14-i

CHAPTER 14. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

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

14.2 METHOD ..................................................................................................................14-1

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

14.4 IMPACT OF STANDARDS ON NATURAL GAS AND ELECTRICITY 

PRICES AND ASSOCIATED BENEFITS FOR CONSUMERS................................14-9

14.4.1 Impact on Natural Gas Prices....................................................................................14-10

14.4.2 Impact of Changes in Natural Gas Prices on Gas Users.............................................14-12

14.4.3 Discussion of Savings in Natural Gas Expenditures..................................................14-13

14.4.4 Impact on Electricity Prices......................................................................................14-14

14.4.5 Impact of Changes in Electricity Price on Electricity Users.......................................14-16

14.4.6 Discussion of Savings in Electricity Expenditures.....................................................14-17

LIST OF TABLES

Table 14.3.1 AEO2010 Reference Case Forecast.................................................................14-3

Table 14.3.2 Clothes Washer Trial Standard Level 1 Forecast .............................................14-4

Table 14.3.3 Clothes Washer Trial Standard Level 2 Forecast .............................................14-5

Table 14.3.4 Clothes Washer Trial Standard Level 3 Forecast .............................................14-6

Table 14.3.5 Clothes Washer Trial Standard Level 4 Forecast .............................................14-7

Table 14.3.6 Clothes Washer Trial Standard Level 5 Forecast .............................................14-8

Table 14.4.1 Natural Gas Inverse Price Elasticity from Seven Energy Models...................14-10

Table 14.4.2 Cumulative NPV of the Economy-Wide Savings in Natural Gas...................14-13

Table 14.4.3 Cumulative NPV of the Economy Wide Savings in Electricity 

Expenditures Due to the Projected Decline in Electricity Prices Resulting 

from the Proposed Standard For Clothes Washers* .......................................14-17

LIST OF FIGURES

Figure 14.4.1 Change in U.S. Natural Gas Consumption Resulting From the Proposed 

Clothes Washer Product Energy Conservation Standard................................14-11

Figure 14.4.2 Effects of the Proposed Clothes Washer Product Energy Conservation 

Standard on Average U.S. Wellhead Natural Gas Prices................................14-12

Figure 14.4.3 Change in U.S. Electricity Sales Associated with the Proposed Clothes 

Washer Product Energy Conservation Standard.............................................14-15

Figure 14.4.4 Effect of the Proposed Clothes Washer Product Energy Conservation 

Standard on Average U.S. Electricity Prices (All Users)................................14-16
14-1

CHAPTER 14. UTILITY IMPACT ANALYSIS

14.1 INTRODUCTION

DOE analyzed the effects of residential clothes washer 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 here as NEMS-BT,

b to account for the impacts of clothes washer energy 

conservation standards. 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.

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 natural gas consumption. 

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 METHOD

The utility impact analysis uses the assumptions of the AEO2010 and treats residential 

clothes washer conservation standards as variations in policy. The effects of the policy are

calculated as the difference between the AEO2010 Reference Case and each proposed standard 

case, which is described as a trial standard level (TSL). 

 

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

DOE used the 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.

Policy runs are executed by reducing electricity and fossil fuel consumption in the 

NEMS-BT Residential Demand Module. These energy savings are decremented with the 

appropriate end use. The reductions are also divided amongst the nine U.S. Census divisions 

based upon the share of energy end use consumption in each division, as given in NEMS.

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

conservation standards analysis extend through the year 2044. 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

and natural gas consumption, total electricity generation by fuel type, and installed electricity 

generation capacity by fuel type. Results are presented in five-year increments to year 2035.

Beyond year 2035, an extrapolation through 2044 for each proposed TSL represents a simple 

replication of the year 2035 results.

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

A set of five TSLs were modeled for residential clothes washers. The results for each of 

these TSLs are presented in Tables 14.3.2 through 14.3.6, Each table shows forecasts using 

interpolated results, as described in section 14.2, for total U.S. electricity generation and installed 

capacity as well as natural gas consumption.

