(1) These guidelines provide policy guidance to default supply utilities (DSU) on long-term default electricity supply resource planning and procurement. With the exception of ARM 38.5.8301, the guidelines do not impose on DSUs specific resource procurement processes nor mandate particular resource acquisitions. Instead, the guidelines describe a process framework for considering resource needs and suggest optimal ways of meeting those needs. Electricity default supply resource decisions affect the public interest. A DSU can better fulfill its obligations, mitigate risks and achieve resource procurement goals if it includes the public in the portfolio planning process. An independent advisory committee of respected technical and public policy experts may offer the DSU an excellent source of up-front, substantive input that would help mitigate risk and improve resource procurement outcomes in a manner consistent with these guidelines. Consistent with these guidelines, and after an opportunity for public input, the DSU must ultimately make electricity resource acquisition decisions based on economics, reliability, management expertise, and sound judgment.

(2) A DSU should thoroughly document its default supply portfolio planning processes, resource procurement processes and management decision-making so that it can fully demonstrate to the commission and stakeholders the prudence of default supply-related costs and/or justify requests for advanced approval of power purchase agreements. A DSU should routinely communicate with the commission and stakeholders regarding on-going default supply portfolio planning and resource procurement activities.

(3) These guidelines will provide the basis for commission review and consideration of the prudence of a DSU's default supply resource planning and procurement actions, and are the standards against which the commission will evaluate the reasonableness of power supply agreements filed as part of a DSU's application for advanced approval. As such, the guidelines should assist DSUs in making prudent decisions and in fully recovering default supply-related costs. Successful application of the guidelines will require a commitment from the commission, DSUs and stakeholders to honor the spirit and intent of the guidelines.

(4) These guidelines are applicable to any public utility designated by the commission or Montana law as the default supplier of electricity to retail customers in its distribution service territory. These guidelines do not apply to public utilities that are not required to restructure pursuant to Title 69, chapter 8, MCA.

(5) These guidelines supercede the commission's electric least cost planning rules (ARM 38.5.2001 through 38.5.2012) solely with respect to a DSU's default supply resource planning and procurement functions.