Prepared in association with the Alfred P. Sloan School of ManagementThis is the text of a presentation given to the six New England 
governors on November 7, 1975. The presentation focused on explaining 
how the New England Energy Management Information System (NEEMIS) has 
helped the region, what it is, how it will continue to help the region, 
what unique technology made it possible, what shall be done in the future, 
and a demonstration of one application

Donovan, John J.

Keating, W. Robert

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NEEMISTEXT OF GOVERNORS PRESENTATIONof October 6, 1975'Given byJohn Donovan and W. Robert KeatingEnergy Laboratory in Association with theAlfred P. Sloan School of ManaaementWorking Paper No. MIT-EL-76-002WPFebruary 1976ABSTRACTThis is the text of a presentation given to the six New Englandgovernors on November 7, 1975. The presentation focused on explaininghow the New England Energy Management Information System (NEEMIS) hashelped the region, what it is, how it will continue to help the region,what unique technology made it possible, what shall be done in the future,and a demonstration of one application.NEW ENGLAND ENERGY MANAGEMENT INFORMATION SYSTEM (1)W. Robert KeatingNew England Regional CommissionJohn J. DonovanM.I.T. Sloan School of ManagementThank you Mr. Merriman.Governors, Mr. Cochairman, about one and one half years ago, theEnergy Staff of the New England Regional Commission began to collect andanalyze energy data in a simple and rather primitive manner. Because wehad better data than the Federal Government, those first efforts resultedin increased petroleum product allocations to two New England states'--Massachusetts and Maine. To further increase the region's capability toanalyze data, the New England Regional Commission initiated and supportedthe development of a facility called the New England Energy ManagementInformation System (NEEMIS).As our capability increased, we were able to document the highlynegative impacts on the New England economy of the Administration's EnergyProgram. Those impacts were greater than originally projected by FEA inWashington. Our data, being more current and more accurate, eventually in-creased Washington's sensitivity to New England problems. One specificexample is the Entitlements Program which saved New England consumers anestimated $150 million annually. Our data collection and analytical capa-bility also supported the states' law suits challenging the $2.00 tarifflevied on foreign oil. The challenge -- successful to date -- will savethe New England consumer an estimated $297 million annually.(1) This is the text of a presentation given to the six New England Governorson November 7, 1975. The talk began with Mr. Russell Merriman introducingMr. W. Robert Keating of the New Enqland Regional Commission.-2-Our capability to analyze data and present New England's positionto the nation has been increased even more. Today, you will seethat enhanced capability and how it can help you individually and collec-tively support the best alternatives for your state and for theRegion.Dr. John J. Donovan, an associate professor at the Alfred P. SloanSchool of Management at M.I.T., who is the principal investigator for NEEMIS,will talk about the Project.Dr. Donovan's talk will include a brief demonstration of a partiuclarapplication which will calculate the economic impact to the Region, statesand subsectors of various external effects, such as OPEC increases, tariffincreases, and decontrol. In order to assist us in this demonstration,we have asked Governor Noel and his Energy Staff to identify a scenariofor which they would like to see the impact. It should be remembered thatthe results of this demonstration is not a prediction of what will happenbut a measure of the economic effect on the Region should these series ofevents take place. I shall also handout to all of you a copy of the ques-tions that we have asked the State of Rhode Island to answer.