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CHAPTER 15. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

15.1 INTRODUCTION ............................................................................................................ 15-1

15.2 METHODOLOGY ........................................................................................................... 15-1

15.3 RESULTS ......................................................................................................................... 15-2

REFERENCES .......................................................................................................................... 15-3
15-1 

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 called NEMS-Building Technologies 

(NEMS-BT) and is currently based on AEO2012 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 

energy 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 scenarios. Two alternative scenarios use the high and low economic 

growth 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 variations 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 the 
15-2 

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 document) 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 results 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 

standards analysis extends 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. 

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. 
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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>