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Big Sandy Rural Electric Cooperative Corporation 2006 Load Forecast Prepared by: East Kentucky Power Cooperative, Inc. Forecasting and Market Analysis.

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Presentation on theme: "Big Sandy Rural Electric Cooperative Corporation 2006 Load Forecast Prepared by: East Kentucky Power Cooperative, Inc. Forecasting and Market Analysis."— Presentation transcript:

1 Big Sandy Rural Electric Cooperative Corporation 2006 Load Forecast Prepared by: East Kentucky Power Cooperative, Inc. Forecasting and Market Analysis Department July 2006

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3 3 Table of Contents Introduction and Executive Summary 5 Narrative16 Key Assumptions20 Methodology and Results28 –Residential Forecast33 –Small Commercial38 –Large Commercial40 –Peak Day Weather Scenarios43 RUS Form 34146 Page Number

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5 5 Introduction Executive Summary Big Sandy Rural Electric Cooperative Corporation (Big Sandy RECC), located in Paintsville, Kentucky, is an electric distribution cooperative that serves members in eight counties. This load forecast report contains Big Sandy RECC’s long-range forecast of energy and peak demand. Big Sandy RECC and its power supplier, East Kentucky Power Cooperative (EKPC), worked jointly to prepare the load forecast. Factors considered in preparing the forecast include the national and local economy, population and housing trends, service area industrial development, electric price, household income, weather, and appliance efficiency changes. EKPC prepared a preliminary load forecast, which was reviewed by Big Sandy RECC for reasonability. Final projections reflect a rigorous analysis of historical data combined with the experience and judgment of the manager and staff of Big Sandy RECC. Key assumptions are reported beginning on page 20.

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7 7 Executive Summary (continued) The load forecast is prepared biannually as part of the overall planning cycle at EKPC and Big Sandy RECC. Cooperation helps to ensure that the forecast meets both parties’ needs. Big Sandy RECC uses the forecast in developing two-year work plans, long-range work plans, and financial forecasts. EKPC uses the forecast in areas of marketing analysis, transmission planning, generation planning, demand-side planning, and financial forecasting. The complete load forecast for Big Sandy RECC is reported in Table 1-1. Residential and commercial sales, total purchases, winter and summer peak demands, and load factor are presented for the years 1990 through 2025.

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11 11 Executive Summary (continued) Overall Results Total sales are projected to grow by 1.9 percent a year for the period 2005-2025, which is the same as the growth projected in the 2004 load forecast for the period 2004-2024. Results shown in Table 1-2 and Figure 1-1. Winter and summer peak demands for the same period indicate annual growth of 2.1 and 1.6 percent, respectively. Annual peaks shown in Figure 1-2. Load factor remains steady at approximately 41% for the forecast period. See Figure 1-3.

12 12 Executive Summary Overall Results (continued)

13 13 Figure 1-1 Average Annual Growth in Sales 2005-2025

14 14 Figure 1-2 Peak Demand Forecast Winter and Summer

15 15 Figure 1-3 Annual System Load Factor

16 16 Narrative Counties Served Big Sandy RECC provides service to members in 8 counties. Figure 1-4 Includes: Breathitt, Knott, Lawrence, Magoffin, Martin, Morgan

17 17 Narrative (continued) As of 2006, the Floyd County labor force was engaged in wholesale and retail sales (30 percent), services (30 percent), and mining (20 percent). Average weekly wages earned in wholesale and retail sales were $350, services $500, and mining $1,000. Johnson County’s work force was primarily engaged in wholesale and retail sales (45 percent) and government (25 percent), earning $350 per week average in wholesale and retail sales, and $600 for government employees. Population trends of the area indicate only slight increases in the next 20 years. The bulk of the population resides in the rural areas and Big Sandy RECC should receive its share of future services. This share will probably continue in the next 5-10 years, with major roadways being developed and an increase in retired people relocating back into Big Sandy RECC’s service territory.

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19 19 Narrative (continued) Big Sandy RECC Members Demographic Information There is an average of 2.33 people per household. 56% of all homes are headed by someone age 55 or greater. 8% of homes have farm operations, with beef cattle most prevalent. 19% of all homes served are less than 10 years old.

20 20 Key Assumptions Power Cost and Rates EKPC’s wholesale power cost forecast used in this load forecast comes from the following report: “Twenty-Year Financial Forecast, Equity Development Plan, 2006-2025”, dated January 2006.