-3-NEEMIS (1)Governors Noel, Salmon, Grasso, Thomson, Dukakis, Longley, andFederal Cochairman Merriman, I'm here to talk about the New England EnergyManagement Information System, or what we call NEEMIS. Specifically, I'mgoing to try and cover:1. What NEEMIS is;2. How NEEMIS can help you;3. How we produced NEEMIS,4. What we plan to do in the future.Previous discussions on this Project with members of your Energy Staffhave taken many hours. We have tried to compress our presentation down to6 slides as we realize the commitments on your time. Our doors continue tobe open as they have in the past to you and to your staff for furtherdiscussions.1. What is NEEMISWhat is NEEMIS? NEEMIS is a computer facility that includes a capa-bility for: data management (storing, retrieving, protecting, and validatingdata); for performing analytical functions on data; and for presenting resultsof analyses and data.NEEMIS presently contains a number of data series relating to energycollected by FEA Region I, previous NERCOM efforts (e.g., ADL), and others.The NEEMIS facility has been applied to constructing a number of programsto assist in analyzing various energy policy decisions as outlined byNERCOM and the State Energy Offices.(1) Openinq of Professor flnnnvan'c nrcantAtinn-4-Therefore, NEEMIS can be viewed as three things: (1) a facility(which is analogous to carpenter tools); (2) several data series (whichare analogous to materials); and (3) application programs (which are analo-gous to individual houses). NEEMIS is first and foremost a facility thatcan be used to construct many applications programs quickly and inexpensively,just as good carpenter tools can construct many different houses.2. How NEEMIS can Help YouThese tools can be used by your staff in many ways. I am not goingto dwell on the tools but rather will emphasize the types of answers you canget using applications programs constructed with these tools.Example ApplicationThe application eshall demonstrate today is one that calculates theeconomic impact to the Region, state and subsector of various externalevents, e.g., OPEC price increases, tariff increases, decontrol. ThisNERCOM procedure was originally implemented in conjunction with theMassachusetts Energy Office using the NEEMIS capabilities. The datathat the procedures use were collected under previous NERCOM efforts. Itis important to keep in mind that this is "only/one house" that has beenbuilt using these tools. The tools were such that this application wasable to be built quickly (in a matter of a week's time), and the calcula-tions performed now take a matter of seconds instead of days or weeks(as with the manual system).During the talk, the operator will input Governor Noel's assumptionsto this program into an IBM computer located at Cambridge. Namely, hisassumptions are:-5-- The scenario is for the State of Rhode Island andNew England.- Assume the OPEC price increase per barrel will be $1.05 (2)over the present world price of $14.15.- Assume that a tariff on imported crude will remain as is,namely, $2.00 per barrel or 0 increase.- Assume that the tariff on imported product which was$.60 per barrel and has recently been eliminated willremain eliminated.- Decontrol of oil will start December 1975 and continueover a period of 40 months or 2.5% per month.Before the end of the talk, the computer will produce a report of theeconomic effect that these events will have if they should occur for themonth of December 1976 for the state of Rhode Island and New England.Note that the program to make this computation ultimately could bequite complex, e.g., calculation of effect of entitlements program, fore-casting shifts in consumption patterns with changes in price, etc. Further,note that the data used in the calculations must be previously analyzed ina sophisticated manner.Therefore, we needed a sophisticated data management capability and agood analytical capability to build this application.To keep you all here, the answers will be ready at the end of my talk.Other Application Programs:We should stress again that NEEMIS is a capability that can be appliedby your State Energy Offices, NERCOM, and other energy agencies to problemsfacing them and you.(2)(2) These underlying parameters were given during the presentation byGovernor Noel as a possible scenario in :which he was interested.-6-..Recognizing time constraints, let me briefly touch upon a few otherapplication programs that have been created and reside on secondary storage.For each of these applications, the hardware configurations remainthe same; the change occurs in the data and programs needed.