(1) A critical component of integrated least cost resource planning and acquisition is the initial screening of demand- and supply-side resource alternatives. This involves weighing, ranking, sizing, evaluating and selecting the individual resources which will eventually form the resource plan. Utilities should use the best scientific and engineering methods available, their own judgment and public comment to weigh and rank the operation of existing resources and the acquisition of new resources based on consideration of multiple resource attributes. Resource attributes are variables that may affect (positively and negatively) the cost society incurs when the resource is acquired and allocated to the production of energy services. Some attributes may be accounted for in utility costs; others may represent externalities. Since efficient resource acquisition requires information about the societal resource cost, and since the societal resource cost will be a major determinant of a resource's initial suitability as a least cost resource, utilities should ensure that the cost assigned to each resource reflects all relevant attributes. Attributes that may influence the societal cost of a resource include, but may not be limited to:

(a) environmental externalities,

(b) the overall efficiency with which the resource produces energy services,

(c) administrative costs of acquisition programs,

(d) the cost effectiveness of the resource, determined in the context of the utility system,

(e) risk and uncertainty,

(f) reliability, and

(g) associated transmission costs. The transmission costs, positive and negative, associated with the resource should be imputed based on relevant long run avoidable costs. The imputed costs should reflect the utility's best estimate of the opportunity cost value of new or existing transmission capacity that would be consumed by the resource if that resource were acquired. This value should be added to the price of the resource.

(2) Demand-side resources should be sized and evaluated consistent with the following guidelines.

(a) The impact of price-induced conservation, (i.e., conservation undertaken by customers in the absence of utility sponsored programs) should be accounted for either in the load forecast or as part of the total available resource. In designing programs to acquire cost effective resources a utility should estimate and pay the price necessary to achieve the resource at the time of acquisition, which may be less than the cost effective level due to customer or other contributions.

(b) The revenue impacts of decreased sales resulting from the implementation of demand-side resources should not be added to the cost of the resources acquired through such programs.

(c) A nonparticipant (no-losers) test considers utility-sponsored programs cost effective only if rates to customers that do not participate in the program are not affected by the program. A nonparticipant test should not be applied to demand-side resources just as it is not applied to any other resource choice.