The considered residential clothes washer TSLs reduce electricity and natural gas 

consumption compared to the AEO2010 Reference Case. The electricity impacts predicted by the 

NIA Model for the considered clothes washer products reduce consumption from a range of 0.34

to 0.71 percent of total residential electricity consumption in the year 2035. The residential 
14-3

natural gas consumption impacts range from a decrease of 0.42 percent to a decrease of 1.23

percent of total residential natural gas consumption in the year 2035.

Table 14.3.1 AEO2010 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 Clothes Washer Trial Standard Level 1 Forecast

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2042 2044

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,469 1,549 1,632 1,702 Electricity Sales (TWh) 0.00 -0.47 -2.78 -4.59 -5.39 -5.73 -5.97 -6.06 -6.15

Natural Gas (EJ) 5.22 5.11 5.22 5.29 5.28 5.26 Natural Gas (EJ) 0.000 -0.003 -0.016 -0.026 -0.031 -0.033 -0.034 -0.035 -0.035

Other (EJ) 1.68 1.52 1.47 1.42 1.38 1.35 Other (EJ) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001

Natural Gas (Quads) 4.95 4.85 4.95 5.01 5.00 4.98 Natural Gas (Quads) 0.000 -0.003 -0.015 -0.025 -0.029 -0.031 -0.032 -0.033 -0.033

Other (Quads) 1.59 1.44 1.40 1.35 1.31 1.28 Other (Quads) 0.000 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001

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

Coal (TWh) 1,828 2,038 2,090 2,130 2,208 2,304 Coal (TWh) 0.07 0.15 -0.73 -0.02 -1.06 -1.10 -1.10 -1.10 -1.10

Gas (TWh) 857 691 769 883 1,016 1,094 Gas (TWh) 0.16 1.08 -0.36 -3.02 -1.74 -1.11 -1.11 -1.11 -1.11

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.02 -0.02 -0.03 -0.04 -0.04 -0.04 -0.04

Nuclear (TWh) 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.32 -0.32 -0.32 -0.32

Renewables (TWh) 462 647 712 795 848 888 Renewables (TWh) -0.22 -1.72 -1.51 -1.80 -1.89 -2.11 -2.11 -2.11 -2.11

Total (TWh) 4,005 4,257 4,500 4,741 5,007 5,229 Total (TWh) 0.00 -0.49 -2.62 -4.85 -4.72 -4.68 -4.68 -4.68 -4.68

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.000 -0.036 -0.015 -0.015 -0.078 -0.070 -0.070 -0.070 -0.070

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) -0.001 -0.103 -0.137 -0.382 -0.226 -0.227 -0.227 -0.227 -0.227

Nuclear (GW) 102 105 111 111 111 112 Nuclear (GW) 0.000 0.000 0.000 0.000 0.000 -0.042 -0.042 -0.042 -0.042

Renewables (GW) 133 171 176 186 195 209 Renewables (GW) -0.063 -0.470 -0.460 -0.401 -0.432 -0.543 -0.543 -0.543 -0.543

Total (GW) 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) -0.064 -0.609 -0.612 -0.798 -0.736 -0.882 -0.882 -0.882 -0.882

Extrapolation
14-5

Table 14.3.3 Clothes Washer 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 2042 2044

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,468 1,548 1,631 1,701 Electricity Sales (TWh) 0.00 -0.53 -3.16 -5.24 -6.19 -6.60 -6.87 -6.97 -7.08

Natural Gas (EJ) 5.22 5.11 5.23 5.30 5.29 5.27 Natural Gas (EJ) 0.000 -0.002 -0.010 -0.017 -0.021 -0.022 -0.023 -0.023 -0.024

Other (EJ) 1.68 1.52 1.47 1.42 1.38 1.35 Other (EJ) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001

Natural Gas (Quads) 4.95 4.85 4.96 5.02 5.01 4.99 Natural Gas (Quads) 0.000 -0.002 -0.010 -0.016 -0.020 -0.021 -0.022 -0.022 -0.022

Other (Quads) 1.59 1.44 1.40 1.35 1.31 1.28 Other (Quads) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001

