Electricity Utility Least Cost Planning


ElectricityUtility Least Cost Planning

Tablesof Content



Energyefficiency as a public policy……………………………………………………4

Consumptionof electricity and effects on the environment…………………………….5

Leastcost programs………………………………………………………………………7

Measuresof Least Cost Planning in America…………………………………………….9

CostBenefit Analysis for Agar Supply………………………………………………….10




Inthe United States of America, energy efficiency has been an aspect ofthe states’ energy policy. Not only is it portrayed as the lowestcost utility, it has also been perceived to be of effective cost.Therefore, a need to come up with least cost planning methods withthe aim of conserving the environment has been the key for America.Across a range of states, programs and regions, energy efficiencydemonstrates to be an energy resource that is cost effective. Newsources of energy have been developed. Agar supplies and productionof energy has promised to be a source of fuel production that isinexhaustible and renewable. Although the production cost is high, itoffers environmental conservation. Compared to other natural energyproducers, agar produces a considerable amount of fuel thus cansatisfy the rise in demand in energy consumption. This paper aims atdiscussing more narrowly the issues of least cost planning inrelation to electricity utility. Least cost planning here examinesoptions like electricity production and electricity saving. The goalleast cost planning is to use supply and demand options to provideminimum cost energy services. Finally, this paper argues that statesaround the world are still moving towards innovation programs thatsupport least cost planning electricity utility. Use of other sourcesof energy has also created job opportunities and has encouragedcustomers to save costs on electricity bill.

Adoptionof energy efficiency that is cost effective as a strategy to increaseinvestment and save the environment has been the most importantpolicy of the United States of America. Not only is energy efficiencyportrayed as the resource available of the lowest cost utility, butalso, perceived as being cost effective. However, this aspect hasbeen faced by problems of implementation for instance, many peopleare willing to get electricity power, but are not willing to acceptfacilities of utility production in their areas. Also, utilityindustries have been having problems of keeping up with standardsrelated to the ever environmental changes. Many governments aroundthe world have experienced demands concerning the climate changeeffects (Beecher, 2011). Therefore, a need to come up with least costplanning methods with the aim of conserving the environment has beenthe key to most American citizens. This paper look at issues of leastcost planning in relation to electricity utility. Least cost planninghere examines options like electricity production and electricitysaving. The chief goal least of cost planning is to use supply anddemand options to provide minimum cost energy services. Moreover, itfocuses on fulfilling energy requirements in an efficient mannertaking into consideration environmental, social, and economiceffects. Least cost planning aims at explicitly considering factorsthat are relevant and balancing interests that seem to compete.

Energyefficiency as a public policy

Thecost incurred by a consumer is minimized when these two options aretaken into consideration. Moreover, this is achieved when theyinclude environmental concerns. Energy efficiency has been aregulatory aim and public policy for many governments around theworld but this has not been taken seriously. This goal has to bepursued aggressively for the achievement of energy efficiency andenvironmental conservation. There have been reasons as to why thishas been experiencing difficulties to pursue (Berry, 2005). Some ofthe reasons are the strong economic disincentive created by thetraditional regulations. In most cases, this hinders theimplementation of least plan utility and programs directed to theinvestment in energy efficiency. This discussion revolves aroundstrategies that would ensure environmentally compatible and costeffective electricity utility. This paper applies principles of leastcost planning to discuss programs that are cost effective in relationto electricity utility. Traditionally, electric utilities have beenmeasuring their success based on kilowatts output. This has beenassumed to be ensuring their economic operation through theregulation. In the least cost planning the electric utility becomesother businesses economics bottom line. The power quantity they sellis not taken as a priority. They become the suppliers of energyservices rather than purveyors of electric utility. Programs thatsupport least cost planning gives the consumers the opportunity toaccess power easily and at a low cost. In addition, electricity willbecome possible to produce, easy to transmit, and also distributionof natural gas and electricity will become highly reliable (Costello,2007). According to Corinne (2009), small and large utilities,administrators of the third party have delivered energy programs thatare cost effective and focus on environmental solutions. This hasbeen of importance since in the late nineteen eighties. Utilityinvestment rationale in programs that are efficient, dictates thatfor services and products that are existing in the market, barriersare experienced and they can be overcome by consumers from alleconomies of the world to enjoy more practices and products that areenergy efficient and take into consideration environmentconsideration.

