A New Strategic Model for Electric Utilities

The planning environment faced by electric utilities has become increasingly complex. Not alone is the economic environment constantly changing, but the actions of once predictable and benign external entities have become more uncertain and disadvantageous to the utility. In response to the changed planning environment, utilities have increasingly recognized the need for better planning tools. As a result, models have (1) become more integrated, (2) incorporated the effect of noncontrollable (behavioral) externalities, and (3) included time dependent variables in order to project the longer run consequences of utility actions. One such model is reported on here. It exhibits all three of the above characteristics, and represents the responses of external entities to utility actions, through mechanisms commonly referred to as "feedback loops".