851 S.W. Sixth Avenue, Suite 1100 Steve Crow 503-222-5161 Portland, Oregon 97204-1348 Executive Director 800-452-5161 www.nwcouncil.org Fax: 503-820-2370

Bill Bradbury Chair

Oregon

Jennifer Anders Vice Chair Montana

Henry Lorenzen Oregon

W. Bill Booth

Idaho

James A. Yost Idaho

Pat Smith Montana

Tom Karier Washington

Phil Rockefeller

Washington

July 2, 2013 MEMORANDUM TO: Power Committee FROM: Massoud Jourabchi SUBJECT: Demographic and Economic Drivers for Seventh Power Plan

Demand for goods and services drives the demand for energy. Demand for energy is also determined by consumers’ choices on energy efficiency of the homes and appliances they choose and how these appliances are used. This presentation discusses the key demographic and economic drivers for the Seventh Plan such as size and mix of regional population, number of new homes, new square footage additions for commercial buildings, and output of industrial sectors, among other drivers. To develop the range of demographic and economic forecast, Council staff consulted with the Demand Forecast Advisory Committee (DFAC). Thirty two members of this advisory group consist of Public, Co-op, Investor Owned Utility forecasters, public interest groups, and State economists as well as general public. During a day-long session on May 23, 2013 Council staff took the DFAC members through all key demographic and economic drivers. The initial assumptions for the forecast were subsequently refined using insight from the committee and state forecasts. The key driver that ultimately drives economic activities and their energy requirement is population growth. Consistent with the growth rate projections at the national level, the population growth in the Seventh Plan’s forecasting horizon is expected to slow-down to about nine-tenth of percent, compared to 1.5% growth experienced since 1985. This slow-down in turn is reflected is slower growth rate in residential household formation, requirement for new commercial floor space requirement and to lesser degree growth in industrial output that has been on a partial rebound. Staff, in consultation with the DFAC, has developed three scenarios to establish a range of demographic and economic drivers. The medium or Base Case, and two alternative scenarios Pessimistic scenario is reflective of a future with slow economic growth, weak demand for fossil fuels, declining fuel prices; slow down in labor productivity. Optimistic scenario on the other hand, assumes faster economic growth, stronger demand, higher prices for fuels, and sustained growth in labor productivity.

7/2/2013

1

Demographic and Economic Drivers forthe Seventh Power Plan

J l 9 2013July 9, 2013

In This Meeting

Discussion of Drivers

Population growing – Population- growing – Residential sector- recovering– Commercial square footage- increasing

slowly– Industrial output (slow recovery)p ( y)– Electric Vehicles (slow and steady)– Next Steps

2

7/2/2013

2

Demand Forecast OverviewToday’s Presentations relate to Box 1 and 2

6 ) Forecast Demand for New Capital(by fuel)

7) Forecast New EnergyRequirements(by fuel)

Start with 1 ) Economic Forecast• New Homes• SQF of com. buildings• Industrial output

Mil t l d

12)  ForecastPeak hour load ,Monthly Energy by enduse and state

2 ) Obtain Retail Fuel 

Prices  History and Forecast

8 ) Forecast Energy Requirements netOf retirements

(by fuel)

10) Produce “Price Effect “ Demand Forecast

4) Determine Consumer Choice on 

ffi i

• Miles traveled

3) ChooseEfficiency/Fuel 

5) Compare consumer choice  to 

Codes and Standards

11)  Then use Hourly System Load to estimate contribution to system peak by each sector and enduse

slide 3

9) Bring in other variablesfrom calibration To 1985‐2011 Annual Demand ,MarketShare, market efficiencyMonthly System Peak, Average & Min Loads.

