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38.5.2001    GOAL AND POLICY

(1) The goal of these integrated least cost resource planning guidelines is to encourage electric utilities to meet their customers' needs for adequate, reliable and efficient energy services at the lowest total cost while remaining financially sound. To achieve this goal utilities should plan to meet future loads through timely acquisition of an integrated set of demand- and supply-side resources. Importantly, this includes actively pursuing and acquiring all cost effective energy conservation. The cost effectiveness of all resources should be determined with respect to long-term societal costs.

(2) These guidelines represent the policy of the Montana public service commission concerning proper integrated least cost resource planning and acquisition. Electric utilities under the jurisdiction of the Montana public service commission are required to file least cost plans as outlined below.

(3) These guidelines do not change the fundamental ratemaking relationship between the utilities and the commission. Rather, they are a restatement of the commission's regulatory objective: to efficiently allocate society's resources to the provision of electricity services and ensure just and reasonable rates for consumers.

(4) The guidelines provide the utilities with policy and planning guidance. With the exception of ARM 38.5.8301, they do not specify the outcome of the planning process nor mandate particular investment decisions. Each utility's plan should be the result of that utility's unique planning process and judgment.

(5) Integrated least cost planning may demonstrate that, on the basis of overall societal costs, previously rate-based resources should be abandoned and replaced by new resources. In addition, least cost plans may show that it is in society's best interest for construction of a new resource to be abandoned in favor of some other resource option. If such situations occur, the commission will open separate proceedings in which it will determine how recovery of the undepreciated, rate-based capital costs will be accomplished.

(6) The guidelines do not shift risk; rather, they suggest ways to reduce and manage the risk of resource choices to shareholders, ratepayers and society.

(7) Existing resources should be operated, and new resources acquired, only when needed and in a manner consistent with these guidelines.

(8) Until such time as the commission determines that market failures and market barriers which may interfere with ratepayer investment in conservation have been reduced or eliminated, utility investment in conservation measures installed on the customer's side of the meter should be considered cost effective up to 115 percent of the utility's long-term avoided cost.

(9) The utility should thoroughly document the exercise of its judgment in weighing the importance of conflicting decision objectives. The utility should prepare such documentation so that it can be reasonably understood by the commission and interested parties.

(10) Resource decisions have a significant impact on the public. Each utility can best meet the diverse goals of its shareholders, its ratepayers and society if it involves the public in resource planning. To facilitate such involvement the resource planning process should be thoroughly documented and reasonably understandable.

(11) Implementation of these guidelines will require a commitment from both the public and private sectors to honor the spirit and intent of the guidelines.

History: 69-3-103, 69-3-1204, 69-8-1006, MCA; IMP, 69-3-102, 69-3-106(1), 69-3-201, 69-3-1202, 69-8-1004, 69-8-1005, MCA; NEW, 1992 MAR p. 2764, Eff. 12/25/92; AMD, 2006 MAR p. 1461, Eff. 6/2/06.

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