14-i

CHAPTER 14. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

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

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

14.3 RESULTS ...................................................................................................................... 14-2

14.4 IMPACT OF STANDARDS ON ELECTRICITY PRICES AND ASSOCIATED 

BENEFITS..................................................................................................................... 14-6

14.4.1 Impact on Electricity Prices......................................................................... 14-6

14.4.2 Impact of Changes in Electricity Price on Electricity Users........................ 14-8

14.4.3 Discussion of Savings in Electricity Expenditures...................................... 14-9

LIST OF TABLES

Table 14.3.1 AEO 2010 Reference Case Forecast.................................................................. 14-3

Table 14.3.2 Microwave Oven Standby Power: Trial Standard Level 1 Forecast.................. 14-4

Table 14.3.3 Microwave Oven Standby Power: Trial Standard Level 2 Forecast.................. 14-4

Table 14.3.4 Microwave Oven Standby Power: Trial Standard Level 3 Forecast.................. 14-5

Table 14.3.5 Microwave Oven Standby Power: Trial Standard Level 4 Forecast.................. 14-5

Table 14.3.6 Reduction in Electric Generating Capacity in 2043 Under Microwave 

Oven Standby Power and Off Modes Trial Standard Levels............................. 14-6

Table 14.4.1 Cumulative NPV of the Economy-Wide Savings in Electricity 

Expenditures Due to the Projected Decline in Electricity Prices Resulting 

from the Selected Standard for Microwave Oven Standby Power* .................. 14-9

LIST OF FIGURES

Figure 14.4.1 Change in U.S. Electricity Sales Associated with Proposed Microwave 

Oven Standby Power Standard .......................................................................... 14-7

Figure 14.4.2 Effect of Selected Microwave Oven Standby Power Energy Conservation 

Standard on Average U.S. Electricity Price (All Users).................................... 14-8
14-1

CHAPTER 14. UTILITY IMPACT ANALYSIS

14.1 INTRODUCTION

DOE analyzed the effects of its amended standard levels on the electric utility industry using 

a variant of the DOE/Energy Information Administration (EIA)’s National Energy Modeling System 

(NEMS).a

 NEMS is a public domain, multi-sectored, partial equilibrium model of the U.S. energy 

sector. Each year, DOE/EIA uses NEMS to produce an energy forecast for the United States, the 

Annual Energy Outlook (AEO). The AEO for 2010 (AEO2010) forecasts energy supply and demand 

through 2035. 1 DOE used a variant of this model, referred to as NEMS-BT,b

The utility impact analysis reports the changes in electric installed capacity and generation 

that result for each trial standard level (TSL) by plant type, as well as changes in residential 

electricity consumption. 

to account for the 

impacts of standby power energy conservation standards for microwave ovens. DOE’s utility impact 

analysis consists of a comparison between model results for the AEO2010 Reference Case and for 

cases in which standards are in place, and applies the same basic set of assumptions as the AEO2010. 

The AEO2010 reference case corresponds to medium economic growth.

NEMS-BT has several advantages that have led to its adoption as the forecasting tool in the 

analysis of energy conservation standards. NEMS-BT uses a set of assumptions that are well known 

and fairly transparent, due to the exposure and scrutiny each AEO receives. In addition, the 

comprehensiveness of NEMS-BT permits the modeling of interactions among the various energy 

supply and demand sectors, producing a complete picture of the effects of energy conservation 

standards. Perhaps most importantly, NEMS-BT can be used to estimate marginal effects, which 

yield a better estimate of the actual impact of energy conservation standards than considering only 

average effects.

14.2 METHODOLOGY

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. For microwave oven standby power the

refrigeration end use was decremented. The refrigeration end use is the best representation of a 

baseline energy load, which is characteristic of the standby power in microwave ovens. The 

 

a For more information on NEMS, 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. 

b DOE/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 DOE/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). NEMS-BT 

was previously called NEMS-BRS.
14-2

energy conservation decrement is divided amongst the nine U.S. Census divisions based upon 

their shares of energy consumption in the specific end use, as given in NEMS.