- Economic impact analysis (the demonstration of today).- Conservation -- Two of the several analyses on conserva-tion that are underway include: (1) Working in conjunctionwith the Massachusetts Public Housing Authority who havea large expenditure per year in heat and utilities;(2) In conjunction with the State of Connecticut'sEnergy Office, consumption monitoring of State buildingsis underway.3. How We Produced NEEMISThe NEEMIS facility has been developed at M.I.T. under the guidance anddirection of the New England Regional Commission and in close cooperationwith the State Energy Offices. (For example, Lynn Brooks fromConnecticut has previously served as a chairman of a subcommittee on thisproject.) In order to build the flexible type of management informationsystem desired and needed by the Region, it was necessary to implementsome of the newest software techniques available as well as develop others.This has been made possible: by a Joint Study Agreement between M.I.T. andthe Cambridge Scientific Center of IBM. This arrangement has allowed anintegration of our scientific work at M.I.T. and some important work onsoftware at IBM; this cooperation plus access to IBM's computer facilitieshave made possible the development of these advanced software technologies.We in the Joint Study are very excited about these developments. I am onlysorry we do not have the time to speak about them in detail.-7-Hardware Archi ctecture:The hardware configuration that NEEMIS uses consists of: computerterminals (which are available to State Energy Offices); ordinary tele-phones, which are connected to the terminals by way of a data set; anIBM 370 Model 158 computer located at the IBM Cambridge Scientific Centermade available to us through the IBM/M.I.T. Joint Study Agreement; andsecondary storage devices.They key components of the system, however, are the programs (soft-ware), which are sets of instructions that reside in the computer'smemory. The collection of these programs that provide the tools forhandling data, constructing application programs (e.g., the one we aredemonstrating), and integrating existing programs we call the GMIS (Gene-ralized Management Information System) System. (1) The application ofthese tools to New England energy problems we call the NEEMIS System.What is Unique:Most computer systems are concerned with operational aspects.For example, computing payroll, taxes, bills, etc. This system is con-cerned with supporting policy decision making. What is different aboutsuch support is that:- problems are not known long in advance- problems keep changing- solutions are needed in a short time frame.(1) For further information the reader may refer to three documents:- "GMIS: An Experimental System for Data Management and Analysis,"M.I.T. Energy Laboratory Worki;ng Paper No. MIT-EL-75-Oll1WP.- "GMIS Primer," M.I.T. Energy Laboratory Working Paper No. MIT-EL-75-012WP.- "NEEMIS," M.I.T. Energy Laboratory Working Paper No. MIT-EL-75-O15WP.-8-Therefore, we must build on existing program. We cannot requirenew training of persornnel for computer languages. The NEEMIS system wasspecifically designed'to provide the above unique needs of the decisionmaker. One of the key software technological advances that it uses to do thisis by simulating many computers onto one computer and having all thesesimulated computers inter-connected. Each simulated computer is capableof running any program that is presently running by any computer withlittle transfer cost. Each simulated computer is capable of running adifferent modeling or econometric package (e.g., TROLL, TSP, EPLAN,FORTRAN, etc.) even though they may run under incompatible operating systems.4. FutureIn the next months, it is anticipated that the NEEMIS System willbecome even more readily usable by your State Energy Offices as terminalswill be installed in their offices that will access the system, data,and existing models, as well as the facility to build new applications.In conjunction with NERCOM and the State Energy Offices, new energyapplication programs will be written. During the next year, the performanceof the system will be improved most notably in increased response time. Further,additional modeling facilities and report generation capabilities will beadded to the system.The M.I.T. Sloan School's Center for Information Systems Researchand IBM will analyze the management implications of this system.The Sloan School and NERCOM will identify other applications of thissystem in areas where public policymaking or strategic planning issues canbe assisted by such a capability (e.g., management of educational programs,health care, etc,).