14-i

CHAPTER 14. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

14.1 INTRODUCTION ......................................................................................................... 14-1

14.2 METHODOLOGY ........................................................................................................ 14-1
14-1

CHAPTER 14. UTILITY IMPACT ANALYSIS

14.1 INTRODUCTION

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. DOE’s Energy Information Administration 

(EIA)’s National Energy Modeling System (NEMS). The NEMS 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. DOE will use a variant known 

as NEMS-BT to provide key inputs to the analysis.a

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 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 residential sector.

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

available version of 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 AEO reference case, as are the prospects for natural gas 

supply.

14.2 METHODOLOGY

The electric utility impact analysis will consist of NEMS-BT forecasts for generation by 

plant type, installed capacity, sales, and prices. The gas utility impact analysis will consist of 

forecasts of change in sales due to standards. 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 total electric system load growth for each region, which it uses in turn to predict 

the necessary additions to capacity. DOE uses NEMS-BT to account 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 per-unit energy savings developed in 

 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 2003, 

DOE/EIA-0581(2003), March 2003. EIA approves use of the name NEMS to describe only an official version of the 

model without any modification to 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 the model by 

the name NEMS-BT (BT is DOE’s Building Technologies Program, under whose aegis this work has been 

performed). NEMS-BT was previously called NEMS-BRS.
14-2

the life-cycle cost analysis (chapter 8) and the forecast of shipments developed for the national 

impact analysis (chapter 9).

Since the AEO version of NEMS forecasts only to the year 2035, DOE must extrapolate 

results after that year to be consistent with the analysis period being used by DOE in the national 

impact analysis (NIA). It will not be feasible to extend the forecast period of NEMS-BT 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 2035, DOE 

intends to use simple replications of year 2035 results; in this way results are guaranteed to be 

consistent.

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

capacity and generation by fuel type, and residential natural gas sales for each trial standard 

level, in five-year increments over the forecast period.
14-3 

REFERENCES

1. Energy Information Administration, Updated Annual Energy Outlook 2009 Reference 

Case Service Report, 2009. Washington, DC. Report No. DOE/EIA-0383(2009). 

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