ML19221A818
| ML19221A818 | |
| Person / Time | |
|---|---|
| Issue date: | 02/28/1979 |
| From: | Office of Nuclear Reactor Regulation |
| To: | |
| References | |
| NUREG-0555, NUREG-0555-08.2.2, NUREG-555, NUREG-555-8.2.2, SRP-08.02.02, SRP-8.02.02, NUDOCS 7907090185 | |
| Download: ML19221A818 (12) | |
Text
Section 8.2.2 February 1979 PRELIMINARY
- ENVIRONMENTAL STANDARD REVIEW PLAN FOR ES SECTION 8.2.2 FACTORS AFFECTING GROWTH OF DEMAND 8.2.2.1 ECONOMIC AND DEMOGRAPHIC TRENDS 8.2.2.2 CONSERVATION AND SUBSTITUTION 8.2.2.3 PRICE AND RATE STRUCTURE RE'/IEW INPUTS Environmental Report Sections 1.1 System Demand and Reliability Environmental Reviews 8.1 Description of the Power System 8.2.1 Power and Energy Requirements Standards and Guides Energy Policy and Conservation Act Energy Conservation and Production Act Other Consultation with local, State, and Federal agencies Responses to requests for additional information Public Utility Commission rate schedules for natural gas Applicant's rate book REVIEW OUTPUTS Environmental Statement Sections 8.2.2 Factors Af fecting Growth of Demand 8.2.2.1 Economic and Demographic Trends 8,2.2.2 Conservation and Substitution 8.2.2.3 Price and Rate Structure Other Environmental Reviews 8.2.1 Power and Energy Requirements 8.4 Staff Assessraent of Need Alternatives Not Requiring New Generating Capacith h 9 Q 9.1.1 This ESRP will be revised at a future date.
7 9070 90tss~ 8.2.2-1
February 1979 I. PURPOSE AND SCOPE The purpose of this environmental standard review plan (ESRP) is to direct the staf f's identification, analysis, and evaluation of those important factors contributing to the rate of growth cf electricity demand in the appli-cant's service area. This review will provide input to reviews dealing with the assessment of the applicant's forecast (ES Section 8.2.1), baseload capac-ity planning, and a final assessment of the need for the plant (ES Section 8.4). The scope of the review directed by this plan will include economic and demographic trends, conservation, substitution, and price and rate structure as these factors may af fect the rate of growth of electricity demand. II. REQUIRED DATA AND INFORMATION The following data or information will usually be required: A. Historical and estimated growth for the service area (or close geographic approximation) of the following variables: population, number of households, per capita income, consumer price index, manufacturing output, gross regional product, saturation by major appliance, trends in size of household, and prices of alternative fuels. Data will cover the 15 years prior to the date of application through the third year of commercial operation of all proposed units. B. Historical temperature-adjusted peakload data since 1973. C. For the 5 years preceding date of application, the percentage of residences in the applicant's service area relying on oil and the pert entage relying on gas for. space conditioning, water heating, and operating major appliances. Similarly, for industries in the service area, the percentages of total energy requirements being met by oil and gas over this same time period. D. From date of application to 3 years after initial commercial operation of the first proposed unit, the generally known availability of oil and gas to () Q 8.2.2-2
February 1979 ultimate customers in the service area (e.g., gas curtailments, status of gas hookups to new customers). E. For the 15 years prior to the date of application through the third year of commercial operation of all proposed units, the historic and projected growth for the service area of the real price of electricity by major customer class. F. The current and projected (at time of first-unit startup) rate structures for major customer classes. G. Applicant's efforts to conserve and promote customer conservation of electrical energy. III. ANALYSIS PROCEDURE A. Economic and Demographic Trends The reviewer will analyze the applicant's estimates of the ef fects of economic and demographic trends on the applicant's projected growth of electricity demand in the service area. The reviewer will also obtain or prepare independent forecasts for the economic and demographic variables identified by the applicant as affecting the rate of growth of electricity demand within the service area. The reviewer may consider additional variables when it appears that they could af fect electricity demand growth. Forecasts prepared for service areas other than the applicant's may be used when in the reviewer's judgment they are sufficiently similar to provide a meaningful comparison. For each variable used by the applicant, the reviewer will (1) compare the applicant's projected growth rates with growth rates developed or obtained by the reviewer, (2) identify aifferences, and (3) analyze significant differen-tials as they contribute either positive or negative effects to the applicant's forecasted growth rate of electricity demand. The reviewer will compare the historic growth of the above variables with the forecasted growth rates and 8.2.2-3 109 UU.
