In the past public utilities in the United States have been mandated by regulators to practice least-cost planning. The process of least-cost planning involves the choosing and implementing the most cost-effective means of supply. For most areas of the United States, this has meant using coal-fired technologies to generate electric power. More recently, demand side options which are designed to reduce the rate of increase in demand , have been included in the planning process, which is now referred to as integrated resource planning.

The process of integrated resource planning other than concern over avoiding capacity increases, has not explicitly acknowledged external costs, such s stresses to the environment. Incorporating these other concerns has become a major issue for public utility regulators. As a result of the conflicting goals of least-cost capacity additions, and the potential for mandated reduction in emission of greenhouse gases, both public utility companies and regulatory bodies have been forced to make some difficult policy choices. With the implementation of the climate Challenge Accord in April 1994, a voluntary agreement to reduce greenhouse gases, the generation planning decisions that utilities must make to meet environmental goals are becoming increasingly complex. Clean Air Act provisions governing the reduction of sulfur dioxide and nitrous oxide place specific caps on levels of those emissions. The Climate Accord, however, deliberately offers utilities maximum leeway in meeting emissions reduction requirements. As a result, the options available for meeting greenhouse gas emissions targets include not only conventional options, but also expanded trading options, support of reduction projects internationally, and carbon sequestering projects.