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

Coal (TWh) 1,828 2,038 2,089 2,130 2,208 2,303 Coal (TWh) 0.08 0.17 -0.83 -0.03 -1.21 -1.26 -1.26 -1.26 -1.26

Gas (TWh) 857 692 769 882 1,016 1,094 Gas (TWh) 0.18 1.22 -0.41 -3.44 -1.99 -1.28 -1.28 -1.28 -1.28

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.02 -0.02 -0.03 -0.04 -0.04 -0.04 -0.04

Nuclear (TWh) 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.37 -0.37 -0.37 -0.37

Renewables (TWh) 462 647 712 795 848 888 Renewables (TWh) -0.25 -1.94 -1.72 -2.05 -2.17 -2.43 -2.43 -2.43 -2.43

Total (TWh) 4,005 4,257 4,500 4,740 5,006 5,228 Total (TWh) 0.01 -0.55 -2.98 -5.54 -5.42 -5.38 -5.38 -5.38 -5.38

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.00 -0.04 -0.02 -0.02 -0.09 -0.08 -0.08 -0.08 -0.08

Other Fossil (GW) 468 445 446 467 501 534 Other Fossil (GW) 0.00 -0.12 -0.16 -0.44 -0.26 -0.26 -0.26 -0.26 -0.26

Nuclear (GW) 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 -0.05 -0.05 -0.05 -0.05

Renewables (GW) 133 171 176 186 195 209 Renewables (GW) -0.07 -0.53 -0.52 -0.46 -0.50 -0.62 -0.62 -0.62 -0.62

Total (GW) 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) -0.07 -0.69 -0.69 -0.91 -0.84 -1.01 -1.01 -1.01 -1.01

Extrapolation
14-6

Table 14.3.4 Clothes Washer Trial Standard Level 3 Forecast

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2042 2044

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,400 1,468 1,547 1,629 1,699 Electricity Sales (TWh) 0.00 -0.49 -3.52 -6.35 -7.81 -8.43 -8.82 -8.95 -9.09

Natural Gas (EJ) 5.22 5.11 5.22 5.29 5.28 5.25 Natural Gas (EJ) 0.000 -0.003 -0.017 -0.029 -0.034 -0.036 -0.038 -0.038 -0.039

Other (EJ) 1.68 1.52 1.47 1.42 1.38 1.35 Other (EJ) 0.000 0.000 -0.001 -0.001 -0.001 -0.002 -0.002 -0.002 -0.002

Natural Gas (Quads) 4.95 4.84 4.95 5.01 5.00 4.98 Natural Gas (Quads) 0.000 -0.003 -0.016 -0.027 -0.032 -0.034 -0.036 -0.036 -0.037

Other (Quads) 1.59 1.44 1.40 1.35 1.31 1.28 Other (Quads) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.002 -0.002 -0.002

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

Coal (TWh) 1,828 2,038 2,089 2,130 2,208 2,303 Coal (TWh) 0.07 0.15 -0.92 -0.03 -1.53 -1.62 -1.62 -1.62 -1.62

Gas (TWh) 857 691 769 881 1,016 1,093 Gas (TWh) 0.16 1.13 -0.45 -4.17 -2.51 -1.64 -1.64 -1.64 -1.64

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 0.00 -0.02 -0.02 -0.04 -0.05 -0.05 -0.05 -0.05

Nuclear (TWh) 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.47 -0.47 -0.47 -0.47

Renewables (TWh) 462 647 712 794 847 887 Renewables (TWh) -0.23 -1.79 -1.91 -2.48 -2.74 -3.10 -3.10 -3.10 -3.10

Total (TWh) 4,005 4,257 4,499 4,739 5,005 5,227 Total (TWh) 0.00 -0.51 -3.31 -6.70 -6.83 -6.88 -6.88 -6.88 -6.88

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.00 -0.04 -0.02 -0.02 -0.11 -0.10 -0.10 -0.10 -0.10

Other Fossil (GW) 468 445 446 467 501 533 Other Fossil (GW) 0.00 -0.11 -0.17 -0.53 -0.33 -0.33 -0.33 -0.33 -0.33

Nuclear (GW) 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 -0.06 -0.06 -0.06 -0.06

