TEP-UNS Electric Load and Peak

Demand Forecast Overview

Jon M. BowmanSenior Supply-Side Planner

TEP and UES Resource Planning Workshop 1

Objectives

2

•Provide an overview of the load and peak

demand forecasts for TEP and UNS Electric

(Prior to additional DSM/EE adjustments)

•Discuss the key inputs, data sources, and

tools used in the forecasting process

•Identify key areas of uncertainty that have the

potential to significantly impact future

iterations of the forecast

TEP and UNS Electric Service Territories

3

Navajo

Sundt

Moenkopi

Peacock

Kayenta

Tucson

Generating Station

Coal Mine

Interconnection With Other Utility

Substation

Solar Station

TEP

UNS Gas

UNS Gas & Electric

UNS Electric

Service Areas

High Voltage

Transmission Lines

San JuanShip Rock

Four Corners

San Juan

Mine

Navajo

McKinleyMcKinley

Mine

Coronado

Springerville

Luna

Hidalgo

Greenlee

South

Vail

Valencia

Nogales

Davis

Mead

Black Mountain

KingmanKingman

Black Mountain

GriffithGriffith

N. Havasu Lake

Havasu

CityParkerParker

Saguaro

West Wing

Liberty

Palo Verde

PhoenixPinal West

ChollaFlagstaff

Lee Ranch

Yavapai

Prescott

MEXICO

NEVADA

UTAH COLORADO

NEW MEXICO

Lake

Havasu

City

Pinnacle

Peak

Methodology

4

•A monthly load forecast is prepared for each of the major

rate classes:

•Residential

•Commercial

•Industrial

•Mining

•Other (street lighting, etc.)

•The individual rate class level forecasts are aggregated to

produce the total load forecast for each company

•A monthly peak demand forecast for each company is

prepared based on:

•Anticipated load

•Historical relationship between consumption and peak

demand

Methodology, cont.

5

•Load forecasts for the residential and commercial classes

are based primarily on statistical models with inputs

including:

•Weather (e.g. HDD, CDD, Humidity, etc.)

•Demographic forecasts (e.g. population growth)

•Historical usage patterns

•Economic indicators

•Price response (TEP December 2008 rate increase first

in 13 years)

•Load forecasts for the industrial and mining rate classes

are prepared individually for each customer based on:

•Historical usage patterns

•Inputs from the customer (e.g. planned operational

expansions)

•Inputs from account managers

Data Sources

6

Data used in the forecasting process is collected from a

variety of sources including:

•IHS Global Insight

•The University of Arizona Forecasting Project

•Arizona Department of Commerce

•U.S. Census Bureau

7

TEP Forecast Summary

8

Residential41%

Commercial21%

Industrial24%

Mining11%

Other3%

TEP 2008 Sales by Rate Class

9

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

290,000

300,000

310,000

320,000

330,000

340,000

350,000

360,000

370,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Resid

en

tial

Cu

sto

mer

Gro

wth

Rate

Resid

en

tial

Cu

sto

mers

TEP Residential Customer Growth

1

0

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

28,000

29,000

30,000

31,000

32,000

33,000

34,000

35,000

36,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Co

mm

erc

ial

Cu

sto

mer

Gro

wth

Rate

Co

mm

erc

ial

Cu

sto

mers

TEP Commercial Customer Growth

11

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

GW

h S

ale

sTEP Reference Case Load Growth

Actual Load Forecast Load

AC

and

Appliance

Saturation

High

Population

GrowthIncrease in

Average

Home Size

~2.2% Average

Growth 1998 - 2008

~1.5% Average

Growth 2010 - 2020

~0.8% Average

Growth 2009 - 2010

Price

Impacts

(Rates,

PPFAC)Lower

Population

Growth

Structural

Changes

12

0

1,000

2,000

3,000

4,000

5,000

6,000

19

98

19

99

20

00

20

01

20

02

20

03

20

04

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

GW

h S

ale

sTEP Reference Case Load Growth by Segment

Actual

Projected

Residential

Industrial

Commercial

Mining

13

1,000

1,500

2,000

2,500

3,000

3,500

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

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

Pe

ak D

em

and

(M

W)

TEP Reference Case Peak Demand Growth

Actual Demand Baseline Forecast

Risks to Forecast

14

•Recession and Recovery

•Timing and strength of recovery

•Possible structural changes

•Copper price volatility (Mining)

•Impact of Technological Innovation

•Efficient lighting, appliances, etc.

•Plug in hybrids

•Volatility and Uncertainty in Demographic Assumptions

•Higher population growth than currently forecast

•Significant changes to persons/household, etc.

High levels of uncertainty in forecast assumptions

necessitate the consideration of multiple scenarios

15

High Growth

Plug in Vehicle

Reference

Case

DSM Target

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

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

Pe

ak D

em

and

(M

W)

TEP Peak Demand Scenarios

16

UNS Electric Forecast Summary

17

Residential45%

Commercial35%

Industrial/Mining20%

UNS Electric Estimated 2009 Sales Mix

18

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

20

04

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

Tota

l Sal

es

(GW

h)

UNS Electric Reference Case Load Growth

Actual Load Forecast Load

~2.3% Average Growth 2010 - 2020

High

Population

Growth

Mining

Expansion

Obscures

Res/Com

Slowdown

Lower

Population

Growth

19

0

200

400

600

800

1,000

1,200

20

04

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

GW

h S

ale

sUNS Electric Reference Case Load Growth by Segment

Actual

Projected

Residential

Industrial/Mining

Commercial

20

300

350

400

450

500

550

600

650

20

04

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

Pe

ak D

em

and

(M

W)

UNSE Reference Case Peak Demand Growth

Actual Demand Baseline Forecast

TEP and UES Resource Planning Workshop 1