February 1979 identify differences as positive or negative influences on projected electricity demand growth. B. Conservation and Substitution
- The reviewer will estimate the importance of conservation and substitu-tion i r, the service area by preparing an estimate of the effect of these factors on projected kWh sales and peak demand in the service area for the proposed initial year of plant operation (first unit).
This estimate will be contrasted with that of the applicant and any significant dif ferences between the two estimates will be noted. The reviewer will also contrast the annual compound growth rate in kWh sales and peakload for the periods 1964-to-1973 and 1973-to present year and will compute the percentage increase or decrease between these two periods. The reviewer will identify those elements that could have contributed to diminished growth. This should include at a minimum: conservation, higher prices of electricity, economic recession, and milder than usual weather. The reviewer will estimate the relative ef fects of conservation, price, recession, and weather on diminished growth using the following analysis: 1. Compare the real rate of increase in the average price of a kWh of electricity in the service area since 1973 and contrast with the real rate of increase nationally. 2. Compute the real rate of increase in the gross regional product for the service area (or geographic approximation) since 1973 with the real rate of increase in gross national product. Review peakload growth since 1973 (adjusted for temperature) s. and discuss positive or negative ef fect on observed growth rate. A For this ESRP, substitution is defined as the substitution of electricity for other fuels. O 109 n/7 uo-8.2.2-4
February 1979 The reviewer will consider the effect of substitution on growth usi g the following analysis: 1. Revira ?.he importance of oil and gas in the service area relative to their availability. Consider any curtailments or denials to new customers (residential, industrial, and commercial) if they exist. Determine the service area dependence on fossil fuels and the demand-to-available-supply ratio. 2. Identify trends in new homes (all-electric versus other), purchases of new appliances (electric versus other), and shifts in industrial energy requirements. Determine if electricity is capturing or losing an increasing share of the new and replacement market. The reviewer will determine the extent to which the future substitu-tion of electrical energy for fuels in short supply (oil and natural gas) may tend to increase the demand for electric power and thus of fset the impacts of conservation measures. The reviewer will consider any estimates developed by the applicant with respect to the impact of substitution on realized growth rate and will determine any adjustments to growth forecasts that may have been made to reflect this. On a basis specific to the service area, the reviewer will consider the following factors as they contribute to electricity demand growth: 1. The extent to which technological breakthroughs, government legislation and subsidies, and large conservation investments may provide greater conservation savings than have been experienced in the past. 2. The extent to which energy sources (e.g., synthetic natural gas) or energy conversion systems (e.g., solar space heating) currently under development may reasonably be expected to compete with the use of electricity. The reviewer will consult with the reviewer of ES Section 9.1, Alternative Energy Sources and Systems, to complete this portion of the review. 109 063 8.2.2-5
February 1979 3. The possibility that long-term savings may not be particularly significant. 4. The possibility that energy conservation would result in increased use of electric power. 