DOE used the site energy savings developed in the national impact analysis (chapter 10) for 

each TSL as input to NEMS-BT. The magnitude of the energy decrement that would be required for 

NEMS-BT to produce stable results out of the range of numerical noise is larger than the highest 

efficiency standard under consideration. Therefore, DOE estimated results corresponding to each 

TSL using interpolation. DOE ran higher energy use reduction levels in NEMS-BT, representing 

multipliers of each TSL, and used these outputs to linearly interpolate the results to estimate actual 

changes in generation and capacity due to the standard.

Although the current time horizon of NEMS-BT is 2035, other parts of the energy 

conservation standards analysis extend through the year 2043. It is not feasible to extend the forecast 

period of NEMS-BT for the purposes of this analysis, nor does DOE/EIA have an approved method 

for extrapolation of many outputs beyond 2035. While it might seem reasonable to make simple 

linear extrapolations of results, in practice this is not advisable because outputs could be 

contradictory. 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, all 

extrapolations beyond 2035 are simple replications of year 2035 results. To emphasize the 

extrapolated results wherever they appear, they are shaded in gray to distinguish them from actual 

NEMS-BT results.

14.3 RESULTS

This utility impact analysis reports NEMS-BT forecasts for residential sector electricity 

consumption, total electricity generation by fuel type, and installed electricity generation capacity by 

fuel type. Results are presented in five-year increments through 2035. Beyond 2035, an extrapolation 

through 2043 for each TSL represents a simple replication of the 2035 results. 

The results from the AEO2010 Reference Case are shown in Table 14.3.1. The results for 

microwave oven standby power TSLs are presented in Tables 14.3.2 through 14.3.5. Each table 

shows forecasts using interpolated results, as described in section 14.2, for total U.S. electricity 

generation and installed capacity.

The considered TSLs reduce only electricity consumption compared to the AEO2010 

Reference Case. The electricity savings predicted by the NIA Model range from 0.073 to 0.223

percent of total residential electricity consumption in the year 2035.
14-3

Table 14.3.1 AEO 2010 Reference Case Forecast

NEMS-BT Results: AEO2010 Reference

2005 2010 2015 2020 2025 2030 2035

Residential Sector Energy Consumption 1

Electricity Sales (TWh)2 1,359 1,388 1,400 1,472 1,553 1,637 1,707

Total U.S. Electric Generation 3

Coal (TWh) 2,013 1,828 2,038 2,090 2,130 2,209 2,305

Gas (TWh) 759 857 690 769 886 1,018 1,095

Petroleum (TWh) 122 45 46 47 48 48 49

Nuclear (TWh) 782 813 834 883 886 886 895

Renewables (TWh) 358 462 649 714 797 850 890

Total (TWh)4 4,034 4,005 4,257 4,503 4,746 5,012 5,234

Installed Generating Capacity 5

Coal (GW) 314 321 325 326 326 330 337

Other Fossil (GW)6 439 468 445 446 467 501 534

Nuclear (GW) 100 102 105 111 111 111 113

Renewables (GW) 99 133 171 177 186 196 209

Total (GW)7 952 1,024 1,046 1,059 1,091 1,138 1,192

1

Comparable to Table A2 of AEO2010: Energy Consumption, Residential

2

Comparable to Table A8 of AEO2010: Electricity Sales by Sector

3

Comparable to Table A8 of AEO2010: Electric Generators and Cogenerators

4

Excludes "Other Gaseous Fuels" cogenerators and "Other" cogenerators

5

Comparable to Table A9 of AEO2010: Electric Generators and Cogenerators Capability

6

Includes "Other Gaseous Fuels" cogenerators

7

Excludes Pumped Storage and Fuel Cells
14-4

Table 14.3.2 Microwave Oven Standby Power: Trial Standard Level 1 Forecast

Table 14.3.3 Microwave Oven Standby Power: Trial Standard Level 2 Forecast

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2043

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,471 1,552 1,636 1,706 Electricity Sales (TWh) 0.00 -0.24 -0.80 -1.15 -1.20 -1.24 -1.28 -1.30

