Regional Electricity Forecasting presented to Michigan Forum on Economic Regulatory Policy January 29, 2010 presented by Doug Gotham State Utility Forecasting Group
State Utility Forecasting Group Began developing its energy forecasting models 25 years ago Released its 12 th set of Indiana electricity projections in December Does not have a forecasting model for Michigan or the region
Energy information Administration (EIA) EIA uses its National Energy Modeling System to produce long-term forecasts on an annual basis Finest level of detail is the census region East North Central region IL, IN, MI, OH, WI
EIA 2010 Annual Outlook Electricity consumption forecast for the period 2008-2035 (average compound growth rates) for East North Central region residential 0.49% commercial 1.20% industrial 0.44% all sectors 0.74%
Questions How much variation might we expect between individual states in the region? What factors are likely to cause those variations? How does this forecast compare to recent growth in electricity usage?
Typical Drivers of Electricity Residential Usage demographics, personal income, energy prices Commercial floor space, employment, demographics, energy prices Industrial manufacturing output, employment, energy prices
Data Sources Bureau of Economic Analysis (Commerce) personal income, gross domestic product Bureau of Labor Statistics (Labor) employment Bureau of the Census (Commerce) population Energy Information Administration (Energy) electricity prices, electricity sales
Data Presentation Historical trends are normalized to 2000 values to show how each state has changed over time Most recent year available varies depending on data source
Population 1.1 1.05 1.Illinois.Indiana.Michigan.Ohio.Wisconsin 0.95 0.9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total Real Personal Income 1.2 1.15 1.1 1.05 1 0.95 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.85 0.8 2000 2001 2002 2003 2004 2005 2006 2007 2008
Commercial Employment 1.2 1.15 1.1 1.05 1 0.95 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.85 0.8 2000 2001 2002 2003 2004 2005 2006 2007 2008
Manufacturing Employment 1.4 1.3 1.2 1.1 1 0.9 0.8 Illinois Indiana Michigan Ohio Wisconsin 0.7 0.6 2000 2001 2002 2003 2004 2005 2006 2007 2008
Real Gross Domestic Product 1.3 1.2 1.1 1 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.8 0.7 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Real Electricity Prices 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 Illinois Indiana Michigan Ohio Wisconsin 0.7 0.6 0.5 2000 2001 2002 2003 2004 2005 2006 2007 2008
2008 All Sector Electricity Retail Price (cents/kwh) 35 30 MI 8.94, rank #28 25 20 15 10 5 0 WV WY ID KY UT WA NE ND MO IA IN SD OR KS AR MT MN OK SC NC VA TN NM OH AL CO GA MI MS WI AZ IL PA LA US-TOTAL NV FL TX VT DE CA MD DC ME NJ NH AK RI MA NY CT HI
EIA Sales Data Caveats EIA reports historical sales but forecasts consumption self and co-generation will show up in consumption but not in sales EIA reclassified its other category in 2003, moving the energy into commercial, industrial, and transportation There are questionable data points
Residential Electricity Sales 1.3 1.2 1.1 1 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.8 0.7 2000 2001 2002 2003 2004 2005 2006 2007 2008
2008 Residential Electricity Sales (million MWh) 140 120 100 80 60 40 20 0 DC AK VT WY RI HI ND ME NH SD DE MT NM ID UT NE WV NV CT KS IA AR CO MS MA OR OK WI MN MD KY LA NJ SC AL AZ IN MI MO WA TN VA IL NY OH PA GA NC CA FL TX
Commercial Electricity Sales 1.3 1.2 1.1 1 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.8 0.7 2000 2001 2002 2003 2004 2005 2006 2007 2008
2008 Commercial Electricity Sales (million MWh) 140 120 100 80 60 40 20 0 VT AK HI RI ME SD DE WY ND NH MT ID WV NM DC NV NE UT AR IA MS CT KS OR OK KY CO SC AL MN LA WI IN MA TN WA MD AZ MO MI NJ NC GA VA OH PA IL NY FL TX CA
Industrial Electricity Sales 1.3 1.2 1.1 1 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.8 0.7 2000 2001 2002 2003 2004 2005 2006 2007 2008
2008 Industrial Electricity Sales (million MWh) 140 120 100 80 60 40 20 0 DC RI AK VT NH SD DE ME ND HI CT MD MT NM UT ID MA WY NE NJ KS AZ OR NV CO NY WV OK MS AR MO VA FL IA WA MN WI LA NC SC MI GA TN AL IL KY PA IN CA OH TX
All Sector Electricity Sales 1.3 1.2 1.1 1 0.9 Illinois Indiana Michigan Ohio Wisconsin 0.8 0.7 2000 2001 2002 2003 2004 2005 2006 2007 2008
2008 Total Electricity Sales (million MWh) 400 350 300 250 200 150 100 50 0 VT AK RI HI SD NH ME DE DC ND MT WY NM ID UT NE CT WV NV KS IA AR MS OR CO MA OK MD MN WI AZ LA NJ SC MO WA AL KY TN MI IN VA NC GA NY IL PA OH FL CA TX
Electricity Sales 2000-2008 RES COM IND TOTAL Illinois 1.93% 2.10% 1.33% 0.89% Indiana 2.16% 2.31% 0.10% 1.13% Michigan 1.39% 1.04% -1.69% 0.12% Ohio 1.75% 1.88% -2.87% -0.45% Wisconsin 1.23% 3.15% -0.73% 0.92% Region 1.74% 1.97% -0.95% 0.42% - Average compound growth rates - Reclassification of other sales inflates commercial & industrial growth rates somewhat but does not affect residential & total (Illinois is most significantly affected) - Development of new self and co-generation deflates industrial & total growth rates (Ohio?)
Comparison of History to Forecast for the Region Historical sales (2000-2008) Forecast consumption (2008-2035) residential 1.74% commercial 1.97% industrial -0.95% total 0.42% residential 0.49% commercial 1.20% industrial 0.44% total 0.74%