Consumptionof electricity and effects on the environment

Thesector for electricity in America involves transmission, generation,and distribution of electric power. The Most gas emitted is thecarbon dioxide and makes the highest percentage of greenhouse gasesemitted from the electricity sector. There are also emissions ofnitrous oxide and methane in smaller amounts. When the fossil fuels,are combusted, the gases are produced to generate electricity. Thesefossil fuels include oil, natural gas, and also coal. Burningpetroleum and natural gas for electricity are not carbon intensive ascompared to the combustion of coal. Kolb, Mancini, &amp Gary, (2011)suggests that coal emits about seventy five percent of carbon dioxidefrom the electricity sector. Moreover, coal represents about thirtynine percent of America’s electric generation. In the year 2012,twenty nine percent of electric generation, was from natural gas andin the recent years, the percentage has risen. Electric generationfrom petroleum accounts for less than one percent. Twenty percentcomes from nuclear and about twelve percent comes from sources thatare renewable such as biomass, solar, wind, and hydroelectricity.Combustion of fossil fuel releases much green house gas than othersources. These gases accumulate in the atmosphere of the earth makingit to warm up. Radiations from the sun penetrate the earth’satmosphere because the gases allow them to do so. Also, theradiations do not escape the atmosphere due to the prevention fromthe gas. Consequently, the earth finds ways to release energy fromthe radiation to prevent overheating. Therefore, the climate changesoccur due to the temperature increase.

Whenthe world temperatures rise, polar ice caps melts leading to a risein sea levels and many effects to the environment putting the livesof people and plants into danger. Many companies in the United Statesof America and around the world are putting more effort to come upwith solutions to eliminate the greenhouse gases in electricityproduction (Sallam &amp Malik, 2011).

Leastcost programs

Therehas been a need to come up wit least cost planning programs andpractices that ensures effective consumption of electricity at lowcost, and produce air pollution that is less. Part of the solutionsis use of renewable sources such as wind. In two thousand and four,results from various states in America described the issue of costeffectiveness (Shimon, 2006). Utilities in California offer manyopportunities of energy efficiency to their natural gas and electricpower consumers. The state is also in the lead on this field. Also,Massachusetts record of energy efficiency investment was reported tobe strong. In New York, the programs are funded well and includeindustrial and commercial programs. Low income programs that supportenergy efficiency in residential areas are significantly invested in.Programs of efficiency in Vermont are of smaller scale but arestrongly established. For example, the program of fluorescent lightbulb acts as a model to other developers of such programs. Theseresults show that energy efficiency is still cost effective.

Accordingto Slavin (2011), across a range of states, programs and regions,energy efficiency demonstrates to be an energy resource that is costeffective.Under a regime of least cost planning, the demand forservices of electric utilities is no longer ` a place where thingsare taken easily as they are presented. Instead, utilities havethe capability to lead to expectationsthatintegrateto both into their approach and to their customer’s behavior, ademand that has more sophisticated analysis.Also,the technologies consumers in relation to their fields ofdistribution and power generation are established. Often, the premiseholds that for variousreasons,it is cheaper for electricity utilities to invest in consumerefficiency than it is to expand the supplies by construction of moreelectricity plants.

Leastcost planning in electricity utility has benefits like lowerpollution. The green house effect will be reduced due to fewer powerstations. Few power stations would generate less electricity thusharmful gases like nitrogen oxide, sulphur dioxide, and carbondioxide emissions will also be reduced. In the planning process,environmental aspects are taken into consideration thus the leastcost method offers a mechanism that weighs benefits against costsdirectly. Another benefit is that when the amount of electricityproduced is small, the required amount of full is small thus enjoyingenergy self sufficiency (Mancini, et al., 2011). Political andeconomical benefits are experienced here. This is because fewerimports will be demanded and domestic supplies will be used for thatmatter.

