CHAPTER 13. UTILITY IMPACT ANALYSIS 


TABLE OF CONTENTS 


13.1 INTRODUCTION ......................................................................................................... 13-1 


13.2 METHODOLOGY ........................................................................................................ 13-1 


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CHAPTER 13. UTILITY IMPACT ANALYSIS 


13.1 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 2009 version 

of the AEO (AEO2009), 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 AEO2009 reference case, as are the prospects for natural 

gas supply. 

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

represent alternative futures. Two alternative scenarios use the high and low economic growth 

cases of AEO2009. (The reference case corresponds to medium growth.) As part of varying 

supply-side growth determinants in these cases, AEO2009 also varies the forecasted energy 

prices for all three economic growth cases. Different economic growth scenarios will affect the 

rate of growth of energy demand. 

13.2 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 

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. 

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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 

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

impact analysis (chapter 9). 

The predicted reduction in electric capacity additions is sensitive to the peak load impacts 

of the standard. DOE will investigate the need to adjust the hourly load profiles that include 

room air conditioners and clothes dryers in NEMS-BT. 

 Since the AEO2009 version of NEMS forecasts only to the year 2030, DOE must 

extrapolate results to 2044. DOE conducts an extrapolation 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 2030, DOE intends to use simple replications of year 

2030 results; in this way results are guaranteed to be consistent. As with the AEO reference case 

in general, the implicit assumption is that the regulatory environment does not deviate from the 

current known situation during the extrapolation period. Only changes that have been announced 

with date-certain introduction are included in NEMS-BT. 

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 extrapolated to the year 2044. 

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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/> 

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