CHAPTER 13. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

**13.1 INTRODUCTION** 

**............................................................................................................ 13­1** 

**13.2 METHODOLOGY** 

**........................................................................................................... 13­1** 

**13.3 RESULTS** 

**......................................................................................................................... 13­3** 

**REFERENCES**

**.......................................................................................................................... 13­4** 

**13­i**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.**

**13­1 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 high­economic** 

**growth 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.**

**13­2**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.** 

**13­3 1**  REFERENCES

**U.S. Department**  **of Energy**  C **Energy Information**  **Administration. 2007**  **Annual Energy**  **Outlook**

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

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

**13­4**