Renewables (GW) 133 171 176 186 195 209 Renewables (GW) -0.07 -0.49 -0.58 -0.55 -0.62 -0.80 -0.80 -0.80 -0.80

Total (GW) 1,024 1,045 1,058 1,090 1,137 1,191 Total (GW) -0.07 -0.64 -0.77 -1.10 -1.07 -1.30 -1.30 -1.30 -1.30

Extrapolation
14-7

Table 14.3.5 Clothes Washer 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 2042 2044

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,399 1,467 1,545 1,627 1,697 Electricity Sales (TWh) 0.00 -0.85 -5.05 -8.38 -9.98 -10.68 -11.14 -11.31 -11.48

Natural Gas (EJ) 5.22 5.11 5.21 5.27 5.26 5.23 Natural Gas (EJ) 0.000 -0.004 -0.026 -0.043 -0.052 -0.056 -0.058 -0.059 -0.060

Other (EJ) 1.68 1.52 1.47 1.42 1.38 1.35 Other (EJ) 0.000 0.000 -0.001 -0.002 -0.002 -0.002 -0.002 -0.002 -0.002

Natural Gas (Quads) 4.95 4.84 4.94 5.00 4.98 4.96 Natural Gas (Quads) 0.000 -0.004 -0.025 -0.041 -0.049 -0.053 -0.055 -0.056 -0.057

Other (Quads) 1.59 1.44 1.40 1.35 1.31 1.28 Other (Quads) 0.000 0.000 -0.001 -0.001 -0.002 -0.002 -0.002 -0.002 -0.002

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

Coal (TWh) 1,828 2,038 2,089 2,130 2,207 2,303 Coal (TWh) 0.13 0.27 -1.33 -0.05 -1.96 -2.05 -2.05 -2.05 -2.05

Gas (TWh) 858 692 768 880 1,015 1,093 Gas (TWh) 0.28 1.95 -0.65 -5.51 -3.21 -2.07 -2.07 -2.07 -2.07

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 -0.01 -0.03 -0.03 -0.06 -0.07 -0.07 -0.07 -0.07

Nuclear (TWh) 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.60 -0.60 -0.60 -0.60

Renewables (TWh) 462 645 711 794 847 886 Renewables (TWh) -0.40 -3.09 -2.75 -3.28 -3.51 -3.93 -3.93 -3.93 -3.93

Total (TWh) 4,005 4,256 4,498 4,737 5,003 5,225 Total (TWh) 0.01 -0.88 -4.76 -8.86 -8.73 -8.71 -8.71 -8.71 -8.71

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.00 -0.07 -0.03 -0.03 -0.14 -0.13 -0.13 -0.13 -0.13

Other Fossil (GW) 468 445 445 467 501 533 Other Fossil (GW) 0.00 -0.19 -0.25 -0.70 -0.42 -0.42 -0.42 -0.42 -0.42

Nuclear (GW) 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 -0.08 -0.08 -0.08 -0.08

Renewables (GW) 133 171 176 186 195 208 Renewables (GW) -0.11 -0.85 -0.83 -0.73 -0.80 -1.01 -1.01 -1.01 -1.01

Total (GW) 1,024 1,045 1,058 1,089 1,137 1,191 Total (GW) -0.12 -1.10 -1.11 -1.46 -1.36 -1.64 -1.64 -1.64 -1.64

Extrapolation
14-8

Table 14.3.6 Clothes Washer Trial Standard Level 5 Forecast

NEMS-BT Results: Difference from AEO2010 Reference Case

2010 2015 2020 2025 2030 2035 2010 2015 2020 2025 2030 2035 2040 2042 2044

Residential Sector Energy Consumption Residential Sector Energy Consumption

Electricity Sales (TWh) 1,388 1,399 1,466 1,544 1,626 1,695 Electricity Sales (TWh) 0.00 -0.96 -5.74 -9.51 -11.28 -12.08 -12.62 -12.82 -13.01

Natural Gas (EJ) 5.22 5.11 5.21 5.26 5.25 5.23 Natural Gas (EJ) 0.000 -0.005 -0.031 -0.051 -0.061 -0.065 -0.068 -0.069 -0.070