Historic Cooling andHeating degree days 

Forecast (by fuel, enduse , state)

Energy EfficiencyTrade off  point

Calculate total Energy Cost

Input O&MCosts

Input CapitalCosts

Monthly system load and Sales

Major Drivers of Long-term Load Forecast

– Demographic and Economic Factors

E P i– Energy Prices

– Customers choice of fuel

– Customers choice of efficiency

– Trends in socio-economic factors

– Trends in change in temperatureg p

4

7/2/2013

3

Box1- Economic Drivers

Economic and Demographic factorsGrowth in Population – Growth in Population

– Changes in population mix– Stock and Additions to residential units– Stock and additions to Commercial square

footage requirements– Changes in industrial output and mix g p– Change in Agricultural output– Transportation (income, VMT)

5

Source of Information for Economic Drivers

– IHS_Global Insight– In-house analysis– State economic forecasts– Demand Forecast Advisory Committee

Vintage of data: Q1 2013 and Q4 2012

6

7/2/2013

4

Regional Population

8000

9000Regional Population

1985-2015 2015-2035ID 1.7% 1.3%

2000

3000

4000

5000

6000

7000

8000MT 0.8% 0.5%WA 1.6% 0.9%OR 1.4% 0.9%

4 States 1.5% 0.9%USA 1.03% 0.9%

Average Annual Addition to Population (1000) 1985-2015 2015-2035

ID 21 33MT 7 7

0

1000

1990 2000 2010 2020 2030 2035

ID MT OR WA

7

Overall regional population growth projected to slow down.

Northwest population remains about 4% of national population.

WA 89 86OR 44 50

4 States 132 136

What is the impact of declining working age adults?

90%

100%

30%

40%

50%

60%

70%

80%

65-older20-640-19

8

0%

10%

20%

1990 2000 2010 2020 2030 2035

7/2/2013

5

Regional Growth in Residential Building Stock

6,000 

Residential Building Stock

‐

1,000 

2,000 

3,000 

4,000 

5,000 

1000s of units

Single Family

Multi Family

Other Family

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

9

1985-2011 2012-2035Single Family 1.6% 1.1%Multi Family 2.4% 2.3%Manufactured Homes 2.3% 0.3%

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Numbe

r of U

nits

New single Family Additions

ID_Single Family

MT_Single Family

OR_Single Family

WA_Single Family

1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

0

5000

10000

15000

20000

25000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Numbe

r of U

nits

New Multi‐Family Residential Additions

ID_Multi Family

MT_Multi Family

OR_Multi Family

WA_Multi Family

0

1000

2000

3000

4000

5000

6000

7000

8000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Numbe

r of U

nits

Number of New Manufactured Homes

ID_Other Family

MT_Other Family

OR_Other Family

WA_Other Family

10

7/2/2013

6

100

120

140

160

National Composition of  Housing Stock(Millions)

0

20

40

60

80

Manufactured homes Single‐family  Multi‐family

11

Annual Growth Rate All Housing Manufactured homes Single-family Multi-family

1985-2015 0.94% 0.42% 1.19% 0.39%

2015-2035 0.88% -0.34% 0.91% 1.03%

Commercial Sector Drivers

5,000

5,500

6,000

6,500

7,000

7,500

8,000

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Regional Employment (thousands)

Annual Growth Rate2005-2011 2011-2020 2020-2035

Floor Space Stock Req. 0.4% 1.0% 0.5%

-

10

20

30

40

50

60

70

200

5

200

6

200

7

200

8

200

9

201

0

20

11

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

202

9

203

0

203

1

203

2

203

3

203

4

203

5

2012-2035 New Floor Space Requirement in the 4 States (1000 SQF)

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

Stock Req. 0.4% 1.0% 0.5%New SQF Req. -2.7% 3.9% 0.5%Employment 0.8% 1.4% 0.6%

CumulativeAnnual Average

1985-2011Addition 1,406 52

2015-2035Requirement 951 40

Floor space Additions (M SQF)

25002600270028002900300031003200330034003500

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

2012-2035 Stock of Floor Space Requirement in the 4 States (1000 SQF)

12

Growth in non‐farm employment is projected to slowdown after initial recovery from recession.

