A recent history of electricity forecasting in California is given. Dealing with forecasts and regulatory uncertainty is discussed. Graphs are presented for: (1) Los Angeles Department of Water and Power and Pacific Gas and Electric present and projected reserve margins; (2) California electricity peak demand forecast; and (3) California electricity production

Jones, H. G. M.

English

NASA Technical Reports Server

W. 6. Hike Jones 
Lnmger. Electr ici ty P l a m i q  hogram 
California Etaergy Ccrrission 
Sacramento. Gaiifomia 
I .  RECENT HISlWlY 01: ELETRICIlY 
F0RLuSTI)cl I6 UlhIFORNIA 
The debate over forecasts of electr ici ty de- 
and i n  California has been F i n g  on before tbe 
California Energy C a i s s i m  *x over kD ymrs. 
and before the h b l i c  Ut i l i t i es  Omission a d  
State Leg-slature f o r  over five years. This d e  
bate on electrical derand forecasts ws w e r e d  
by the str@ng earirotrental protec'im sentiments 
of the l a te  1960's. m s t  notably sprrred oa by the 
Sana Barbara Channel o i l  spil l . There nas fur- 
thr a belief i n  sae quarters Cat California 
u t i l i t i e s  yere overevpasding and r igh t  f i l l tbe 
coastline with nuclear power p1an:s. The adoption 
of the Federal C lean A i r  kt Aenbents. the 
Hational Enviroaeatal Policy kt (HEPA). and the 
California bviromental (luality Act. a l l  in 1969. 
a d  the establ is&at  of the California Coastal 
Zone c i s s f o n  i n  1972. signalled a major envi- 
ronmental avePent to regulate u t i l i t y  gronth. 
t r i c i t y  derand i n  California. vhwe sme noted 
that high projections are potentially self- 
fu l f i l l ing.  led to the establishent of the 
California Energy Corissian in 1975. The dabate 
over electrical forecasts has not been eliminated- 
Howerer. the California Energy col iss ion prepared 
statewide electr ici ty deuand forecasts with assis- 
tance and c r i t i ca l  review fra the State's f ive 
mjor ut i l i t i es :  Pacific Gas and Electric. 
Southetn California Edison, Loo Angeles kpartaent 
of Water and Po-. b n  Diego Gas and Electric. 
and Sacramento kn ic ipa l  U t i l i t y  District. The 
Commission o f f i c ia l l y  adopted a "aost l ike l f  
forecast for use i n  approving new -ration 
faci l i t ies. Uhile the forecast remains contro- 
versial. i t  i s  the f i r s t  f u l l y  docmented electric- 
i t y  deaand forecast o f f i c ia l l y  adopted as a basis 
for approving on a statewide basis proposals to 
construct new generation stations. 
Since the met.hou?i and siynificance o f  fore- 
casting are poorly understood by the layperson. 
there i s  more often than - 2 t  a somewhat confused 
intuit ive reaction t o  forecasts and the qwstion 
of forecastiw. Before describing the historic 
and current electr ici ty demand and suppiy situa- 
tion i n  California, I Mwld l i ke  t o  make a few 
brief observations on this complex subject. 
The debate over the rate of growth in elec- 
Why should ne concern ourselves with fore- 
c a s t w r e .  
aren't fwpcasts a l m s t  inevitabl won ? It i s  
c o n n c a ! i ~ ~ ~ ~ a n d  c l a i d  t d  our ?ate o f  
economic growtn and the cuxent level o f  econmic 
activi ty a;e intimately tied t o  the use of energy. 
Thus. forecastin9 well a n j  providing adewate 
energy supply i s  essential t o  our economy. A l -  
tharnh there i s  almost no disarlreement on the 
basic iqortasce. there i s  substantial Eoatro*ersJr 
about 14at the exact relationship has beea or 
needs to be in  tke future. 
capita and eneqy/W ratios are oftea used to 
at- to generalize that less emergy intamlre 
patterns are c t i b l e  with r is ing stadads of 
l i v ing  and are feasible far the UaZted States. 