Other (EJ) 1.68 1.52 1.47 1.42 1.38 1.35 Other (EJ) 0.000 0.000 -0.001 -0.002 -0.002 -0.002 -0.002 -0.002 -0.002

Natural Gas (Quads) 4.95 4.84 4.94 4.99 4.98 4.95 Natural Gas (Quads) 0.000 -0.005 -0.029 -0.048 -0.057 -0.062 -0.065 -0.066 -0.067

Other (Quads) 1.59 1.44 1.40 1.35 1.31 1.28 Other (Quads) 0.000 0.000 -0.001 -0.002 -0.002 -0.002 -0.002 -0.002 -0.002

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

Coal (TWh) 1,828 2,038 2,089 2,130 2,207 2,302 Coal (TWh) 0.14 0.30 -1.51 -0.05 -2.21 -2.32 -2.32 -2.32 -2.32

Gas (TWh) 858 693 768 879 1,015 1,093 Gas (TWh) 0.32 2.21 -0.74 -6.25 -3.63 -2.34 -2.34 -2.34 -2.34

Petroleum (TWh) 45 46 47 48 48 49 Petroleum (TWh) 0.00 -0.01 -0.03 -0.03 -0.06 -0.07 -0.07 -0.07 -0.07

Nuclear (TWh) 813 834 883 886 886 894 Nuclear (TWh) 0.00 0.00 0.00 0.00 0.00 -0.67 -0.67 -0.67 -0.67

Renewables (TWh) 462 645 711 793 846 886 Renewables (TWh) -0.46 -3.51 -3.13 -3.72 -3.96 -4.45 -4.45 -4.45 -4.45

Total (TWh) 4,005 4,256 4,497 4,736 5,002 5,224 Total (TWh) 0.01 -1.00 -5.41 -10.05 -9.87 -9.86 -9.86 -9.86 -9.86

Installed Generating Capacity Installed Generating Capacity

Coal (GW) 321 325 326 326 330 336 Coal (GW) 0.00 -0.07 -0.03 -0.03 -0.16 -0.15 -0.15 -0.15 -0.15

Other Fossil (GW) 468 445 445 466 501 533 Other Fossil (GW) 0.00 -0.21 -0.28 -0.79 -0.47 -0.48 -0.48 -0.48 -0.48

Nuclear (GW) 102 105 111 111 111 112 Nuclear (GW) 0.00 0.00 0.00 0.00 0.00 -0.09 -0.09 -0.09 -0.09

Renewables (GW) 133 171 176 185 195 208 Renewables (GW) -0.13 -0.96 -0.95 -0.83 -0.90 -1.14 -1.14 -1.14 -1.14

Total (GW) 1,024 1,045 1,058 1,089 1,137 1,190 Total (GW) -0.13 -1.25 -1.26 -1.65 -1.54 -1.86 -1.86 -1.86 -1.86

Extrapolation
14-9

14.4 IMPACT OF STANDARDS ON NATURAL GAS AND ELECTRICITY 

PRICES AND ASSOCIATED BENEFITS FOR CONSUMERS

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

electricity and natural gas prices resulting from proposed standards on clothes washer products. 

Associated benefits for all energy users in all sectors of the economy are then derived 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 natural gas or electricity. 

The average inverse gas price elasticity during 2015–2035 is 2.08 with TSL 3 (the proposed 

standard). A value of 2.08 means that, given a one-percent decrease in demand, the price of gas 

would decline by 2.08 percent.

In a review of such studies that used versions of NEMS to examine the impacts on natural 

gas prices resulting from reductions in natural gas demand, Wiser and Bollinger2 examined 

analyses that reported the reductions in natural gas demand caused by certain energy policies, 

and the resulting decline in the average U.S. wellhead gas price. Wiser and Bollinger found that 

the average values of the inverse price elasticity throughout the forecast period in each study 

ranged from 0.7 to 4.7. The average inverse price elasticities in 13 of 19 analyses were between 

0.8 and 2.0. The value from DOE's current analysis (2.08 for TSL 3) falls within the overall 

range.

