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38.5.2002    DEFINITIONS

(1) "Integrated least cost resource planning" is an ongoing, dynamic and flexible process which:

(a) explicitly manages the consequences of uncertainty and risk associated with a utility's market characteristics and supply alternatives,

(b) integrates the demand- and supply-side resources that represent the least cost to society over the long-term,

(c) explicitly weighs a broad range of resource attributes (e.g., environmental externalities) in the evaluation of alternative resources,

(d) is reasonably understandable to interested persons (including members of the general public) and the commission,

(e) involves stakeholders and nonutility expertise in utility resource planning,

(f) results from a planning process within the utility which facilitates communication and coordination among the entities dealing with utility finances, demand forecasts, demand- and supply-side resource evaluations, as well as other relevant entities, and

(g) continually monitors and develops data on the cost effectiveness and actual productivity of conservation programs.

(2) "Energy conservation" is any reduction in electric power consumption resulting from:

(a) increased energy efficiency in the production, transmission, distribution and customer end-use applications of electricity, and

(b) increased customer knowledge concerning the societal impacts of consumption. (Such knowledge may be the result of economically efficient energy prices or other means of communication when prices are of the "second best" nature.)

(3) "Energy efficiency" refers to a ratio of output to input; a ratio of one indicates the highest conceptual degree of efficiency. In terms of least cost resource planning, the output ultimately produced is an energy service; the generation, transmission, distribution and end-use conversion of electricity are intermediate steps in the production of the energy service. The input may be a fuel source such as coal, wind or moving water, which is converted to electricity. Energy efficiency encompasses the entire spectrum, from conversion of the fuel source to electricity, to the energy service finally consumed.

(4) "Societal cost" consists of all costs to the utility plus all external costs which are imposed on the global society.

(5) "External costs" or "negative externalities" are costs imposed on society, but which are not directly borne by the producer in production and delivery activities. Due to imperfections in, or the absence of, markets, the producer's production and pricing decisions do not account for these costs.

(6) "Planning costs" are the costs of evaluating the future demand for energy services and of evaluating alternative methods of satisfying that demand. Planning costs include, but may not be limited to, costs associated with:

(a) econometric and end-use forecasting,

(b) identification and evaluation of alternative demand- and supply-side resource options,

(c) evaluation of externalities associated with alternative resources, and

(7) "Portfolio development costs" are costs of preparing a resource in a portfolio for prompt and timely acquisition. Portfolio development costs include, but may not be limited to, costs associated with:

(a) negotiating contracts with competitively acquired resources,

(b) acquiring and holding resource options, and

(c) developing and maintaining the capability to rapidly acquire demand-side resources.

History: 69-3-103, MCA; IMP, 69-3-102, 69-3-106(1), 69-3-201, MCA, ARM 38.5.2001; NEW, 1992 MAR p. 2764, Eff. 12/25/92.

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