However. tbese -tire assessmsts are OfBea 
flawed Qy a fat lure to properly mcogntze basic 
ecmic.  geogxqbiol a d  aatural -e differ- 
ences. such as the large.imwensioe hy&w 
resounes in  h u a y  and Snedea. ubi& allared 
energy inbeasire iwJus?ries to be beret@, Ye 
can also observe tbt proportimally less eaergy 
i s  u t i l ized mbere energy prices are h i 6  relat ive 
to the costs o f  other inputs such as capital an8 
labor. Fav -le. a recent study of Etmqmm 
electr ici ty pricing a d  load m a a m  ezpmience 
by the Rand CorpafatiorP SaaeQ tht the bmpeaa 
u t i l i t i e s  sell ing electric$Q a t  rates reftesetng 
daily and seasonal s~pu ly  cost differentials 
affected si.iaificant changes fa botb t8e ioteasitJ 
and time o f  electr ici ty use. 
Accurate forecasting i s  important Because it 
deternines the magnitude and lead tir of ejOr 
energy investments. The high cost of aew baselod 
generation stations (a 1.OOO Mu nuclear statton ntw 
ccsts UD to $1.5 bil l ion; a coal station. 51.3 
Treads in fareign Eaatries' energy use per 
b i l l i on j  and the extenad t ime  horizon aier dich 
these expenditures are made (nm e l l  mer 10 
years). means that economic 11y optimm inre5t#rrt 
decisions can only be made i f  ne have m t e  
forecasts. 
assess the financial feasibi l i ty o f  u t i l i t y  supply 
plans. I n  the Energy Caunission's recent examin- 
ation of the feasibil i ty of financing the pmposd 
Sundesert Nuclear plant o f  b n  Diego Gas aid 
Electric. it was detemineU that financing ?he 
expansion proposed by S C N X  wuld  cause a severe 
strain for  that u t i l i t y  unless substantially 
higher rates were approved by the California 
Public U t i l i t i es  m i s s i o n .  The demand forecast 
i s  a d o r  factor i n  determining rate of return. 
Accurate fvrecasts are also irpwtant f o  
What i s  our histor'c experience with electric- 
ity a m d  grovth i n California? Histor rcally. 
electricrty demand has grown a i  rates above 7 
percent, 4 t h  sales doubling i n  less than ten 
years. Hajw factors influencing this growth adre 
been the chea ess and convenience of electricity. 
goods and services has declined steadily since the 
1920's. Also contributing have been promotional 
The real -57 cost o e ectr ici ty relative to  other 
"Electricity Pricing and Load Management: 
eign Experience and California Opportunities." 
B. Mitchell. Rand Corporation. March 1977. 
For- 
https://ntrs.nasa.gov/search.jsp?R=19790019430 2020-03-21T22:41:20+00:00Z
pricing aal declining block rates far i d u s t r i a l  
gorer. 
targets Far c r i t i cs  o f  tbe ut i l i ty  ipbistry. 
esegial ly &ere tbe rates bave not reflectee mr- 
giml costs of service. Believers i n  tbe logic 
that ut i l i ty fgecasts are se l f - fu l f i l l i ng  
Bre9paeies bare notel taet Qeclimiag Mat rates 
aklr Qe not reflect the true m q i n a l  cost o f  
sQPlri.0 Baar p.ouide aa raerowwic st%alaat 
todemdgrontb. 
lbe s b r g  jm i n  tfe price of o i l  in 1973- 
1974 b 8 ~  resalted in hi- d m 3 C i W  
flwrse ?at* bro factors :ave Bacm mjor 
P ~ C ~ S .  
rabcee e l e c t r i c i ~  demand gmwtl~ rem. a d  
iar+eased mbl i c  arsreaess of tbe need b u m -  
saw. fbe ecaaic  reressim lrlrich follaved also 
amtribute8 to  tbe *drop in tBe rate &de- 
and grartb i o  Cclifasaia. 
flp declinimg rates of i m  &maul CQO- 
triDated to the view tlrat tighter mgulatiep o f  
u t i l i t i e s  mas necessary tD prevent ovdmilding. 
In aait iaa. the EcaKily 4#f  good sites aad mater 
a t  inland sites, and a i r  ~ l l a t i a a  in  d m n  
centers were cited bp pnwmenu of t igker  regs- 
latian- QI tbe atber side. may uti l i ty analysts 
claim today tlpt tk u t i l i t i e s  are tending to 
bigb cost a d  difficulty of raisimg capital i o  
tbe fa  e of stringent CPUC rate policies. 
capacity s i taat ia l  for the 
los mles oeparheat of Uater a d  mmer aod t4e 
def ic i t  i n  required reserres for Pacific 6as end 
E?ectrk.* as deaastated by tbe -mtwgias 
in Figm? 1, ssppat our belief that there are 
w s  for improving our forecasting aad planning 
appl icat ions, 
Tbe iqortant task a t  had i s  tm leap f r a  
tk past dad establish plrblic goals which p a i d e  
for future etOrmic grouts. This i s  tk respon- 
s i b i l i t y  facing the CatifaPia Eaerpl C i S S i o a .  