Total U.S. Electric Generation Total U.S. Electric Generation

Coal (TWh) 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) -0.01 -0.01 -0.21 -0.26 -0.33 -0.33 -0.33 -0.33

Gas (TWh) 857 690 769 885 1,018 1,095 Gas (TWh) 0.06 0.04 -0.31 -0.65 -0.54 -0.44 -0.44 -0.44

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01

Nuclear (TWh) 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.04 -0.04 -0.04

Renewables (TWh) 462 648 714 797 850 890 Renewables (TWh) -0.05 -0.28 -0.29 -0.38 -0.35 -0.38 -0.38 -0.38

Total (TWh) 4,005 4,257 4,502 4,745 5,011 5,233 Total (TWh) 0.00 -0.25 -0.81 -1.29 -1.22 -1.20 -1.20 -1.20

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.000 -0.010 -0.012 -0.012 -0.020 -0.021 -0.021 -0.021

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.026 -0.045 -0.095 -0.096 -0.082 -0.082 -0.082

Nuclear (GW) 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 -0.005 -0.005 -0.005

Renewables (GW) 133 171 177 186 196 209 Renewables (GW) -0.015 -0.079 -0.078 -0.074 -0.074 -0.089 -0.089 -0.089

Total (GW) 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) -0.016 -0.115 -0.135 -0.181 -0.190 -0.196 -0.196 -0.196

Extrapolation

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2043

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,470 1,552 1,635 1,706 Electricity Sales (TWh) 0.00 -0.35 -1.15 -1.67 -1.74 -1.80 -1.85 -1.89

Total U.S. Electric Generation Total U.S. Electric Generation

Coal (TWh) 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) -0.01 -0.02 -0.31 -0.37 -0.47 -0.48 -0.48 -0.48

Gas (TWh) 857 690 769 885 1,017 1,094 Gas (TWh) 0.09 0.06 -0.44 -0.93 -0.78 -0.64 -0.64 -0.64

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01

Nuclear (TWh) 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.05 -0.05 -0.05

Renewables (TWh) 462 648 713 796 850 890 Renewables (TWh) -0.08 -0.41 -0.42 -0.54 -0.50 -0.55 -0.55 -0.55

Total (TWh) 4,005 4,257 4,501 4,744 5,010 5,232 Total (TWh) 0.00 -0.37 -1.17 -1.86 -1.76 -1.74 -1.74 -1.74

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.000 -0.014 -0.017 -0.017 -0.028 -0.030 -0.030 -0.030

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.038 -0.065 -0.137 -0.138 -0.119 -0.119 -0.119

Nuclear (GW) 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 -0.007 -0.007 -0.007

Renewables (GW) 133 171 176 186 196 209 Renewables (GW) -0.022 -0.114 -0.113 -0.108 -0.107 -0.128 -0.128 -0.128

Total (GW) 1,024 1,046 1,059 1,091 1,138 1,192 Total (GW) -0.022 -0.166 -0.195 -0.261 -0.274 -0.284 -0.284 -0.284

Extrapolation
14-5

Table 14.3.4 Microwave Oven Standby Power: Trial Standard Level 3 Forecast

Table 14.3.5 Microwave Oven Standby Power: Trial Standard Level 4 Forecast

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2043

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,470 1,551 1,635 1,705 Electricity Sales (TWh) 0.00 -0.48 -1.58 -2.29 -2.39 -2.47 -2.55 -2.59

Total U.S. Electric Generation Total U.S. Electric Generation

Coal (TWh) 1,828 2,038 2,090 2,129 2,209 2,304 Coal (TWh) -0.01 -0.02 -0.42 -0.52 -0.65 -0.66 -0.66 -0.66

Gas (TWh) 857 690 768 884 1,017 1,094 Gas (TWh) 0.12 0.08 -0.61 -1.28 -1.07 -0.88 -0.88 -0.88

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01

Nuclear (TWh) 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.07 -0.07 -0.07

Renewables (TWh) 462 648 713 796 849 890 Renewables (TWh) -0.11 -0.56 -0.58 -0.75 -0.69 -0.76 -0.76 -0.76

