CHAPTER 13. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION

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13.2 METHODOLOGY

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13.3 RESULTS

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REFERENCES

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13-iCHAPTER 13. UTILITY IMPACT ANALYSIS

13.1 INTRODUCTION

The U.S. Department of Energy (DOE) will analyze the effects on the electric utility industry of proposed fluorescent lamp ballast ener gy conservation standards as part of the notice of proposed rulemaking. This analysis will be conducted using the Energy Information Administration’s (EIA’s) National Energy Modeling System (NEMS), 1 a large, multi-sectoral, partial-equilibrium model of the U.S. energy sector. EIA uses NEMS to produce the Annual Energy Outlook 2009 ( AEO2009 ). 2 NEMS produces a widely recognized publicly available baseline energy forecast for the United States through 2030.

13.2 METHODOLOGY

To estimate the effects of the proposed sta ndards on the electric utility industry, DOE

will use a variant of the EIA’s NEMS known as NEMS-Building Technologies (BT) to provide key inputs to the analysis. EIA approves the use of the name NEMS only to describe an official version of the model without modifying the modelin g code or data. Because this analysis entails

some minor code modifications and the model is run under multiple policy scenarios that are variations on EIA assumptions, DOE refers to it as NEMS-BT.

For fluorescent lamp ballasts, the analysis will consist of forecasted differences between the base and standards cases for electricity gene ration, installed capacity, sales, and prices. The NEMS-BT model provides reference case load shap es for several end uses, including lighting applications.

For electrical end uses, NEMS-BT uses predic ted growth in demand for each end use to project the total electric system load growth fo r each region, which in turn predicts the necessary additions to electrical generation capacity. NEMS-BT also accounts for the implementation of energy conservation standards by decrementing th e appropriate reference case load shape. DOE will determine the size of the decrement using data for the per-unit energy savings developed in the life-cycle cost (LCC) and payback period (PBP) analyses (chapter 8 of the preliminary technical support document) and the forecast of shipments developed for the national impact analysis (chapter 9).

The use of NEMS-BT for the utility impact analysis offers several advantages. As the official DOE energy forecasting model, NEMS-BT relies on a set of transparent assumptions that 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 determine the changes for electric utilities in installed electrical generation capacity and in generation by fuel type produced for each trial standard level (TSL) as well as changes in electricity sales.

DOE plans to conduct the utility impact analysis as a variant of the AEO2009 , applying the same basic set of assumptions. For example, the utility analysis uses the operating characteristics ( e.g. , energy conversion efficacy, emissions ra tes) of future electricity generating plants.

13-1The model uses predicted growth in demand for each end use to project total electric system load growth for each region, which in tu rn is used to predict necessary additions to electrical generation capacity. Two alternative sc enarios use the high- and low-economic growth

cases of AEO2009 . (The reference case corresponds to medium growth.) The high-economic growth case assumes higher projected growth rates for population, labor force, and labor productivity, resulting in lower pr edicted inflation and interest rates relative to the reference case. The opposite is true for the low-growth case. The NEMS-BT model accounts for the implementation of energy conser vation standards by decrementing the appropriate reference-case load shape. DOE determines the size of the decrement using data for the per-unit energy savings developed in the LCC and PBP analyses (chapter 8) and the shipments analysis (chapter 9) developed for the NIA (chapter 10).

The predicted reduction in electrical generation capacity additions is sensitive to the peak load impacts of the standard. DOE will investigate the need to adjust the hourly load profiles that include fluorescent lamp ballast use in NEMS-BT.

The terminal year of the NEMS-BT model is 2030, impacts beyond which are typically extrapolated based on the pattern of electrici ty savings (in kilowatt hours) expected for a particular standard. The extrapolation will be based on a comparison of the change in the NEMS

BT variable ( e.g. , coal-fired generation) to the chan ge in electricity savings over 2025–2030. As

with the AEO reference case in general, the implicit premise is that the regulatory environment

does not deviate from the current known situation during the extrapolation period. Only changes

that have been announced w ith date-certain in troduction are included in NEMS-BT.

13.3 RESULTS

Results of the utility impact analysis will include changes in electricity sales, installed capacity, and generation for each TSL in five-yea r forecasted increments extrapolated to 2044.

13-2REFERENCES

1. U.S. Department of Energy–E nergy Information Administration. The National Energy Modeling System: An Overview 2000 . March 2000. Report No. DOE/EIA-0581 (2000). (Last accessed June 30, 2009.) < http://tonto.eia.doe.gov/ftproot/forecasting/05812000.pdf >

2. U.S. Department of Energy–E nergy Information Administration. Annual Energy Outlook 2009: With Projections to 2030 . March 2009. Report No. DOE/EIA-0383 (2009). (Last accessed March 11, 2010.) < http://www.eia.doe.gov/oiaf/a rchive/aeo09/pdf/0383(2009).pdf >

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