Requirement 951 40

7/2/2013

7

Commercial Sector Slowing Down

3000

4000

Non‐manufacturing Employment (1000s)

0

1000

2000

3000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

ID MT OR WA

13

Employment (Non-Manufacturing) 1990-2015 2015-2035

ID 2.36% 1.04%

MT 1.86% 0.91%

OR 1.55% 1.03%

WA 1.70% 0.81%

4 States 1.74% 0.91%

Our current forecast suggest

90 100

Floor Space Additions 1985-2011and Forecast of Floor space Requirements 2012-2035(MSF)

-10 20 30 40 50 60 70 80

985

988

991

994

997

000

003

006

009

012

015

018

021

024

027

030

033

19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20

14

Floor Space Additions (Millions of S.Q.F)Cumulative Annual Average

1985-2011 1,406 52

2015-2035 951 40

7/2/2013

8

Slow down in rate of growth for commercial sector space requirements

Oregon Washington Idaho Montana Region

Business/Building type 1985-20112012-2035

1985-2011

2012-2035 1985-2011 2012-2035

1985-2011 2012-2035 1985-2011 2012-2035

Large Office 1.7% 1.5% 1.2% 1.5% 4.6% 1.9% 0.5% 2.5% 1.4% 1.6%

Medium Office 3.9% 1.5% 3.4% 1.5% 7.0% 1.9% 2.6% 2.5% 3.6% 1.6%

Small Office 2.2% 1.5% 1.6% 1.5% 5.1% 1.9% 0.9% 2.5% 1.8% 1.6%

Big Box-Retail 7.4% 1.1% 7.4% 0.6% 10.8% 0.9% 7.2% 0.7% 7.5% 0.8%

Small Box-Retail 1.0% 1.1% 1.3% 0.6% 3.7% 0.9% 1.0% 0.7% 1.3% 0.8%

High End-Retail 1.0% 1.1% 1.0% 0.6% 3.7% 0.9% 1.0% 0.7% 1.1% 0.8%

Anchor-Retail 0.5% 1.1% 0.5% 0.6% 3.5% 0.9% 0.4% 0.7% 0.6% 0.8%

K-12 3.0% 0.7% 1.6% 0.8% 2.5% 1.4% 1.1% 0.8% 1.8% 0.8%

University 3.3% 1.1% 1.5% 0.8% 2.8% 0.6% 1.5% 1.0% 1.9% 0.9%

Warehouse 2.2% 1.7% 3.8% 0.9% 3.6% 2.1% 1.3% 1.7% 2.9% 1.4%

Supermarket 0.7% 0.6% 1.0% 0.5% 3.1% 0.3% 1.2% 0.4% 1.2% 0.5%

15

Q:\MJ\Demand Forecasting Model\Economic Forecasts\Economic drivers for the model‐March 2013 7th plan update to load forecast.xlsx

p

Mini Mart 5.9% 1.8% 5.5% 0.9% 8.2% 0.7% 6.1% 0.6% 5.9% 1.0%

Restaurant 1.5% 1.1% 1.7% 1.1% 3.5% 1.4% 1.2% 0.9% 1.7% 1.1%

Lodging 1.6% 1.1% 1.9% 0.6% 2.2% 0.6% 0.9% 1.0% 1.6% 0.8%

Hospital 2.9% 1.1% 2.0% 1.9% 3.2% 2.1% 1.9% 1.3% 2.4% 1.7%

Other Health 3.3% 2.0% 2.0% 1.6% 2.2% 1.6% 2.8% 2.1% 2.4% 1.7%

Assembly 3.2% 1.0% 2.0% 1.1% 3.2% 2.5% 1.8% 1.2% 2.3% 1.3%

Other 3.1% 1.6% 1.8% 0.5% 3.2% 1.2% 1.4% 1.3% 2.1% 0.9%

Manufacturing Employment recovers but does not regain 1990s high level

Manufacturing Employment

100

150

200

250

300

350

400

1000s

0

50

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

ID MT OR WA

16

7/2/2013

9

Industrial Sector Output Recovering

60

70

Industrial Output (Billions of $2005)