Total (TWh) 4,005 4,257 4,501 4,743 5,009 5,231 Total (TWh) 0.00 -0.51 -1.62 -2.56 -2.42 -2.39 -2.39 -2.39

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.000 -0.020 -0.023 -0.024 -0.039 -0.041 -0.041 -0.041

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.052 -0.089 -0.188 -0.190 -0.164 -0.164 -0.164

Nuclear (GW) 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 -0.009 -0.009 -0.009

Renewables (GW) 133 171 176 186 196 209 Renewables (GW) -0.031 -0.156 -0.155 -0.148 -0.148 -0.176 -0.176 -0.176

Total (GW) 1,024 1,046 1,059 1,090 1,138 1,192 Total (GW) -0.031 -0.228 -0.268 -0.359 -0.377 -0.390 -0.390 -0.390

Extrapolation

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2043

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,399 1,469 1,550 1,633 1,704 Electricity Sales (TWh) 0.00 -0.74 -2.44 -3.53 -3.68 -3.80 -3.92 -3.99

Total U.S. Electric Generation Total U.S. Electric Generation

Coal (TWh) 1,828 2,038 2,090 2,129 2,208 2,304 Coal (TWh) -0.02 -0.04 -0.65 -0.79 -1.00 -1.02 -1.02 -1.02

Gas (TWh) 857 690 768 884 1,017 1,094 Gas (TWh) 0.18 0.13 -0.94 -1.98 -1.65 -1.36 -1.36 -1.36

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.01 -0.02 -0.02 -0.02 -0.02 -0.02

Nuclear (TWh) 813 834 883 886 886 895 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.11 -0.11 -0.11

Renewables (TWh) 462 648 713 796 849 889 Renewables (TWh) -0.16 -0.87 -0.89 -1.15 -1.06 -1.16 -1.16 -1.16

Total (TWh) 4,005 4,256 4,500 4,742 5,008 5,230 Total (TWh) 0.00 -0.78 -2.49 -3.94 -3.72 -3.68 -3.68 -3.68

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.000 -0.030 -0.036 -0.036 -0.060 -0.063 -0.063 -0.063

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) 0.000 -0.080 -0.137 -0.289 -0.293 -0.252 -0.252 -0.252

Nuclear (GW) 102 105 111 111 111 113 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 -0.015 -0.015 -0.015

Renewables (GW) 133 171 176 186 196 209 Renewables (GW) -0.047 -0.241 -0.239 -0.228 -0.227 -0.271 -0.271 -0.271

Total (GW) 1,024 1,046 1,059 1,090 1,138 1,192 Total (GW) -0.048 -0.351 -0.412 -0.553 -0.581 -0.601 -0.601 -0.601

Extrapolation
14-6

Table 14.3.6 presents the estimated reduction in electricity generating capacity in 2043 

for the TSLs that DOE considered in this rulemaking.

Table 14.3.6 Reduction in Electric Generating Capacity in 2043 Under Microwave Oven 

Standby Power and Off Modes Trial Standard Levels

TSL 1 TSL 2 TSL 3 TSL 4

Gigawatts

0.196 0.284 0.390 0.601

14.4 IMPACT OF STANDARDS ON ELECTRICITY PRICES AND ASSOCIATED 

BENEFITS 

Using the framework of the utility impact analysis, DOE analyzed the potential impact on 

electricity prices resulting from the standards on microwave oven standby power. Associated 

benefits for all electricity users in all sectors of the economy are then estimated from these price 

impacts.

DOE’s analysis of energy price impacts used NEMS-BT in a similar manner as described 

in section 14.2. Like other widely-used energy-economic models, NEMS uses elasticities to 

estimate the energy price change that would result from a change (increase or decrease) in 

energy demand. The elasticity of price to a decrease in demand is the “inverse price elasticity.” 

The calculated inverse price elasticity based on NEMS-BT simulations differs throughout the 

forecast period in response to the dynamics of supply and demand for electricity. 