Riblic U t i l i t i es  Carissioa. A i r  k a n  -es Board, 
ami other State regulae- agencies comxrned w i t h  
tlader C?phli&. e bild. &kCtfIlg the 
ne anrent 
aatters. 
Ubat has been our ezuerience w i t h  p o t t a r g o  
e~e&xr~immth? As notal above. our h i s t a i c  
e ectr c ty growth ra te of are tsarr 7 pewcent bas 
4mpped substantially i n  the las t  fewyears. Two 
years ago. i n  tbeir official *year faecests. 
the five +or California u t i l i t i e s  forecasted a 
growth rate of apposimtely 5.1 perrent fo r  
sales. dad 4.8 percent fa r  peak deed (1976-1935,. 
fig#= 2 Shold the post derand f m w s t  and tRc 
adopted Energy r t i s s i o a  forgast Which cmr8CdeS 
the basis for  Conmission appwal  of new fa:ili- 
ties, The Corission's 1- growth rate :mecasts 
were approximately 4.5 petcent for ener-3 and 4.3 
percent for peek derand. Actual experience to 
date has shown that sales grew a t  approximately 
2.5 perrent in 197f. and peak demand by only 0.5 
penent. A one percent difference i n  the fore- 
casted rate of growth translates into roughly a 
3.500 UH capacity difference statewide by 1935. 
* The delay i n t h e  licensing of PGM's Oiablo 
Canyon's 2200 I)r nuclear statim, and hydro- 
electric capacity lost i n  the 1976-77 drought. 
contributed t o  their lon reserve margin. 
~asd BR tpe a t i i i t w  mr+) ism rorarast 
CBP see 0 Beperal laming o f  tbe u t i l i t i e s '  pe- 
sdm4ttals. sham in tBe table Del# Figare 2. one 
viaas peak demd famasts frm 4.8 Berwat to 
4.1 Berrept per year lnbreg 1976 a d  I=. It 
stamla be noted tbat a relabee cbmge lras been a 
mcb yre - l i c i t  -ring of the effects of 
ceasemetian -. sab as raadeth~y State 
Bailding a d  appliance staadanls aad ut i l i ty  coa- 
serration -. 
ant electrical aerqlr e. uitb Wmelec t r i c  
mergy placing secaatl, fkgiming in  1970. matural 
gas zvailabili€y bopeed drastically. replaced by 
iaapasal frnl oil use. In the 1976 and I977 
h g h t  years, Califbmia's hydroelectric oatplt 
WBS w e  than kl~ed. fn 1976 tbis loss was off- 
set by iaereesed i.ewts of I&tirrest hyhelec- 
tr ici ty; Wis supply was also lost i o  1977. as 
tbedraopRtAittsehthlest. Qrtbaralgen- 
eration i n  1977 19s supplied 56 gerwat fka oil, 
28 perceat fro aatural gas. 12 pemmt fra aut- 
of-state coal. and 101 fnw mctear and geotberial 
sources. 
In their 1976 plaaaiag sub i t ta ts  to tJe 
Energy Carission. tie f ive majar u t i l i t i e s  pro- 
posed a 1- facrease i n  Aslmr m a t i - .  
-tin9 tbat fuel trpe to account fa 36 m e a t  
o f  eqnansioa frcr 1976 to 1985; o i l  to a-t for 
21 perrent; coal I S  oenent; and geothermal atwoe 
im te l y  8 percent. 
1 s  to 19!h Mclar generation plants m c  an- 
t i c i p n t d  to a a w n t  for 75 penent of all  
additions. 
(March 1978). the u t i l i t i e s  ref lect the uncer- 
tainties facing them in the choice of baseload 
generatfon techmlopl. They have cut plans fa new 
w l m r  generation and W&E now does not q x i f y  
type o f  plant after 1967. This i s  essentiaily the 
driving force behind the coal conference today. 
Coal use for California electr ici ty generation 
i s  now l imited to art-of-state faci l i t ies. 
