CHAPTER 13. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

13.1 INTRODUCTION ............................................................................................................ 13­1

13.2 METHODOLOGY ........................................................................................................... 13­1

13.3 RESULTS ......................................................................................................................... 13­3

REFERENCES .......................................................................................................................... 13­4

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CHAPTER 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 general service fluorescent lamp (GSFL) and incandescent reflector lamp

(IRL) energy conservation standards as part of the Notice of Proposed Rulemaking (NOPR).

This analysis will be conducted using a variant of the Energy Information Administration

(EIA)’s National Energy Modeling System (NEMS).a The NEMS is a large, multi­sectoral,

partial­equilibrium model of the U.S. energy sector. EIA uses NEMS to produce the 2007

1 Annual Energy Outlook (AEO2007). NEMS produces a widely recognized baseline energy

forecast for the United States through 2030, and this energy forecast is available in the public

domain.

13.2 METHODOLOGY

To estimate these effects of proposed standards on the electric utility industry, DOE

intends to use a variant of the EIA’s National Energy Modeling System (NEMS), known as

NEMS­Building Technologies (NEMS­BT) to provide key inputs to the analysis. For GSFL and

IRL, the analysis will consist of forecasted differences between the base and standards cases for

electricity generation, installed capacity, sales, and prices. The NEMS­BT model provides

reference case load shapes for several end uses, including lighting applications.

For electrical end uses, NEMS­BT uses predicted growth in demand for each end use to

build up a projection of the total electric system load growth for each region, which it uses in

turn to predict the necessary additions to capacity. NEMS­BT also accounts for the

implementation of energy conservation standards by decrementing the appropriate reference case

load shape. DOE will determine the size of the decrement using data for the per­unit energy

savings developed in the LCC and PBP analyses (Chapter 8) and the forecast of shipments

developed for the NIA (Chapter 9). For more information on the utility impact analysis, refer to

Chapter 13.

The use of NEMS 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 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 capacity and in

generation by fuel type produced by each CSL, as well as changes in electricity sales.

a For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information

Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000,

DOE/EIA­0581(2000), March 2000. EIA approves use of the name NEMS only to describe an official version of

the model without modifying the modeling code or data. Because this analysis entails some minor code

modifications and the model is run under various policy scenarios that are variations on EIA assumptions, DOE

refers to it by the name NEMS­BT. (BT is DOE’s Building Technologies Program, under whose aegis this work has

been performed). NEMS­BT was previously called NEMS­BRS.

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DOE plans to conduct the utility impact analysis as a variant of AEO2007, applying the

same basic set of assumptions. For example, the utility analysis uses the operating

characteristics (e.g., energy conversion efficacy, emissions rates) of future electricity generating

plants.

DOE will also explore deviations from some of the reference case assumptions to

represent alternative futures. Two alternative scenarios use the high­ and low­economic­growth

cases of AEO2007. (The reference case corresponds to medium growth.) The high­economicgrowth case assumes higher projected growth rates for population, labor force, and labor

productivity, resulting in lower predicted inflation and interest rates relative to the reference

case. The opposite is true for the low­growth case. While DOE varies supply­side growth

determinants in these cases, AEO2007 assumes the same reference case energy prices for all

three economic growth cases. Different economic growth cases affect the rate of growth of

electricity demand.

The model uses predicted growth in demand for each end use to project total electric

system load growth for each region, which it uses to predict the necessary additions to capacity.

The NEMS­BT model accounts for the implementation of energy conservation standards by

decrementing the appropriate reference­case load shape. DOE determines the size of the

decrement using data for the per­unit energy savings developed in the life­cycle cost and

payback period analysis (Chapter 8) and the shipments analysis (Chapter 9) developed for the

national impact analysis.

The predicted reduction in capacity additions is sensitive to the peak load impacts of the

standard, of which lighting technologies are a component. DOE will investigate the need to

adjust the hourly load profiles that include this end use in NEMS­BT.

Since the AEO2007 version of NEMS forecasts only to the year 2030, DOE must

extrapolate results to 2042. It will not be feasible to extend the forecast period of NEMS­BT for

the purposes of this analysis, nor does EIA have an approved method for extrapolation of many

outputs beyond 2030. 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.

For example, changes in the fuel mix implied by extrapolations of those outputs could be

inconsistent with the extrapolation of marginal emissions factors. 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, for all extrapolations beyond 2030, DOE

intends to use simple replications of year 2030 results. While these may seem unreasonable in

some instances, in this way results are guaranteed to be consistent. 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

with date­certain introduction are included in NEMS­BT.

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13.3 RESULTS

Results of the utility impact analysis will include changes in electricity sales, installed

capacity, and generation for each standard level in five­year forecasted increments extrapolated

to 2042.

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REFERENCES

U.S. Department of EnergyCEnergy Information Administration. 2007 Annual Energy Outlook

with Projections to 2030. 2007. Washington, D.C.

<http://www.eia.doe.gov/oiaf/aeo/index.html>

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