15 -i CHAPTER 15. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION ............................................................................................................ 15-1 15.2 METHODOLOGY ........................................................................................................... 15-1 15.3 RESULTS ......................................................................................................................... 15-2 REFERENCES .......................................................................................................................... 15-315 -1 CHAPTER 15. UTILITY IMPACT ANALYSIS

15.1 INTRODUCTION

The utility impact analysis projects the changes in power generation capacity of the nation that would be expected to result from the adoption of new energy efficiency standards.

The U.S. Department of Energy (DOE) will analyze specific effects of its proposed standard levels on the electric and natural gas utility industry as part of the notice of proposed rulemaking analyses, using a variant of the U.S. Energy Information Administration ’s ( EIA ’s) National Energy Modeling System (NEMS). NEMS , which is publicly available, is a large, multi -sectoral, partial equilibrium model of the U.S. energy sector. EIA uses NEMS to produce the Annual Energy Outlook (

AEO ). 1 NEMS produces a widely recognized baseline energy forecast for the United States, and this energy forecast is available in the public domain. The version of NEMS used for appliance standards analysis is ca lled NEMS -Building Technologies (NEMS -BT) and is currently based on AEO20 12 with minor modifications. NEMS

- BT offers a sophisticated picture of the effect of standards because it accounts for the interactions between the various energy supply and demand sectors and the economy as a whole.

The utility impact analysis will consist of a comparison between model results for the base case and for policy cases in which proposed standards are in place. The use of NEMS- BT for the utility impact analysis offers several advantages. As the official DOE energy forecasting model, NEMS relies on a set of assumptions that are transparent and have received wide exposure and commentary. NEMS- BT allows an estimate of the interactions between the various

en ergy supply and demand sectors and the economy as a whole. The utility impact analysis will report the changes in installed capacity and generation, by fuel type, that result for each trial standard level, as well as changes in electricity and natural gas sales to the commercial sector.

DOE will conduct the utility impact analysis as a policy deviation from the AEO

, applying the same basic set of assumptions. For example, the operating characteristics ( e.g. , energy conversion efficiency, emissions rates) of future electricity generating plants are as specified in the reference case, as are the prospects for natural gas supply.

DOE also will explore deviations from some of the reference case assumptions to represent alternative future scenario s. Two alternative scenarios use the high and low economicgrowth cases. (The reference case corresponds to medium growth.) As part of varying supplyside growth determinants in these cases, AEO also varies the forecasted energy prices for all three economic growth cases because different economic growth scenarios will affect the rate of growth of energy demand.

15.2 METHODOLOGY

The utility impact analysis will use the assumptions of the AEO and treat energy conservation standards for high- intensity discharge lamps as variation s in policy. The effects of the policy are calculated as the difference between the reference case and each proposed standard

case. The electric utility impact analysis will consist of NEMS

- BT forecasts for generation, installed capacity, sales, and prices

. NEMS provides reference case load shapes for several end

uses. The model uses predicted growth in demand for each end use to build up a projection of the15 -2 total electric system load growth for each region, which it uses to predict the necessary additions to capacity. NEMS

- BT accounts for the implementation of efficiency standards by decrementing the appropriate reference case load shape.

DOE will use its site energy savings developed in the national impact analysis (chapter 11 of this interim support docum ent) for each trial standard level (TSL) as input to NEMS- BT. The magnitude of the energy decrement that would be required for NEMS-BT to produce stable results is slightly out of the range of numerical noise in the models. Therefore, DOE will estimate res ults corresponding to each TSL using interpolation with several simulations of NEMS -BT. This averaging of several simulations is deemed to yield a more robust estimate of the impacts of the energy conservation standard. DOE will run reduction levels in NEMS- BT, representing multipliers of each TSL, and use these outputs to linearly interpolate the results to estimate actual changes in generation and capacity due to the standard.

Although the current time horizon of NEMS-BT is 2035, the energy conservation

s tandards analysis extend s further into the future. It is not feasible to extend the forecast period of NEMS -BT for this analysis, nor does EIA have an approved method for extrapolation of many outputs beyond the forecast period

. While it might seem reasonable in general to make simple linear extrapolations of results, in practice this is not advisable because outputs could be contradictory. An analysis of various trends sufficiently detailed to guarantee consistency is beyond the scope of this work and, in any case, would involve a great deal of uncertainty. Therefore, all extrapolations beyond the NEMS -BT forecast period will be simple replications of results from the last year of the forecast period

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15.3 RESULTS

Results of the utility impact analysis will include changes in electricity sales, installed capacity, and generation for each TSL in 5- year forecasted increments.15 -3 REFERENCES

1. U.S. Energy Information Administration. Annual Energy Outlook 2012 with Projections to 2035 . 2012. (Last accessed February 19, 2013 .)

< www.eia.gov/forecasts/archive/aeo12/index.cfm >