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CHAPTER 14. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

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

14.2 METHODOLOGY ........................................................................................................ 14-2

14.3 RESULTS ...................................................................................................................... 14-2
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CHAPTER 14. UTILITY IMPACT ANALYSIS

14.1 INTRODUCTION

As part of preparing for its notice of proposed rulemaking, the U.S. Department of 

Energy (DOE) will analyze effects of its proposed energy efficiency standards on the electric 

utility industry. DOE will perform this analysis using a variant of the DOE/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, which is available in the public domain. DOE will use a variant 

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

The utility impact analysis will involve comparing model results for the base case with 

those 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 enables an estimate of the interactions among 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, as well as changes in electricity and 

natural gas sales to the residential sector, that would result from each trial standard level.

DOE plans to conduct the utility impact analysis as a policy deviation from the 2011

version of the AEO to reflect provisions of the American Recovery and Reinvestment Act 

(ARRA) and recent changes in the economic outlook (AEO2011),

1 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 AEO2011 reference 

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

scenarios involving high and low economic growth. (The reference case corresponds to medium 

growth.) The case of high economic growth assumes higher projected growth rates for 

population, labor force, and labor productivity, resulting in lower predicted inflation and interest 

rates and higher aggregate economic growth relative to the reference case. The opposite is true 

for the low-growth case. Because EIA does not plan to produce high and low economic growth 

cases for the AEO2011 that includes the ARRA, DOE will estimate those cases based on the 

March 2010 release of the AEO2011 that excludes the ARRA.2

 a For more information on NEMS, refer to the DOE/EIA documentation. A useful summary is National Energy 

Modeling System: An Overview 2000. DOE/EIA-0581(2000). March 2000. EIA approves use of the name NEMS 

only to describe 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 policy scenarios that are variations on EIA 

assumptions, DOE refers to the model as NEMS-BT (BT is DOE’s Building Technologies Program, under whose 

aegis this work has been performed). NEMS-BT previously was called NEMS-BRS.

 
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14.2 METHODOLOGY

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

generation, installed capacity, sales, and prices. For the reference case, NEMS provides load 

shapes for several end uses. The model uses predicted growth in demand for each end use to 

build a projection of the total electric system load growth for each region, which in turn is used

to predict necessary additions to capacity. NEMS-BT accounts for the implementation of 

efficiency standards by decrementing the appropriate load shape for the reference case. DOE will 

determine the size of the decrement using data for the per-unit energy savings developed in the 

life-cycle cost and payback period analysis (Chapter 8) and the forecast of shipments developed 

for the national impact analysis (NIA; Chapter 10).

Predicted reductions in additions to capacity are sensitive to a standard’s effect on peak

load. DOE will investigate the need to adjust in NEMS-BT the hourly load profiles that include 

this end use. 

Because the AEO2011 version of NEMS forecasts only to 2030, DOE must extrapolate 

results to 2045. DOE extrapolates effects to 2045 to be consistent with the analysis period it is 

using in the 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 extrapolating many outputs 

beyond 2030. Although it might seem reasonable to make simple linear extrapolations of results, 

in practice that is not advisable because outputs could be contradictory. Changes in the fuel mix 

implied by extrapolations of outputs, for example, 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. For all extrapolations beyond 2035, therefore, DOE intends to use simple 

replications of 2035 results; in this way results are guaranteed to be consistent. As with the AEO

reference case in general, the assumption is that the regulatory environment does not deviate 

from the current known situation during the extrapolation period. NEMS-BT includes only those 

changes that have been announced with date-certain introduction.

14.3 RESULTS

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

installed capacity, and generation by fuel type for each trial standard level, in 5-year increments 

extrapolated to 2045.
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REFERENCES

 1 U.S. Department of Energy–Energy Information Administration. An Updated Annual Energy

Outlook 2009: Reference Case Reflecting Provisions of the American Recovery and 

Reinvestment Act and Recent Changes in the Economic Outlook. April 2009. Washington, 

D.C. SR/OIAF/2009-03. (Last accessed March 29, 2010.) 

<http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf> 

2 U.S. Department of Energy–Energy Information Administration. Annual Energy Outlook 

with Projections to 2035. December 2009. Washington, D.C. Report No. DOE/EIA0383(2010). (Last accessed March 29, 2010.) 

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