characterized by some measure of the dispersion of the
probability distribution for each performance measure, such as the standard
deviation or the values associated with specified percentiles of the
distribution.
(C) The utility shall
provide-
1. A discussion of the method the
utility used to determine the cumulative probability-
A. An explanation of how the critical
uncertain factors were identified, how the ranges of potential outcomes for
each uncertain factor were determined, and how the probabilities for each
outcome were derived; and
B.
Analyses supporting the utility's choice of ranges and probabilities for the
uncertain factors;
2.
Plots of the cumulative probability distribution of each distinct performance
measure for each alternative resource plan;
3. For each performance measure, a table that
shows the expected value and the risk of each alternative resource plan; and
4. A plot of the expected level of
annual unserved hours for each alternative resource plan over the planning
horizon.
*Original authority: 386.040, RSMo 1939; 386.250, RSMo
1939, amended 1963, 1967, 1977, 1980, 1987, 1988, 1991, 1993, 1995, 1996;
386.610, RSMo 1939; and 393.140, RSMo 1939, amended 1949,
1967.
