Are deregulation and integrated resource planning compatible?
Integrated resource planning (IRP) and deregulation are the foci of policy changes occurring in the electric utility industry worldwide. However, at some levels there are fundamemal conflicts between these approaches to resource allocation. IRP requires a certain degree of centralized decision-making and regulatory oversight. Deregulation promotes competition, which relies on decentralized decision-making by individuals. This paper focuses on the compatibility of deregulation with the practice of IRP. The paper explores the question, “Can market approaches provide sufficient incentives to achieve optimal investment in demand- and supply-side energy resources from a societal perspective?” Deregulation in the U.S. has occurred to date only at the power generation level, although recent national legislation will introduce third-party transmission access for wholesale customers. Non-utility generation has grown rapidly in the U.S. as a result of deregulation, providing a cost-effective alt