0

10

20

30

40

50

601985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Billions of 2005$

Idaho Montana Oregon Washingtong g

17

Industrial 1985-2011 2015-2035Idaho 0.5% 1.2%

Montana 1.0% 1.7%Oregon -0.2% 1.0%

Washington 0.6% 1.8%Region 0.4% 1.6%

Growth in Industrial OutputOregon Washington Idaho Montana Region

Business/Building type 1985-2011

2012-2035

1985-2011

2012-2035 1985-2011

2012-2035

1985-2011 2012-2035 1985-2011 2012-2035

Food & Tobacco 2.0% 3.0% 2.0% 2.5% 2.1% 2.6% 2.8% 2.5% 2.0% 2.7%

Textiles -3 0% 0 6% 7 3% 0 4% 9 4% 4 9% NA 1 7% 4 5% 0 9%Textiles -3.0% 0.6% 7.3% 0.4% 9.4% 4.9% NA 1.7% 4.5% 0.9%

Apparel -2.1% -2.7% -4.3% -0.9% -3.7% 2.7% -5.8% 1.7% -3.7% -1.0%

Lumber -3.9% -3.0% -3.4% -0.2% -2.8% -1.6% -3.7% 1.0% -3.6% -1.5%

Furniture 4.1% 2.5% 3.4% 2.8% 5.8% 5.6% 3.4% 2.0% 3.9% 3.1%

Paper -1.2% 2.5% 0.4% 2.6% 2.1% 1.7% -9.4% NA -0.2% 2.5%

Printing -2.8% 1.6% -4.8% -0.6% -5.0% 2.1% -5.9% -0.3% -4.1% 0.8%

Chemicals 10.1% 4.7% 5.3% 5.6% NA 3.7% -1.9% 3.6% 5.5% 5.1%

Petroleum Products -6.0% 1.2% 2.6% 2.2% -14.8% 4.8% 12.4% 1.5% 2.2% 2.0%

Rubber 4.3% 3.2% 4.6% 3.5% -1.7% 4.2% 5.5% 4.0% 3.3% 3.5%

Leather 2.5% -1.8% -1.3% -3.6% -0.5% 1.6% 1.5% 1.0% 1.1% -1.3%

Stone Clay etc 3 6% 3 1% 2 6% 4 0% 0 3% 4 1% -1 2% 1 9% 2 5% 3 6%

18

Stone, Clay, etc. 3.6% 3.1% 2.6% 4.0% 0.3% 4.1% -1.2% 1.9% 2.5% 3.6%

Aluminum -2.2% -3.5% -3.2% -4.1% NA NA -8.5% NA -3.3% -3.9%

Other Primary Metals 1.3% 1.4% 3.2% -4.0% 10.6% -4.2% 1.8% 1.5% 2.1% -0.4%

Fabricated Metals 2.6% 1.0% 3.4% -2.4% 3.9% -2.9% 5.5% 5.7% 3.1% -0.3%

Machines & Computer 0.3% 1.1% -0.2% -0.5% -1.0% -2.9% -0.6% 1.0% -0.2% 0.3%

Electric Equipment -3.1% 1.0% -3.7% 0.8% 3.1% -0.2% 3.3% 5.5% -3.2% 0.9%

Transport Equipment 2.7% -0.1% 0.3% 1.0% 8.7% -15.6% 4.3% NA 0.5% 0.9%

Other Manufacturing 4.6% 3.9% 4.5% 3.4% 9.0% 4.5% 6.7% 5.4% 4.9% 3.8%

7/2/2013

10

New Auto Sales Rising

700

New Passenger Car & Light Truck Registrations (Thous.) 

300

400

500

600

Washington

Orergon

Montana

d h

19

0

100

200

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Idaho

Fuel Efficiency increasing

45 

Fuel Efficiecny of Passanger Vehicles Miles/Gallon

10 

15 

20 

25 

30 

35 

40 

20

1975 1980 1990 2000 2010 2015 2020 2025 2030 2035

Stock 12  14  19  20  20  21  23  26  29  31 

New 13  20  21  20  22  26  31  35  38  39 

‐

5 

7/2/2013

11

Electric Vehicles increasingIdaho, 15 Montana, 

42Oregon, 1447

As of Jan 2013, there were about 4700 

i t d l t i

Washington, 3225

Idaho Montana Oregon Washington

registered electric vehicles registered with DMV.

Majority of these vehicles are in Oregon and Washington.

