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Focused Business Plans - Load Forecast

Load Forecast

Relationship Between Price and Demand

Actual Experience


Load Forecast

For the purpose of forecasting New Brunswick's electrical requirements, NB Power's customers are divided into four main groups: Residential, General Service, Industrial, and Wholesale. The grouping reflects similarity in uses of electricity.

The Residential classification includes year-round and seasonal households, churches, and farms. The General Service classification comprises mostly commercial and institutional establishments. The Industrial classification is for customers involved in the manufacturing and processing of goods or in the extraction of raw materials. Additionally, NB Power services two Wholesale customers, the cities of Saint John and Edmundston.

The relative magnitude of the level of energy sales to each of the four customer classifications is shown in Figure 9.

NB Power annually prepares a load forecast which provides a 20 year projection of in-province customer requirements for demand and energy. Forecast requirements provide the basis for planning facilities and for revenue projections which are essential inputs to the planning process. An overview of the process used to develop the forecast follows.

Residential Requirements

The electricity requirements of residential customers are forecast using what is generally called an "end-use" model. The model is based on projected increases in the number of customers, the projected addition of electrical appliances and estimates of average electricity consumption, including the impact of conservation and efficiency improvements. The key factors used in the residential load forecast include:

  • Rate of population growth
  • New households (4000 per year)
  • Additional electric space heating in new and converted households (3600 per year)
  • Appliance efficiency improvements and Demand-Side Management measures
  • Normal weather conditions.

Figure 10 indicates the various uses of electricity by Residential customers serviced by NB Power. Worth noting is the fact New Brunswick space heating load is 47% of residential energy use. This fact must be taken into account in the planning process.

General Service Requirements

The electricity requirements of commercial and institutional customers are forecast using an econometric model which correlates electric sales to Personal Disposable Income (PDI) and population. The key factors used in the general service load forecast include:

  • Gross Domestic Product (GDP) of 1.9% per year
  • Personal Disposable Income
  • Population growth
  • Electricity consumption relative to PDI
  • Normal weather conditions.

Figure 11 indicates the various users of electricity by type of General Service customers serviced by NB Power.

Industrial Requirements

The industrial sector is comprised of customers who use electricity for manufacturing, processing or extracting raw materials. It represents the largest single component of the customer base, or about 40% of the total energy supplied. The pulp and paper industry is the largest component of the industrial sector, followed by the mining industry. These power-intensive industries account for a higher proportion of NB Power's total load than is the case for many utilities.

The electricity requirements of industrial customers are forecast using an econometric model which relates industrial needs to economic activity in the primary resource and manufacturing sectors. The requirements of the large power users in the first two forecast years reflect customer inputs and a general review of the product demand and commodity prices for the key resource-based industries in the province. Demand in this area could be greatly affected by general economic conditions, key industry trends in user industries and even the particular circumstances of major customers.

The key factors used in the industrial load forecast include:

  • Gross Domestic Product (GDP) of 1.9% per year
  • Goods producing GDP
  • Industrial requirements relative to goods producing GDP.

Figure 12 indicates the various users of electricity by type of industry serviced by NB Power.

Wholesale Requirements

The electricity requirements of wholesale customers are forecast using estimates from the above three sectors. Historical data are used by NB Power to project wholesale requirements.

Figure 13 indicates the usage by rate classes serviced by Wholesale Customers of NB Power.

Summary

Having completed forecasts for each customer sector, data is aggregated to establish NB Power's total estimated in-province energy requirements for the next 20 years. In addition, estimated peak demand requirements for the utility as a whole are projected for the same period.

The annual load forecast analysis undertaken in 1995 resulted in load projections significantly lower than those presented in the last two Business Plans. The change in load growth projections is attributable to two primary factors:

  • lower historic sales than previously forecast;
  • lower estimate of long-term economic growth rates (from 2.1% to 1.9%).

Figures 14 and 15 provide an overview of historical and forecast energy supply and peak system demand. To assess the impact of variations in inputs used in the forecast, high and low ranges for the forecast were developed by varying the input values for five key variables:

  • population growth,
  • economic growth (as measured by GDP and PDI),
  • the penetration of electric heat in new construction,
  • the relationship of economic growth to total Industrial consumption, and
  • the relationship of personal disposable income to General Service sales.

A probable forecast range based on simulation analysis is shown in Figures 14 and 15.

The impact of the high and low load forecast scenarios on NB Power's net income is presented in the "External Factors Influencing Operations" section of the Business Plan.

The Load Forecast for the next five years is shown in Table 9:


Relationship Between Price and Demand

The Standing Committee on Crown Corporations recommended that NB Power include an analysis of the relationship between electricity price and demand, taking into account competitive end use energy forms, in future load forecasting. The Committee noted that such an analysis is not currently incorporated and acknowledged that it may take some time to implement such a variable into the forecasting process.

NB Power has previously considered incorporating this analysis in its forecasting process but had concerns over the costs necessary to accomplish this. The Corporation will continue to periodically evaluate its position on this matter.


Actual Experience

Compared to the level achieved in 1994/95, in-province loads are projected to increase by 4.7% during 1995/96. A recovery in commercial and industrial sectors have contributed toward this increase. This load growth is 1.5% less than forecast in last year's Business Plan. Lower residential sales due, in part, to decreased housing starts and energy conservation initiatives have caused load growth to be lower than previously expected.

Actual in-province energy supplies since 1981 are compared to forecast in Table 10:



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