5. The possibility of " double counting" energy savings (e.g., conservation is an economic response). C. Price and Rate Structure The reviewer will determine how and to what extent the applicant has considered price response in demand forecasts. Where t; e applicant has devel-oped and/or used an econometric model, the reviewer will identify the applicant's price elasticities and forecasted growth rates for the price of electricity. In addition, the reviewer may obtain independent forecasts of growth in the real price of electricity. These forecasts will be compared with the treatment of price in the applicant's analysis. The reviewer will consider a l te rr.a ti ve rate structures that would moderate load growth or reshape load curves. The rate structures to be con-sidered include peakload pricing, inverted rates, and flattened rates. The reviewer will analyze the applicant's present attempts and future plans to improve the system load factor via rate restructuring (e.g., higher tail rate during peak periods and demand charges that are based on maximum demand) and will estimate anticipated ef fects on annual electricity consumption and peak-load demand. IV. EVALUATION The reviewer will de te rr,1i ne to what extent economic and demographic trends, conservation and substitution, and price and rate structure are likely to affect the rate of growth of electrical demand. This will include the following: 8.2.2-6 o'f g@ Gu i to
February 1979 A. The effect of economic and demographic variables on the expected growth of electricity demand. B. The effect of conservation and substitution on projected kWh sales and peak demand. C. The effect of the growth in the real price of electricity on the expected growth of electricity de.aand. D. The capability of present and proposed rate structures to promote load management. fhe reviewer will ensure that the data and analyses submitted by the applicant are accurate and in suf ficient detail to allow one to conclude that the forecast submitted by the applicant properly reflects the f actors listed above in items A through D. If the reviewer concludes that the applicant has taken reasonable account of these factors in its forecast the reviewer can endorse the applicant's forecast. If the reviewer determines by analysis that adequate consideration has not been given to the factors listed in items A through D, he is directed to the environmental review for ES Section 8.2.1. Here the reviewer will develop an independent range of electricity demand growth to determine if the differences in the treatment of these factors af fect the reasonableness of the applicant's ultimate growth rate. V. INPUT TO THE ENVIRONMENTAL STATEMENT Normally, ES Section 8.2.2 will be divided into three subsections consisting of a discussion of the applicant's treatment of economic and demographic trends, conservation and substitution, and price and rate structure. The following informatien will be included: A. Section 8.2.2.1, Economic and Demographic Trends. This section will include a comparison of the applicant's estimates of the effect of economic 8.2.2-7 109 065
Februa v 1979 and demographic trends on electricity demand growth with independent analyses of those effects. Any significant dif ferences will be noted, and the reviewer will indicate what appears to be the most appropriate estimate. B. Section 8.2.2.2, Conservation and Substitution. The reviewer will provide a qualitative assessment as to the ef fectiveness of conservation in the last several years given the relative severity of price increases, recession, and weather. Successful ef forts undertaken by the applicant to promote conserva-tion on the part of its customers and with respect to its own internal use of power will be included. The reviewer will discuss the extent to which the substitution of electrical energy for short-supply fossil fuels may increase demands for electrical power and will describe how this potential demand may af fect the impacts of conservation measures. The reviewer will present on a basis specific to the service area any other significant factors that could affect the growth of electricity demand in the service area. C. Section 8.2.2.3, Price and Rate Structure. The reviewer will describe the applicant's present and proposed price and rate structure and will discuss how price and rate structure may affect the growth of electricity demand. The reviewer will provide inputs or ensure that inputs will be made to the following ES sections: A. Section 8.2.1. The reviewer will provide data on the applicant's power and energy requirements to support the forecast analysis in ES Sec-tion 8.2.1. B. Section 8.4. The reviewer will provide information pertaining to baseload-capacity planning to support the evaluation of the reed for the plant in ES Section 8.4. O \\ 8.2.2-8