21

Idaho Montana Oregon Washington

2012 2011 GrowthTOTAL U.S. CAR 7,473,850 6,339,884 18%Chevy Volt 23,461 7,671 206%

Nissan Leaf 9,819 9,674 1%

EV Project Experience

By the end of 2012– Nearly 60 million miles recorded

– Over 14,100 MWH

– 7379 Nissan Leafs, Chevy Volts & smart ForTwovehicles

– Over 1.9 million gallons of gasoline avoided.

– 6694 Residential 2583 Public 56 fast Chargers 6694 Residential, 2583 Public, 56 fast Chargers installed.

– Daily Travel (Leaf ~30 miles, Volt ~40 miles)

22

7/2/2013

12

Although number of Charging Stations on the rise, so far

Majority of charging events and energy, (86%‐92%) occurs at home.EV increase resident’s electricity consumption by about 22%consumption by about 22%

MWH/Household

Oregon Washington

Average Consumption

12 13

EV consumption 2.9 2.8

23

EV project participants as of end of 2012 Oregon Washington

Number of Nissan Leafs  549  893

Number of Chevy Volts 94 98

Distance Driven (Million Miles) 5.5 8.5

Electricity Consumed (AC GWH) 1.4 2.1

Our current Assumption on market penetration for Electric Vehicles.

40.00%

45.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Per

cen

t o

f N

ew

car

s

0.00%

5.00%

10.00%

Case 1 Case 2 Case 3

24

7/2/2013

13

2,500

PHEV Vehicles on the Road (1000s)

1,000

1,500

2,000

`

-

500

Case 1Case 2Case 3

25

1.20%

1.40%

1.60%

1.80%

2.00%

Comparison of 6th and 7th Plans Expected Growth Rates by Sector 

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

Residential Commercial Industrial

6th Plan 2010‐2030 7th Plan 2015‐2035

26

6th Plan 7th Plan Draft

2010-2030 2015-2035

Residential 1.37% 1.18%

Commercial 1.25% 1.11%

Industrial 1.74% 1.56%

7/2/2013

14

Range of Economic Drivers for Scenarios

2015 2035 A l G h R f O i i i P i i i2015-2035 Annual Growth rate Reference Optimistic Pessimistic

Residential Units 1.18% 2.0% 0.08%

Commercial Floor space 1.11% 2.1% 0.67%

Industrial output 1.56% 2.4% 0.95%

Agricultural output 0.81% 2.0% 0.26%

ReferenceOptimistic Pessimistic

Residential Units Stock by 2035 (1000 of units) 7 629 11 446 4 851

27

Residential Units Stock by 2035 (1000 of units) 7,629 11,446 4,851 Commercial Floor space stock by 2035 (millions SQF) 3,944 4,842 3,562

Industrial output by 2035(billions $2005) 72 89 63

Agricultural output (billions $2005) 10.9 14.0 9.5

Tentative Timeline of the 7th Plan

Draft Economic forecast …June 2013– Incorporate RBSA data Incorporate RBSA data

Draft Load Forecast … …..November 2013 (Tentative)

Final Economic Forecast…June 2014 (Tentative) Incorporate CBSA and Industrial data

Final Load Forecast……….Q3 2014 (Tentative)

Draft 7th Plan... Q1 2015 (Tentative)

Final 7th Plan... Q3 2015 (Tentative)

28

7/2/2013

15

Questions

Average Annual Addition to New Residential Units1985-2001 2002-2007 2008-2011 2012-2035

ID-SNGL 7,132 13,786 4,327 9,923

MT-SNGL 1,706 3,471 2,643 2,695

OR-SNGL 13,674 17,489 13,831 14,649

WA-SNGL 26,952 31,643 24,098 24,140

ID-MULT 1,232 1,539 1,906 2,073

MT-MULT 598 844 1,499 1,606

OR-MULT 6,155 4,503 6,658 6,896

30

WA-MULT 13,435 9,557 13,125 14,206

ID-Manf. Housing 1,818 811 269 269

MT-Manf. Housing 1,161 713 364 365

OR-Manf. Housing 4,983 2,199 662 674

WA-Manf. Housing 5,609 2,567 784 800