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How is the amount of each commodity needed estimated? Are commodity costs for the portfolio a combination of (a) cost for each commodity and (b) amount of each commodity?
In the context of IRP modeling, commodity prices are generally represented on a per unit basis, as described in the 2025 IRP Update (see Appendix 5B). The quantity of each commodity required is a product of the unique conditions represented by each resource portfolio, and how that portfolio meets customer demand.
The company contracts with a third-party consulting firm, ICF, which utilizes a make-whole methodology in their commodity forecasting. Based on the demand forecast, their model ensures that the commodity supply and price are adequately scaled and valued to attract supply (generation) resources to the grid by making their resource costs whole. This methodology creates a parity between long range resource investment and market revenue contributions via equilibrium in the commodity complex.