Nationaleconomy that is efficient is also beneficial. A wide variationbetween

Countriesin their energy intensity have been identified and the energyconsumption per unit of gross net productproduced,above and over structural differences in the economies is discussed.

Maliket al., (2011) suggests that sinceenergyis a cost in production, this makes the goods of energy inefficientcountries relatively uncompetitive on world markets. Americacomparesvery badly with Japan on this count. Achievement of more energyefficiency thusgainssupport from other groups, and least cost planning, therefore leadsto an appropriate way of change encouragement heading in thisdirection. Another aspect is the economic efficiency of the utilityitself. Large Investments in consumer energy efficiency reduces theurge for expensive and planning enquiries over the construction ofnew power stations. Least cost planning requires less total capital,andcan be carried out in smaller units than investment in major newpower stations.

Flexibleprograms shouldbetargeted to smaller or larger customer groups as required, and also,phasing should be done. The effects are rapid. They are alsopredictable. It is less riskythaninvestingin extra generating capacity in advance of forecast demand growth(Costello, 2007).

Measuresof Least Cost Planning in America

InAmerica, there have been measures that form a considerable part ofleast cost planning. From the electricity utility point of view, theaim of LCP is money saving. The industry aims to avoid building morepower stations through encouraging the consumers to use electricityefficiently at a minimum cost. Also, they fund and invest heavily onelectricity efficient programs (Berry, 2005). Consequently, thedemand reduces thus the need for larger investments are removed. Whenthe consumers have the information about the utility, energyefficiency becomes the cheapest method. Studies show that cash hasbeen an impediment to industrial, commercial and domestic sectors’efficiency.

Rebatesprovision has been the most important measure of least cost planningin electricity utility. Inefficient item costs less than theefficient item. America is now allowing their consumers to makeinformed decisions in regard to their utility bills. This is beingdone through electricity costs that are transparent. Variouscompanies in America like Oklahoma electric and gas service havedevised ways of customer empowerment to save costs. Demand onconsumption of electricity has been on the rise, making thesecompanies to shift to ways of peak load reduction (Beecher, 2011).During this time, companies used to turn to power plants that hadhigh operating cost and caused environmental pollution. They havecome up with a solution for this problem. Management programs havebeen devised by electricity utilities in America. The aim of theprograms is to reduce electricity consumption during the peakperiods.

OG&ampEis examples of a program devised for this purpose. Consumers areencouraged to sign up for this program and thereafter get anopportunity to enjoy less charge during off-peak period. They getnotifications daily, informing them about the charges during peakhours (Slavin, 2011).

Applicationof least cost planning programs like smart hours, lead to customerempowerment. The consumer is armed with knowledge of how to savemoney on their electricity bill. Programs focusing on the demand sidemanagement also, are of importance because they lower the amount ofenergy consumption during peak period, thus reducing the work ofelectricity utilities to manage production of electricity.Consequently, utilities work hard to devise new ways of meeting thedemand. In turn, the ratepayers are able to save their money (Collin,2009).

CostBenefit Analysis for Agar Supply

Productionof oil from Agar has been ventured by many businesses today. It hasbeen an alternative source of energy with a promising future. The biofuel industries characterize algal bio fuel as a third revolution.There has been generated interest lately in the production ofsustainable energy from Agar due to its promising revolution(Costello, 2007). Agar grown in an acre can produce nineteen thousandliters of biodiesel in a year. In contrast, an acre of corn can onlyproduce four hundred and twenty nine gallons of ethanol, thus makingthe Agar production of energy more effective than other sources. Theproduction cost of Agar fuel is high but offers a reasonable costcompared to cost incurred in prevention of environmental pollution.


Indeed,there is dire need to adopt and embrace least cost electricityutility programs and strategies in order to save a high percentage ofcosts fuelled towards this sector. Worldwide, electricity companiesare coming up with new programs of ensuring electricity energy thatis cost effective and that which meets the demands of consumers.Also, the programs are more environmentally friendly. Utilitycompanies are offering many options of demand management, making iteasier for end-users to save money than before. Not only do theseprograms save money on electricity, they also constitute to areduction of our overall consumption of energy thus preserving theenvironment at large.


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