Other widely used, complex energy demand/supply models produce price elasticities that 

are similar to those incorporated in NEMS. Table 14.4.1 compares the results of several studies 

that modeled the response of natural gas prices to changes in gas consumption. These results are 

summarized in a 2003 study by Stanford's Energy Modeling Forum (EMF).3 Although the 

magnitude of the price response (as summarized by the inverse price elasticity) varies

considerably among the models, they generally confirm a sizable price effect associated with 

changes in natural gas consumption.c It is worth noting that the NEMS average value determined 

by the EMF study is smaller than that of most of the other models. Therefore, it is reasonable to 

conclude that the impacts estimated by NEMS are conservative.

 

c The EMF scenarios modeled the effect of increased gas demand on price. Assuming a smooth supply curve over 

the long term, however, the elasticities implied by an increase in demand should be equivalent to those implied by a 

decrease in demand. For undetermined reasons, two of the models studied in the Wiser and Bollinger report

(NANGAS and NARG) report somewhat anomalous inverse elasticities.
14-10

Table 14.4.1 Natural Gas Inverse Price Elasticity from Seven Energy Models

2005 2010 2015 2020 Average

NEMS 1.8 2.2 0.53 0.11 1.2

POEMS 2.4 1.8 2.5 1.8 2.1

CRA 3.5 2.5 1.1 0.9 2.0

NANGAS 5.4 7.0 7.6 5.1 6.3

E2020 1.5 1.0 1.0 0.7 1.1

MARKAL N/A 2.0 N/A 2.1 2.1

NARG 8.7 12.4 5.6 2.4 7.3

Source: Based on EMF, 2003.

NEMS (National Energy Modeling System, 2002); POEMS (Policy Office Electricity Modeling System); CRA 

(Charles River Associates); NANGAS (North American Natural Gas Analysis System), E2020 (Energy 2020);

MARKAL (MARKet ALlocation); NARG (North American Regional Gas model).

In addition to the models listed above, studies have been conducted by the National 

Petroleum Council4 and the National Commission on Energy Policy5 that are based on the EEA 

model. The EEA model has higher inverse price elasticities (between 4.0 and 16.8) than those 

predicted by NEMS and most other national energy models, leading to larger natural gas price 

reductions for a given decrease in demand.

14.4.1 Impact on Natural Gas Prices

Figure 14.4.1 shows the annual change in U.S. natural gas consumption, relative to the 

base case which involves no new standards, for the proposed standard (TSL 3). Because 

standards may decrease electricity demand, and a significant percentage of electricity is 

generated using natural gas, the standards may reduce natural gas consumption in the utility 

sector as well as in the residential sector.
14-11

Figure 14.4.1 Change in U.S. Natural Gas Consumption Resulting From the Proposed 

Clothes Washer Product Energy Conservation Standard

As described in section 14.2, using NEMS-BT to analyze impacts of relatively small

annual changes in energy consumption typically involves using higher-decrements to isolate the

impacts of the standards from numerical noise (i.e., larger energy savings quantities than those

resulting from the considered standards). After generating results using higher decrements to gas

and electricity consumption, DOE utilized a regressed interpolation toward the origin to derive 

the natural gas price effects resulting from energy savings at TSL 3, the proposed standard. 

Figure 14.4.2 shows the annual change in average U.S. wellhead price for natural gas,

relative to the base case. The price reduction averages 1.3 cents per MMBtu (in 2010$), this is a 

reduction of 0.18 percent in wellhead prices.

