The Role of Competitive Forces in Integrated Resource Planning

In this report, we study the potential for competitive forces to enhance tile efficiency of integrated resource planning and produce consumer cost reductions. We examine the efficiency gains from competition in the private power market, and ask whether similar forces can be "successful on the demand-side of tile market. The goal of this analysis is to identify and elucidate options available to state Public Utility Commissions (PUCs) to support competition in utility demand-side management programs to achieve efficiencies similar to those being achieved through development of competitive forces on the supply-side of the industry. We consider the entire market structure from upstream suppliers to distribution intermediaries to ultimate consumers. The market structure differs substantially between the demand-side and the supplyside of the electricity market. Demand-side electricity markets have a longer distribution chain and more intermediaries than the supply-side, which is attributable in part to the ultimately retail nature of demand and the wholesale nature of supply, and in part indicates market failures.