-9-NERCOM and M.I.T. will disseminate information through various work-shops, conferences and publications to your State Offices and to otherState agencies that can use such a capability, as well as to others thathave expressed needs and a desire to learn about what we are doing.5. Results of ScenarioWhile I've been talking, the computer has produced the followingresponse to the assumptions of Governor Noel of Rhode Island and cumulatedthose results forthe entire New England Region. These results may be usedby you to assist in your response to.Washington if those assumptionsbecome likely.The computer operator's inputs are shaded. Figure 2 depicts the inter-actions with the computer while inputting assumptions. Figure 2 depictsthe output for the region. Figure 3 depicts the output for Rhode Island.-10-WELCOME TO T ITERACTIVE SYSTEM FOR COST STIMATION.FIR ST, ELECT OPTIONS.E'NTER TWO LETTER CODE FOR STATE:NEOPECGIVE STIMATE:E:CRUDEGIVE STIMATE:n:PRODUCT/Z' T, 7,' c i* Trif ' .tr.. . " . .1. L JIr' % .El:DEC ONTROLSTART MOTI ( J:P,'RCE.T PER MONU:-TARGET MONT!71:r3:START OF OUTPUTohFigure 1. Input Assumption&-pdcC -t/;C-11-S,NEW ENGLAND1. INCREA D COST TO AVERAGE FAMILY (PER YEAR, ASED ON1) 00 GALLONS OF GA OLINE,13) O0 GALLONS OF HEATING OIL AND53) O0 KWH ELECTRICITY CONSUMPTION PER YEAR: ) , ".GASOLINE:HEATING OIL (DI TILLATE):ELECTRICITY:TOTAL:$46 INCREA SE c $S 6 INCREASE &O cepf e$7 INCREASE h wPr 1$1 9 INCREA SE2. INCREASE/DECREASE IN COSTS FOR FOUR AIN SECTOR,:COMMERCIAL:IND U STRIAL:RESIDENTIAL:DI STILLA TERESIDUALELECTRICITYTOTALDI ECTILLATERESIDUALELECTRICITYTOTALDI STILLATERESIDUALELECTRICITYTOTAL,65,411,886$33,615,543$ 2) ,982,338$120 ,009,767$16,913,681$19,078,775$22,848,637$58,841,093$113, 248,835$27,678,3 29$143 ,927,164TRANSPORTATION INCRtEASE: $19 311, 75)TOTAL IMPACT (INCREASE): $339,089,774Figure 2. Output -- Effect of Assumptions on New England_ tA / LI- 111,O4a//) L/aI-12-'u-dQ2E SILAND1. INCREASED COST TO AVERAGE FAMILY (PER YEAR, BASED ON1000 GALLONS OF GASOLINE,tC 1300 GALLONS OF HEATING OIL AND5300 KWH ELECTRICITY CONSUMPTION PER YEAR:)GASOLINE:HEATING OIL (DISTI.LLATE):ELECTRICITY:$46 INCREASE$56 INCREASE$7 INCREASETOTAL: $109 INCREASE2. INCREASE/DECREASE IN COSTS FOR FOUR AIN SECTORS:COMMERCIAL:INDU STRIAL:RESIDENTIAL:DI STILLATERESIDUALELECTRICITYTOTALDI ITILLATERESIDUALELECTRICITYTOTALDI ETILLATERESIDUALELECTRICITYTOTAL$3,472,957$2,5) 8,765$1,765, i59 sl$7,746,981$827,933$1,060 , 217$1 ,872,166$3,760,313$13 ,413,436$2,0 57, 296$12,470 ,73 2TRANSPORTATION INCREA' ': 19,311,753TOTAL .IMPACT (INCREA SE): j43, 289,776Figure 3: Output -- Effect of ASsumptions on Rhode Islandf-13-6. ConclusionLet me conlcude with three statements. First, let me say that manygroups and individuals that have participated in this effort. They include:the NERCOM staff, students and colleagues at M.I.T., your State EnergyOffices, FEA Region 1, Massachusetts Public Housing Authority, BostonEnergy Office, Port Authority, Coast Guard, your State Tax Departments,the Oil companies servign the New England Region, State Departments ofautomobile registration, IBM, the M.I.T. Sloan School, the M.I.T. EnergyLaboratory, the Sloan School's Center for Information Research and itsCorporate Sponsors, the Bureau of Mines, U.S. Cencus Bureau, as well asmany other private, state, and federal agencies.Secondly, a statement of qualification. NEEMIS is a powerfulfacility, but to answer your questions, the applications must be identified,programs must be written, and the data gathered. The last two tasks havebeen made considerably easier with NEEMIS.Thirdly, this kind of capability gives you the ability to presentyour case to Washington and to your constituents.If there are any questions, we will be happy to answer them at thistime.Thank you.

NEEMIS : text of governors presentation of October 6, 1975

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NEEMIS : text of governors presentation of October 6, 1975

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