Utility Least Cost Planning and the Washington Gas Integrated Model
6 July 1994
Dr. Stuart Harshbarger with Dr. Vladimir Greenberg
In response to the Energy Policy Act of 1992 and other recent regulatory initiatives, many natural gas and electric utilities in the US were ordered to construct a least-cost plan as part of their long-range planning efforts. Accordingly, the District of Columbia Public Service Commission (DCPSC) ordered Washington GAS (WGAS) to construct a least-cost plan in order to reduce natural gas consumption to specific target levels in Washington, DC by the year 2000. To comply, WGAS constructed a long-range planning model with supply and demand components to mimic the local marketplace. As part of the model, WGAS engaged NERA Vice President Dr. Stuart Harshbarger and Dr. Vladimir Greenberg to develop a selection algorithm to identify the least costly combination of energy conservation programs to meet the gas reduction targets.
In this article, Drs. Harshbarger and Greenberg review the algorithms and the long-range planning model they developed for WGAS. The authors also explain how the algorithm and the integrated model can be used to quantify the consumer welfare impacts associated with this new least-cost planning approach to utility regulation. By using the energy conservation selection algorithm within the long-range planning model, WGAS was able to determine the least costly combination of energy conservation programs required to meet the DCPSC’s reduction target, the level of program participation required, and the estimated energy conservation costs.
This paper was subsequently published in Computers & Operations Research, 6 July 1994, Vol. 21, Number 6.
