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Forecast shows recession lowering electric usage

Wednesday, April 22, 2009 by Bill McCann

Austin Energy is seeing the effects of the national recession in its latest forecast of electric power use in Austin and on Austin Energy’s projected future revenues.


The 2009 forecast, issued Tuesday, shows peak power demand by Austin Energy customers dropping 65 megawatts below last year’s forecast for 2009, and 277 gigawatt-hours below previously forecasted energy sales. (A gigawatt is a billion watts.)The lower projections are due mainly to current and expected cutbacks in the industrial sector, especially the semiconductor industry.


The lower projections would translate into $159.7 million less revenue than anticipated for the utility from fiscal years 2010 through 2014, according to the forecast. The lower revenues would be offset in part by a reduction in the cost of fuel needed to generate the power. 


The 2009 forecast covers a 12-year period to 2020, and assumes that the impact of the recession would affect peak demand, power sales and revenues throughout the period. While peak demand, energy sales and revenues would continue to increase during the 12 years, the increases would be less than previously projected.


Despite the downturn, Austin Energy’s General Manager Roger Duncan said there will be no immediate impact on the utility or its services. Duncan presented the latest forecast at a meeting of the Resource Management Commission Tuesday. The City Council is scheduled to get a briefing on April 30.


“At this point, there is nothing to worry about here,” Duncan told In Fact Daily. “We do not expect any impact on this year’s budget and no rate increase in next year’s budget. Also, we do not expect any changes in services this year or next.”


Duncan emphasized that the forecast, especially the later years, represents a “rough estimate of what to expect based on what we know now,” and could change significantly in the future.


“If the economy roars back, we could make up that load and revenue pretty quickly,” he said.


The forecast projects an average rate increase of about 2 percent per year during the period. On the positive side, significant reductions in demands for power would give Austin Energy “some breathing room” in building new generating facilities or purchasing electricity from new biomass or wind power plants, according to Duncan.  


The 2009 forecast shows peak power demand by Austin Energy customers dropping 113 megawatts below the 2008 forecast in 2014 and 135 megawatts below in 2020. Peak demand is important because the utility has to have enough generating facilities available to produce power at the times of highest customer demand, typically on a hot summer afternoon when air conditioners are humming.


Similarly, the 2009 forecast shows overall energy demand dropping 947 gigawatt-hours below the 2008 forecast in 2014 and 1,193 gigawatt-hours below in 2020.


If the demand for electricity grows more slowly than expected, the utility could delay acquiring or purchasing new generation.  For example, the utility could delay construction of planned natural gas-fired plants, reduce its purchase of biomass energy by 50 megawatts and reduce its acquisition of wind energy by 25 megawatts, according to the forecast.

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