California u t i l i t i e s  currently o m  j o in t l y  u i t h  
other u t i l "  'es three out-of-state coal facilities; 
namely. Wjave. lyavajo. and Four Corners. The 
10s Angeles Oepertaent o f  Ute and Power owns 
790 Ibr and Socthern California Edison OMIS 1650 )Irr 
of this out-of-state coal capacity. (Additional 
energy i s  derived from Out-of-state coal by con- 
tract.) Planned out-of-state coal expansion i s  
In the follan-ng 10 pa-. 
In their -st recent plaming w k i t t a l s  
very iqmrtant for Southen California a t  t h i s  
t ime - the Utah InterrouRtain Fwer Project !s con- 
s i d e d  ae iqortaat reSQlrCe in  meeting future 
electrical need: along w i t h  the k - a &  Y a m  
Valley Project. 
To date *e b w e  only oae firo plan for  in- 
state coal geaeritim: m € ' S  proposed Fossil 1 
and 2 fac i l i ty .  Uk#h wuld prwide 1600 Rt of 
capacity begipllng i n  19ES. The fhergy C i s s i o n  
i s  c u m t l y  revieuiag SEE'S proposal. and rill 
also be revierfag a s d 1  coal g6sification 
project proposed by UX. 
as potential resources by tke State a t i l i t i es .  
but witb widely 8 drying levels o f  uncertainty a t  
th is  tine. are as follolss: 
Other coal f ac i l i t i es  specifically identified 
sa: East Desert coal - so00 lb 
fDcM: c o a l l & s d 2  - 2 O o o R t  
State Dqmrtment of Mater and Ponw: Three 
3 3 0 l b l r l  uni ts 
11. IIEALING U17H FORECAST AWD 
REGUUTORY UIICERTAINTT 
The often quoted p-escription t o  cure capacity 
plaming uncertainty often referred t o  as the 
'u tb l i ty via: has been to  argte for: 
- Reduced regulatory r e v i a  ti= - Accelerated s i t ing of  conventional non-oil 
F m r  plants 
- Increased forecasts or reserve margins t3 
c-te for uncertainty 
kh i l e  these alpraents have a place. 
- Consewation as an option to new capacity 
- The benefits frcc better Interstate rnlf 
f a i l  
to adequately re f lect  the value and potential of: 
expansion 
statewide syster, integration 
And m s t  iqortant to  th is  conference. theze 
arguments do not address the need f o r  a fuels 
policy introduction of new fuels and technology. 
l a s t  notablv fo r  the demnstratim and use o f  
conventional cod: w i t h  advanced cleanup and 
advanced coal codustion ar clean fuels fror coal 
for b l i f o rn ia .  
nrej to be re in fo r td ;  specifically, these are: 
It i s  not apparent that e lectr ical  energy 
Jenand j r a r t h  w i l l  be substantially lower than we 
or the u t i l i t i e s  t.aught only two to  f i v e  years 
ago. Qneral acceptance o f  t h i s  fact i s  essen- 
t i a l  to establish a sound basis for supply policy 
discussion. 
2 .  Coal canbustion u t i l i z i n g  our abundant 
supplies i n  lrestern states and Alaska i s  necessary 
i n  anJ f o r  Cal i fania.  but there are insufftcient 
u t i l i t y  proposals a t  hand fcr conventional or 
advanced coal systems. 
3 .  Conservation effects. although d i f f i c u l t  
to predict. nave a substantial potential to fur- 
ther reduce eneq needs, and should k a part of 
+ I  1 resource devefopent strategies. 
I n  s m r y .  severa; of the points lade above 
1. 
4. limmmeai r w l a t m y  agencies sbare an 
obl igat iar  for .eatlag emergy demnds and need to 
provide -te poltcy dlnectlm. A t  the same 
time. Ue utll icy i d a s t r y  m s t  recognize tbe 
wallty of curreat Btmol lcs and constraints to 
rorreAtioaa1 fuel optlaAs. both o i l  a d  Mclear. 
and assist  tbe State i n  developing a rea l i s t i c  
program to use coal cleanly i n  California. 
1% W c f S  SJ'MifCl Q Wffl 7 N e  
r;i WlSir M : WOIC 
F(IPf WdCTfi CLPW M l S  
-,J 
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52 


Electric energy demand and supply prospects for California

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