of which has a probability. We understand that such a “two-stage” version of IPM has been tested. A stochastic version of the analysis would provide a more realistic representation of the option value of different control strategies and how generators would adopt physical hedges against risk. However, such a model would be much larger in size than the basic IPM and more expensive to run. Therefore, the committee suggests that research be undertaken on the conditions under which solutions of stochastic simulation models would be both appreciably different from deterministic models (for example, see Murphy and Sen 2002) and also more realistic in terms of characterization of actual market behavior under uncertainty.
The third way we suggest for improving future analyses is to undertake detailed empirical studies of the costs and effectiveness of maintenance and life-extension alternatives for various classes of power generators to increase understanding of the costs and benefits of undergoing NSR from the plant owner’s point of view. Such a study would contribute to more realistic characterizations within IPM of the alternatives available to generation owners. It would also yield justification of assumptions concerning whether power generators will choose to avoid or undergo NSR. The results of such studies should be subject to peer review, before assumptions in IPM are changed, to get the benefit of a variety of expertise on this important issue.