Indianapolis Power & Light Company 2016 Integrated Resource Plan Public Version Volume 1 of 3 November 1, 2016 Table of Contents Page Table of Figures ............................................................................................................................. vi Integrated Resource Plan Acronyms .............................................................................................. xi Rule Reference Table ................................................................................................................... xvi Executive Summary ........................................................................................................................ 1 Section 1: Introduction ................................................................................................................. 1 1.1. IRP Objective .................................................................................................................. 1 1.2. Guiding Principles .......................................................................................................... 2 1.3. IRP Assumptions ............................................................................................................ 2 1.4. IRP Process ..................................................................................................................... 3 1.5. Stakeholder Engagement ................................................................................................ 4 1.6. Existing Customers ......................................................................................................... 5 1.7. Existing Resource Portfolio ............................................................................................ 5 1.7.1. Thermal Resources.................................................................................................. 6 1.7.2. Renewable Resources ............................................................................................. 7 1.7.3. Demand Side Resources ......................................................................................... 8 Section 2: Operating and Planning Within MISO ....................................................................... 9 2.1. Business framework and daily operations ...................................................................... 9 2.1.1. MISO Energy and Operating Reserves Market ...................................................... 9 2.1.2. Transmission Operations ...................................................................................... 10 2.2. Fuel Procurement .......................................................................................................... 11 2.2.1. Fuel Price Forecasting and Methodology ............................................................. 12 2.3. Resource Adequacy ...................................................................................................... 12 2.3.1. Reserve Margin Criteria ........................................................................................ 13 2.3.2. Planning for Resources ......................................................................................... 14 2.3.3. The MISO Capacity Construct.............................................................................. 15 2.3.4. Transmission Planning in MISO ........................................................................... 18 2.4. Transmission Planning Criteria..................................................................................... 18 i 2.4.1. IPL Blackstart Capability ...................................................................................... 21 2.4.2. Assessment Summary ........................................................................................... 22 2.5. Key Results ................................................................................................................... 24 2.6. Transmission Short Term Action Plan .......................................................................... 26 2.7. Transmission Expansion Cost Sharing ......................................................................... 27 2.7.1. Coordinating Transmission and Resource Planning ............................................. 29 Section 3: Distribution & Smart Grid ........................................................................................ 31 3.1. Distribution System Planning ....................................................................................... 31 3.2. Smart Grid Technologies and Opportunities ................................................................ 32 3.2.1. Advanced Metering Systems ................................................................................ 33 3.2.2. Smart Grid Benefits .............................................................................................. 34 3.2.3. Cyber Security and Interoperability Standards ..................................................... 35 3.2.4. Distribution Generation Enabled .......................................................................... 35 3.2.5. Electric Vehicle ..................................................................................................... 36 3.2.6. Future Smart Grid Expectations............................................................................ 37 Section 4: Load Research, Forecast and Load Forecasting Methodology ................................. 38 4.1. Load Research ............................................................................................................... 38 4.2. Forecasting Overview ................................................................................................... 38 4.3. Forecast Methodology .................................................................................................. 42 4.4. Forecasting Challenges ................................................................................................. 45 4.5. Key Forecast Drivers by Sector .................................................................................... 48 4.5.1. Residential............................................................................................................. 49 4.5.2. Small C&I ............................................................................................................. 52 4.5.3. Large C&I ............................................................................................................. 53 4.5.4. Electric Vehicles ................................................................................................... 55 4.6. Load Model Performance and Analysis ........................................................................ 60 Section 5: Resource Options ...................................................................................................... 62 5.1. Existing IPL Resources ................................................................................................. 62 5.1.1. Existing Supply-Side Resources ........................................................................... 62 5.1.2. Existing Demand Side Resources ......................................................................... 66 5.2. United States Resource Trends ..................................................................................... 68 ii 5.2.1. National Resource Mix ......................................................................................... 68 5.2.2. MISO Resource Mix ............................................................................................. 70 5.3. Supply-Side Resource Options ..................................................................................... 73 5.3.1. Natural Gas ........................................................................................................... 76 5.3.2. Nuclear .................................................................................................................. 79 5.3.3. Renewables ........................................................................................................... 80 5.3.4. Energy Storage Resources .................................................................................... 88 5.4. Distributed Generation .................................................................................................. 95 5.5. Demand Side Resource Options ................................................................................... 95 5.5.1. 2017 DSM Resources ........................................................................................... 96 5.5.2. IPL’s DSM Guiding Principles ............................................................................. 97 5.5.3. Indiana Legislation................................................................................................ 97 5.5.4. Federal Regulation ................................................................................................ 99 5.6. DSM as a Selectable Resource ................................................................................... 100 5.6.1. Market Potential .................................................................................................. 101 5.6.2. Market Characterization...................................................................................... 103 5.6.3. Baseline Projections ............................................................................................ 106 5.6.4. Avoided Cost Calculation ..................................................................................