February 1979 C. Section 9.1.i. The reviewer will provide information pertaining to those factors affecting growth of electricity demand that could affect the choice of alternative energy sources and systems. VI. REFERENCES 1. Water Resources Council, 1972 OBERS Projections, Volumes I through VII, U. S. Government Printing Of fice, Washington, D.C., April 1974. 2. Department of Commerce, Bureau of the Census, County Business Patterns, U. S. Government Printing Of fice, Washington, D.C. (most current issue). 3. Department of Commerce, Bureau of the Census, Census of Population, Government Printing Office, Washington, D.C., (most current issue). 4. Department of Commerce, Cenrus of Manufacturers, U. S. Government Printing Office, Washington, D.C., (most current issue). 5. Department of Commerce, Census of Business, U. S. Government Printing Of fice, Washington, D.C., (most current issue). 6. Federal Energy Administration, 1976 National Energy Outlook, U. S. Govern-ment Printing Of fice, Washington, D.C., February 1976. 7. Federal Energy Administration, The Ef fects of Price on Energy Conservation, U. S. Government Printing Office, Washington, D.C., August 18, 1975. 8. Federal Power Commission, "FPC Staff Report Summarizes 13-Month Utility Energy Savings," No. 21622, August 7, 1975. 9. G. S. Gill and R. D. Ellison, Interfuel Substitution: The Case of Electricity and Natural Gas, presented at the Western Association's Annual Meetings in San Diego, CA, June 1975, Oak Ridge National Laboratory. 109 06.7 8.2.2-9
February 1979 10. M. L. Baughman and P. L. Joskow, Interfuel Substitution in the Consumption of Energy in the United States - Part I: Residential and Commercial Sector, Massachusetts Institute of Technology, May 25, 1974. 11. U. S. Congress, Conservation and Efficient Use of Energy, Report of the Committee on Science and Astronautics, U. S. House of Representatives, 93rd Congress, Second Session, December 18, 1974. 12. National Science Foundation, Energy Conservation Research, Proceedings of the NSF/RANN Conference on Energy Conservation Research, Airlie House, VA, February 18-20, 1974. 13. L. S. Germain, Energy Conservation, Lawrence L,vermore Laboratory, University of California, Livermore, CA, November 20, 1973. 14. L. A. Guth, National Economic Research Associates, Residential Demand for Electricity and Growth of Peak Load, July 1974. 15. K. P.
- Anderson, Residential Energy Use:
An Econometric Analysis, The Rand Corporation, Santa Monica, CA, R-1297-NSF, October 1973. 16. W. S. Chern, and B. D. Holcomb, A Regiona' Model for Electric Energy, Part I - New England, Middle Atlantic, and South Atlantic Regioas, Oak Ridge National Laboratory, Energy Division, April 1977 (Draf t). 17. V. K. Smith and C. J. Cicchetti, " Measuring the Price Elasticity of Demand for Electricity: The U. S. Experience," Energy Systems Forecasting, Planning and Pricing: Proceedings of a French-American Conferer.ce, University of Wisconsin, Madison, WI,1975. 18. E. Berlin and C. J. Cicchetti, Perspective on Power, Ballinger Publishing Co., Cambridge, MA, p. 38, 1975. A f \\"O )i v 8.2.2-10
February 1979 19. L. D.
- Chapman, G.
G. Akland, et al., Oak Ridge National Laboratory, Electricity Demand: Project Independence and the Clean Air Act, NSF-EP-89, November 1975. .'0. C. F. Phillips, The Economics o' Regulation, Richard D. Irwin, Homewood, I L, 1969. 21. J. C. Bonbright, Principles of Public Utility Rates, New York: Columbia University Press, New York, NY,1961. 22. C. J. Cicchetti and J.
- Jurewitz, ed.,
Studies in Electric Utility Regulation, Ballinger Publishing Co., Cainbridge, MA,1975. 23. J. T. Wenders, " Peak Load Pricing in the Electric Utility Industry," Bell Journal of Economics, pp. 232-241, Spring 1976. 24. J. M. Griffin, "The Ef fects of Higher Prices on Electricity Consumption," c, 1974. Bell Journal of Economics, pp. 515-539, Au+ 25. L. D. Taylor, "The Demand for Electricity: A Survey," Bell Journal of Economics, pp. 74-110, Spring 1975. 26. R. L. Cooper, Price Elasticity in Electric Demand Forecasting, Lawrence Livermore Laboratory, August 22, 1975. 27. National Association of Regulatory Utility Commissioners, 1974 Report of the General Counsel on Economics, Washington, D.C.,1974. 28. E. Hirst, et al., An Engineering-Economic Model of Residential Energy Use, Oak Ridge National Laboratory, ORNL/TM-5470, July 1976. 109 069 8.2.2-11}}