Supply-Side Resource Analysis

PURPOSE: This rule establishes minimum standards for the scope and level of detail required in supply-side resource analysis. (1) The utility shall evaluate all existing supply-side resources and identify a variety of potential supply-side resource options which the utility can reasonably expect to use, develop, implement, or acquire, and, for purposes of integrated resource planning, all such supply-side resources shall be considered as potential supply-side resource options. These potential supply-side resource options include full or partial ownership of new plants using existing generation technologies; full or partial ownership of new plants using new generation technologies, including technologies expected to become commercially available within the twenty (20)-year planning horizon; renewable energy resources on the utility-side of the meter, including a wide variety of renewable generation technologies; technologies for distributed generation; life extension and refurbishment at existing generating plants; enhancement of the emission controls at existing or new generating plants; purchased power from bi-lateral transactions and from organized capacity and energy markets; generating plant efficiency improvements which reduce the utility’s own use of energy; and upgrading of the transmission and distribution systems to reduce power and energy losses. The utility shall collect generic cost and performance information sufficient to fairly analyze and compare each of these potential supply-side resource options, including at least those attributes needed to assess capital cost, fixed and variable operation and maintenance costs, probable environmental costs, and operating characteristics. (2) The utility shall describe and document its analysis of each potential supply-side resource option referred to in section (1). The utility may conduct a preliminary screening analysis to determine a short list of preliminary supply-side candidate resource options, or it may consider all of the potential supplyside resource options to be preliminary supply-side candidate resource options pursuant to subsection (2)(C). All costs shall be expressed in nominal dollars. (A) Cost rankings of each potential supplyside resource option shall be based on estimates of the installed capital costs plus fixed and variable operation and maintenance costs levelized over the useful life of the potential supply-side resource option using the utility discount rate. The utility shall include the costs of ancillary and/or back-up sources of supply required to achieve necessary reliability levels in connection with intermittent and/or uncontrollable sources of generation (i.e., wind and solar). (B) The probable environmental costs of each potential supply-side resource option shall be quantified by estimating the cost to the utility to comply with additional environmental legal mandates that may be imposed at some point within the planning horizon. The utility shall identify a list of environmental pollutants for which, in the judgment of the utility decision-makers, legal mandates may be imposed during the planning horizon which would result in compliance costs that could significantly impact utility rates. The utility shall specify a subjective probability that represents utility decision-maker’s judgment of the likelihood that legal mandates requiring additional levels of mitigation will be imposed at some point within the planning horizon. The utility, based on these probabilities, shall calculate an expected mitigation cost for each identified pollutant. (C) The utility shall indicate which potential supply-side resource options it considers to be preliminary supply-side candidate resource options. Any utility using the preliminary screening analysis to identify preliminary supply-side candidate resource options shall rank all preliminary supply-side candidate resource options based on estimates of the utility costs and also on utility costs plus probable environmental costs. The utility shall— 1. Provide a summary table showing each potential supply-side resource option and the utility cost and the probable environmental cost for each potential supply-side resource option and an assessment of whether each potential supply-side resource option qualifies as a utility renewable energy resource; and 2. Explain which potential supply-side resource options are eliminated from further consideration and the reasons for their elimination. (3) The utility shall describe and document its analysis of the interconnection and any other transmission requirements associated with the preliminary supply-side candidate resource options identified in subsection (2)(C). (A) The analysis shall include the identification of transmission constraints, as estimated pursuant to 4 CSR 240-22.045(3), whether within the Regional Transmission Organization’s (RTO’s) footprint, on an interconnected RTO, or a transmission system that is not part of an RTO. The purpose of this analysis shall be to ensure that the transmission network is capable of reliably supporting the preliminary supply-side candidate resource options under consideration, that the costs of the transmission system investments associated with preliminary supply-side candidate resource options, as estimated pursuant to 4 CSR 240-22.045(3), are properly considered and to provide an adequate foundation of basic information for decisions to include, but not be limited to, the following: 1. Joint ownership or participation in generation construction projects; 2. Construction of wholly-owned generation facilities; 3. Participation in major refurbishment, life extension, upgrading, or retrofitting of existing generation facilities; 4. Improvements on its transmission and distribution system to increase efficiency and reduce power losses; 5. Acquisition of existing generating facilities; and 6. Opportunities for new long-term power purchases and sales, and short-term power purchases that may be required for bridging the gap between other supply options, both firm and nonfirm, that are likely to be available over all or part of the planning horizon. (B) This analysis shall include the identification of any output limitations imposed on existing or new supply-side resources due to transmission and/or distribution system capacity constraints, in order to ensure that supply-side candidate resource options are evaluated in accordance with any such constraints. (4) All preliminary supply-side candidate resource options which are not eliminated shall be identified as supply-side candidate resource options. The supply-side candidate resource options that the utility passes on for further evaluation in the integration process shall represent a wide variety of supply-side resource options with diverse fuel and generation technologies, including a wide range of renewable technologies and technologies suitable for distributed generation. (A) The utility shall describe and document its process for identifying and analyzing potential supply-side resource options and preliminary supply-side candidate resource options and for choosing its supply-side candidate resource options to advance to the integration analysis. (B) The utility shall indicate which, if any, of the preliminary supply-side candidate resource options identified in subsection (2)(C) are eliminated from further consideration on the basis of the interconnection and other transmission analysis and shall explain the reasons for their elimination. (C) The utility shall include the cost of interconnection and any other transmission requirements, in addition to the utility cost and probable environmental cost, in the cost of supply-side candidate resource options advanced for purposes of developing the alternative resource plans required by 4 CSR 240-22.060(3). (5) The utility shall develop, and describe and document, ranges of values and probabilities for several important uncertain factors related to supply-side candidate resource options identified in section (4). These cost estimates shall include at least the following elements, as applicable to the supply-side candidate resource option: (A) Fuel price forecasts, including fuel delivery costs, over the planning horizon for the appropriate type and grade of primary fuel and for any alternative fuel that may be practical as a contingency option; (B) Estimated capital costs including engineering design, construction, testing, startup, and certification of new facilities or major upgrades, refurbishment, or rehabilitation of existing facilities; (C) Estimated annual fixed and variable operation and maintenance costs over the planning horizon for new facilities or for existing facilities that are being upgraded, refurbished, or rehabilitated; (D) Forecasts of the annual cost or value of emission allowances to be used or produced by each generating facility over the planning horizon; (E) Annual fixed charges for any facility to be included in the rate base, or annual payment schedule for leased or rented facilities; and (F) Estimated costs of interconnection or other transmission requirements associated with each supply-side candidate resource option. AUTHORITY: sections 386.040, 386.250, 386.610, and 393.140, RSMo 2000.* This rule originally filed as 4 CSR 240-22.040. Original rule filed June 12, 1992, effective May 6, 1993. Amended: Filed Oct. 25, 2010, effective June 30, 2011. Moved to 20 CSR 4240-22.040, effective Aug. 28, 2019. *Original authority: 386.040, RSMo 1939; 386.250, RSMo 1939, amended 1963, 1967, 1977, 1980, 1987, 1988, 1991, 1993, 1995, 1996; 386.610, RSMo 1939; and 393.140, RSMo 1939, amended 1949, 1967.