-0.07

-0.06

-0.05

-0.04

-0.03

-0.02

-0.01

0.00

0.01

2015 2020 2025 2030 2035

quads

Change in Total U.S. Gas Consumption

TSL 3
14-12

Figure 14.4.2 Effects of the Proposed Clothes Washer Product Energy Conservation 

Standard on Average U.S. Wellhead Natural Gas Prices

14.4.2 Impact of Changes in Natural Gas Prices on Gas Users

Although NEMS indicates that amended standards for clothes washers reduce natural gas 

prices by only a small amount, the associated economy-wide savings in natural gas expenditures 

during the forecast period are substantial. For each TSL, DOE calculated the nominal savings in 

total natural gas expenditures in each year by multiplying the annual change in the average-user 

price for natural gas by the total annual U.S. natural gas consumption forecast by NEMS.d The 

amended standards would continue to reduce demand for natural gas after 2035 (which is the last 

year in the NEMS forecast). DOE’s estimate for 2036–2045 (the period used to estimate the 

NPV of the national consumer benefits from amended standards) multiplied the average gas 

price reduction in 2015–2035 by estimated total annual gas consumption in 2036–2045.e DOE 

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

Table 14.4.2 shows the calculated NPV of the economy-wide savings in natural gas 

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

extrapolate price effects and gas consumption beyond 2035 suggests that one should interpret the 

 

d The average user includes electric utilities. Presumably the decrease in expenditures of natural gas that they 

experience would largely be passed on to electricity consumers.

e The estimation of gas consumption after 2035 uses the average annual growth rate in 2031-2035 from the AEO 

2010 Reference projection. 

-0.030

-0.025

-0.020

-0.015

-0.010

-0.005

0.000

0.005

0.010

2015 2020 2025 2030 2035

2010$/MMBtu

Change in Lower 48 States Wellhead Prices

TSL 3
14-13

post-2035 results as a rough indication of the benefits to natural gas users in the post-2035 

period. 

Table 14.4.2 Cumulative NPV of the Economy-Wide Savings in Natural Gas Expenditures 

Due to the Projected Decline in Natural Gas Prices Resulting from the Proposed Standard 

for Clothes Washers*

Discount Rate billion $2010

3 percent 4.937

7 percent 2.313

* Impacts for units sold from 2015 through 2045

14.4.3 Discussion of Savings in Natural Gas Expenditures

A decline in natural gas consumption may lower natural gas prices for two primary 

reasons. One reason is that decreasing consumption would lower the output of existing natural 

gas production capacity, leading to increased competition and downward pressure on prices. A 

second reason is that reduced consumption slows the depletion of low-cost gas reserves, lowers 

the future cost of finding and extracting natural gas resources, and dampens expectations for 

future prices. 

When gas prices drop in response to a lower output of existing natural gas production 

capacity, consumers benefit, but producers suffer. In economic terms, the situation represents a 

benefits transfer to consumers (whose expenditures fall) from producers (whose revenue falls 

equally)f

. When prices decrease because extraction costs decline, however, consumers and 

producers both benefit, and the change in natural gas prices represents a net gain to society. 

Consumers benefit from the lower prices, and producers, whose revenues and costs both fall, are 

made no worse off. 

The short-term impact of lower consumption on natural gas price likely results from 

changes in the utilization of natural gas production and capacity. It is likely that reduced 

consumption has only a short-term impact on capacity utilization in the natural gas industry. 

Producers can adjust to changes in consumption in the long term by either increasing or 

decreasing investments in infrastructure to bring capacity utilization rates back to original levels. 

The long-term impact on natural gas prices probably results from changes in extraction 

costs. Natural gas is an exhaustible resource, and conventional natural gas sources are limited. 

When those low-cost sources are depleted, producers must turn to higher-cost sources of natural 

gas, at which point extraction costs and wellhead prices will increase. Reduced demand creates 

 

f Gas producers include domestic, other North American, and overseas LNG producers. The proportion of domestic 

producers is expected to decline in the future.
14-14

downward pressure on extraction costs and prices because it delays the depletion of low-cost 

reserves and forestalls a shift toward higher-cost sources. 

Because the NEMS is a complex model, it is difficult to determine exactly how much of 

the model-estimated drop in natural gas price in any given year is explained by a decrease in 

utilization of capacity, and how much is explained by a decrease in extraction costs. One would 

expect, however, that most of the forecasted price decline after 2015 is caused by a decline in 

extraction costs. Supporting evidence for this conclusion derives from comparing the sources of 

natural gas drawn upon to supply consumers in the base case (without standards) and the 

standards cases of the model runs. The three principal sources of natural gas considered in 

NEMS for 2035 are termed conventional sources, unconventional sources, and imports. The 

imports are primarily of liquefied natural gas (LNG). Conventional sources are the lowest-cost, 

and imports are the highest-cost source of natural gas, as forecast by NEMS. 

