Because energy is considered a necessity, utilities have an “obligation to serve” and cannot refuse service to any customer (except for non-payment). Utilities try to balance reliability (making sure that electricity is always there when you flip the switch) and keeping costs low. Generally utilities plan at least 10-20 years into the future. Most resource development and building new transmission lines takes at least 10 years to site, permit and construct.
The challenge facing utilities is they must meet constant customer demand (base load or energy) and meet peak needs for energy (peak or capacity). Utilities need both steady state resources (even and predictable) and resources that are quick to fire up to meet spikes in demand. Utilities plan for a wide range of scenarios with a wide variety of resources.
With deregulation, the electric utility business changed dramatically especially when compared with the previous 50 years. Several policies and regulations have changed the landscape. One of these is the Renewable Portfolio Standard. A majority of US states require utilities purchase a percent of renewable energy by a specific date. In Oregon, the largest utilities are required to purchase or own at least 25% renewable energy as part of their total resource portfolio by 2025. For smaller utilities, this amount is 10% or 5%.
Another driving force is reducing climate change and carbon emissions either by reducing or eliminating fossil fuels (such as coal), converting vehicle fleets from fossil fuels or through purchasing Renewable Energy Credits, which are the environmental benefits (or equivalent) of carbon reduction.