Revised Economic Data Reduces Load Forecast

Dec 17, 2013

PJM predicts summer peak loads will increase by about 1% annually over the next decade, with a 1.4% increase in 2014. But the 2014 load forecast reduces peak and energy forecasts from the 2013 report.

PJM predicts summer peak loads will increase by about 1% annually over the next decade, with a 1.4% increase in 2014, according to a draft forecast outlined to the Planning Committee last week.

The 2014 load forecast reduces peak and energy forecasts from the 2013 report due to revisions to historical economic data and the addition to the PJM model of another year of load experience.

PJM Load Forecast Comparison (Source: PJM Interconnection, LLC) — (Source: PJM Interconnection, LLC)

A restatement in federal economic data made “the recent recession a little less deep and the recovery a little faster than data used in last year’s forecast,” PJM’s John Reynolds told the committee.

The projected 2014 summer peak is 157,399 MW, an increase of 2,214 MW from this summer’s weather normalized peak of 155,185 MW.

The RTO summer peak is projected at 173,852 MW for 2024 (an annualized increase of 1%) and 180,137 MW in 2029 (0.9% per year).

Compared to the 2013 load report, the new forecast reduces the anticipated summer peak for the next delivery year (2014) by 1,318 MW (-0.8%); the next RPM auction year (2017) by 2,777 MW (-1.7%) and the next RTEP study year (2019) by 3,457 MW (-2.0%).

Individual zones are expected to see average annual load growth of between 0.4% (RECO) and 1.8% (DOM) over the next 10 years. Several zonal forecasts were adjusted to account for large, unanticipated load changes:

AEP: The closure of the Ormet Corp. aluminum smelter in Hannibal, Ohio — the largest single load in PJM — reduced the summer peak by 370 MW in all years;
APS: 80-120 MW were added to the summer peak to reflect expansion of hydraulic fracturing facilities;
BGE: An “undisclosed project” currently under construction adds 120-315 MW to the summer peak;
DOM: Data center construction adds 288-896 MW to the summer peak.

Assumptions for future load management also have decreased from the 2013 report, to 12,400 MW from 14,600 MW. Projected energy efficiency was reduced to 900 MW from 1,100 MW.

Winter peaks are expected to grow by 0.9% annually over the next decade (to 144,496 MW) and 0.8% over the next 15 years (148,423 MW). Individual zones are projected to grow by 0.3% (ATSI) to 1.7% (DOM) annually for the decade.

Reynolds and Paul McGlynn, PJM general manager of system planning, asked transmission owners for feedback on the projections in their zones. “PJM does not have a deep understanding of what’s going on in Richmond and Allentown and Columbus,” Reynolds said.

Economist James Wilson, consultant to the public advocates of New Jersey, Pennsylvania, Delaware, Maryland and the District of Columbia, questioned what he called the “exogenous adjustment” to the BGE projection.

“Does it make sense to increase the BGE zone based on new load given the chronic over forecast in that zone?” he asked. Despite PJM predictions of increasing load, Wilson added, “The peak in BGE has gone sideways since 2005.”

Wilson also questioned PJM’s authority to make changes based on anticipated load additions. Manual 17, he noted, refers to adjustments for “load that’s already been experienced.”

“The plain language of the manuals does not authorize this sort of adjustment,” Wilson said. The change, he added, “has the potential to contribute to an RPM price spike.”

“We have not interpreted the manual that way recently,” Reynolds responded. “PJM and members wanted this.”

“Maybe we need to do a manual cleanup” to address the discrepancy, he acknowledged.

PJM Planning Committee (PC)Transmission Planning