14.4.1 Impact on Electricity Prices

After generating results using higher decrements to energy consumption, a regressed 

interpolation toward the origin derived the price effects associated with the energy savings of the 

TSLs. Results were then scaled to the appropriate TSL. The selected standard for microwave 

oven standby power is TSL 3. The electricity price impacts are presented below.

Figure 14.4.1 shows the annual change in U.S. electricity sales for the selected standard, 

relative to the base case which involves no new standards. 
14-7

Figure 14.4.1 Change in U.S. Electricity Sales Associated with Proposed 

Microwave Oven Standby Power Standard

Figure 14.4.2 shows the annual change in average U.S. price for electricity, relative to the 

Reference case, projected to result from the proposed standard. For TSL 3, the price reduction 

averages 0.001 cents per kWh (in 2010$), or a price reduction of 0.01 percent, over the period 

from 2014 through 2035.

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

2014 2019 2024 2029 2034

TWH

Change in Electricity Sales from Microwave Oven Standby 

Power

TSL 3
14-8

Figure 14.4.2 Effect of Selected Microwave Oven Standby Power Energy 

Conservation Standard on Average U.S. Electricity Price (All 

Users) 

14.4.2 Impact of Changes in Electricity Price on Electricity Users

Using the estimated electricity price impacts, DOE calculated the nominal savings in total 

electricity expenditures in each year by multiplying the annual change in the average-user price 

for electricity by the total annual U.S. electricity sales forecast by NEMS, adjusted for the impact 

of the standards. The amended standards would continue to reduce demand for electricity after 

2035 (which is the last year in the NEMS forecast). DOE’s estimate for 2036–2043 (the period 

used to estimate the NPV of the national consumer benefits from amended standards) multiplied 

the average electricity price reduction in 2015–2035 by estimated total annual electricity sales in

2036–2043.

c DOE then discounted the stream of reduced expenditures to calculate a NPV.

Table 14.4.1 shows the calculated NPV of the economy-wide savings in electricity 

expenditures for each considered TSL at 3-percent and 7-percent discount rates. The need to 

extrapolate price effects and electricity sales beyond 2035 suggests that one should interpret the 

post-2035 results as a rough indication of the benefits to electricity users in the post-2035 period. 

 

c The estimation of electricity sales after 2035 uses the average annual growth rate in 2031-2035 of total U.S. 

electricity sales forecasted by NEMS. This forecast includes the impact of the standards.

-0.00003

-0.00002

-0.00001

0.00000

0.00001

2014 2019 2024 2029 2034

2010$/KWH

Change in Electricity Prices From Microwave Oven Standby 

Power

TSL 3
14-9

Table 14.4.1 Cumulative NPV of the Economy-Wide Savings in Electricity Expenditures 

Due to the Projected Decline in Electricity Prices Resulting from the 

Selected Standard for Microwave Oven Standby Power* 

Discount Rate MWO Standby 

Power

(billion $2009)

3 percent 0.730

7 percent 0.384

* Impacts for units sold from 2014 to 2043

14.4.3 Discussion of Savings in Electricity Expenditures

Although the aggregate benefits for all electricity users are potentially large, there may be 

negative effects on the actors involved in electricity supply. The electric power industry is a 

complex mix of power plant providers, fuel suppliers, electricity generators, and electricity 

distributors. While the distribution of electricity is regulated everywhere, the institutional 

structure of the power sector varies, and has changed over time. For these reasons, an assessment 

of impacts on the actors involved in electricity supply from reduction in electricity demand 

associated with energy conservation standards is beyond the scope of this rulemaking. 

In considering the potential benefits to electricity users, DOE takes under advisement the 

provided by the Office of Management and Budget (OMB) to Federal agencies on the 

development of regulatory analysis (OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying 

and Measuring Benefits and Costs”). Specifically, at page 38, Circular A-4 instructs that 

transfers should be excluded from the estimates of the benefits and costs of a regulation. DOE is 

continuing to investigate the extent to which change in electricity prices projected to result from 

standards represents a net gain to society.
14-10

REFERENCES

1. Energy Information Administration, Updated Annual Energy Outlook 2010 Reference 

Case Service Report, 2010. Washington, DC. Report No. DOE/EIA-0383(2010). 

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