The effect of standards on extraction costs is revealed by comparing the rate of natural 

gas production from the three natural gas sources in model runs for the base case with the rates 

for the standards cases. As shown in DOE’s furnace/boiler rulemaking (see the TSD, chapter 10), 

NEMS indicates that standards produce decreases in natural gas production from all three

sources, but production from the higher-cost sources declines most of all. This result suggests 

that, based on the NEMS model, energy conservation standards decrease future costs for natural 

gas extraction because they result in decreased rates of depletion of low-cost natural gas supplies 

and decreased imports of high-cost LNG. This result further suggests that a significant part of the 

long-term decreases in wellhead prices forecasted by the NEMS represents both a benefit to 

consumers of natural gas and a net benefit to society.

14.4.4 Impact on Electricity Prices

DOE analyzed the electricity price effect of clothes washer products at TSL 3, the 

selected standard level. A single regression was made to calculate the total impacts at this 

standard level. Results were generated using higher decrements to energy consumption. A 

regressed interpolation toward the origin was then used to derive the price effects associated with 

the total energy savings.

Figure 14.4.3 shows the annual change in U.S. electricity sales for the proposed standard, 

relative to the base case which involves no new standards.
14-15

Figure 14.4.3 Change in U.S. Electricity Sales Associated with the Proposed Clothes 

Washer Product Energy Conservation Standard

Figure 14.4.4 shows the annual change in average U.S. price for electricity, relative to the 

Reference case, projected to result from the proposed standard. The price reduction averages 

0.007 cents per kWh (in 2010$). This average price reduction equals 0.07 percent.

-8.0

-7.0

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

2015 2020 2025 2030 2035

TWH

Change in Total U.S. Electricity Sales

TSL 3
14-16

Figure 14.4.4 Effect of the Proposed Clothes Washer Product Energy Conservation 

Standard on Average U.S. Electricity Prices (All Users)

14.4.5 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 2036–2045 (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 

2036–2045.

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

Table 14.4.3 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. 

 

g The estimation of electricity consumption after 2035 uses the average annual growth rate in 2031-2035 of total 

U.S. electricity consumption forecasted by NEMS. This forecast includes the impact of the standards.

-0.00016

-0.00014

-0.00012

-0.00010

-0.00008

-0.00006

-0.00004

-0.00002

0.00000

2015 2020 2025 2030 2035

2010$/KWH

Change in U.S. Electricity Prices

TSL 3
14-17

Table 14.4.3 Cumulative NPV of the Economy Wide Savings in Electricity Expenditures 

Due to the Projected Decline in Electricity Prices Resulting from the Proposed Standard 

For Clothes Washers*

Discount Rate billion $2010

3 percent 5.224

7 percent 2.471

* Impacts for units sold from 2015 through 2045

14.4.6 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 the impacts on the actors involved in electricity supply from the 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 

instruction 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 a change in electricity prices that is projected to 

result from standards represents a net gain to society.
14-18

REFERENCES

1 Energy Information Administration, Annual Energy Outlook 2010 with Projections to 2035, 

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

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

2 Ryan Wiser, Mark Bolinger, and Matt St. Clair, Easing the Natural Gas Crisis: Reducing 

Natural Gas Prices through Increased Deployment of Renewable Energy and Energy 

Efficiency, January, 2005. Lawrence Berkeley National Laboratory. Report No. 56756. 

3 Natural Gas, Fuel Diversity and North American Energy Markets, September 2003. Energy 

Modeling Forum, Stanford University. Report No. EMF Report 20. 

4 Balancing Natural Gas Policy - Fueling the Demands of a Growing Economy, Vol. I 

Summary of Findings and Recommendations, September 25, 2003. National Petroleum 

Council. 

5 National Commission on Energy Policy, Increasing U.S. Natural Gas Supplies: A Discussion 

Paper and Recommendations from the National Commission on Energy Policy, October, 

2003. <www.energycommission.org>