21 21 Key Assumptions (continued) Economic EKPC’s source for economic forecasts is DRI-WEFA.

22 22 Key Assumptions (continued) Share of Regional Homes Served Figure 1-5 Big Sandy RECC’s market share will increase for the forecast period.

23 23 Key Assumptions (continued) Household Income Members’ Greatest Sources Figure 1-6

24 24 Key Assumptions (continued) Appliance Saturations Room air conditioner saturation is remaining steady at 27 percent. Appliance efficiency trends are accounted for in the model. The data is collected from Energy Information Administration, (EIA). See Figure 1-7.

25 25 Key Assumptions (continued) Saturation Rates Non HVAC Appliances Microwave Oven99% Electric Range88% Dishwasher41% Freezer55% Clothes Dryer96% Personal Computer52%

26 26 Key Assumptions (continued) Figure 1-7 All of the projections are very similar to what was used in the 2004 Load Forecast. However, the 2004 Load Forecast assumption was just below 8 by 2024 whereas this update shows the trend continuing above 8. Source: Energy Information Administration (EIA) Efficiency Trend Update, 2005

27 27 Key Assumptions (continued) Weather Weather data is from the Jackson weather station. Normal weather, a 30-year average of historical temperatures, is assumed for the forecast years.

28 28 Methodology and Results Introduction This section briefly describes the methodology used to develop the load forecast and presents results in tabular and graphical form for residential and commercial classifications. Table 1-3 through Table 1-5 shows historical data for Big Sandy RECC as reported on RUS Form 736 and RUS Form 5. A preliminary forecast is prepared during the first quarter depending on when Big Sandy RECC experiences its winter peak. The first step is modeling the regional economy. Population, income, and employment are among the areas analyzed. The regional model results are used in combination with the historical billing information, appliance saturation data, appliance efficiency data, and weather data to develop the long range forecast.

29 29 Table 1-3

30 30 Table 1-4

31 31 Table 1-5

32 32 Methodology and Results (continued) The preliminary forecast was presented to Big Sandy RECC staff, and reviewed by the Rural Utilities Services (RUS) Field Representative. Changes were made to the forecast as needed based on new information, such as new large loads or subdivisions. In some instances, other assumptions were changed based on insights from Big Sandy RECC staff. Input from EKPC and Big Sandy RECC results in the best possible forecast.

33 33 Methodology and Results (continued) Residential Forecast Residential customers are analyzed by means of regression analysis with resulting coefficients used to prepare customer projections. Regressions for residential customers are typically a function of regional economic and demographic variables. Two variables that are very significant are the numbers of households by county in each member system's economic region and the percent of total households served by the member system. Table 1-6 and Figure 1-8 report Big Sandy RECC’s customer forecast. The residential energy sales were projected using a statistically adjusted end-use (SAE) approach. This method of modeling incorporates end-use forecasts and can be used to allocate the monthly and annual forecasts into end-use components. This method, like end-use modeling, requires detailed information about appliance saturation, appliance use, appliance efficiencies, household characteristics, weather characteristics, and demographic and economic information. The SAE approach segments the average household use into heating, cooling, and water heating end-use components. See Figure 1-9. This model accounts for appliance efficiency improvements. Table 1-6 reports Big Sandy RECC’s energy forecast.

34 34 Table 1-6

35 35 Figure 1-8 Annual Change in Residential Customers

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37 37 Figure 1-9

38 38 Methodology and Results (continued) Small Commercial Forecast Small commercial sales are projected using two equations, a customer equation and a small commercial sales equation. Both are determined through regression analysis and utilize inputs relating to the economy, electric price, and the residential customer forecast. Small commercial projections are reported in Table 1-7.

39 39 Table 1-7

40 40 Methodology and Results (continued) Large Commercial Forecast Large commercial customers are those with loads 1 MW or greater. Big Sandy RECC currently has 1 customers in this class and is projected to increase to 2 customers by 2025. Large commercial results are reported in Table 1-8.

41 41 Table 1-7

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43 43 Methodology and Results (continued) Peak Day Weather Scenarios Extreme temperatures can dramatically influence Big Sandy RECC’s peak demands. Table 1-9 and Figure 1-10 reports the impact of extreme weather on system demands.

44 44 Table 1-9

45 45 Figure 1-10

46 46 RUS Form 341

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