Modeling the Future
How the Power Requirements Study helps structure business goals
Every two years Hoosier Energy’s forecasting group takes a snapshot of energy trends to develop 20-year load forecasts across the power network. This business analysis is compiled into the Power Requirements Study (PRS) and it tackles three main business functions – system planning, budgeting and financial requirements. Tina Elliott and Justin Rice lead the forecasting work at Hoosier Energy and their process is research-focused and driven by data.
Information gathered provides residential, commercial and industrial trends for each member. Co-op leadership receive a preliminary forecast and the data is very specific and actionable. The PRS includes historical data, projected number of member-consumers, energy needs, growth rates and system demand.
With this data, the forecasting group creates an executive summary for each cooperative and their board of directors. The full report is also available, and this is where specific and extensive details lie. This document helps with business needs, such as documentation required for RUS loan applications.
“We take a look at data historically and across a variety of data sets, allowing us to present multiple forecast scenarios. This allows flexibility in dynamic conditions to help Hoosier Energy and members with a wide-range of planning,” said Elliott.
Hoosier Energy also develops a system-wide study for its own planning purposes. This information is an aggregation of all member cooperatives’ forecasted results. The latest PRS shows that load requirements are forecasted to grow modestly through 2038 – mainly led through residential and commercial sectors. Industrial growth is expected to reach its peak in 2025 and decrease nearly 250 gigawatt-hours during the following 13 years. Driving this reduction is the expected loss of mining load located in member territory.
The forecasts are compared with data from other electric utilities and the State Utility Forecasting Group. Data shows the Hoosier Energy average annual growth rate for the 20-year forecasting period is 0.6 percent for energy and 0.7 percent for demand. This is comparable with these groups’ projections. These growth rates are based upon expected economic and normal weather conditions.
Alternate scenarios are developed for variations of these conditions. The expected and alternate economic variables include the Consumer Price Index, demographic data and commodity pricing. Data is sourced from Moody’s, Woods & Poole and the Energy Information Administration. Weather conditions are adjusted in the models using heating and cooling degree days with normal, mild and severe weather based on historical data for each member’s territory.
“Detailing member growth is an essential metric for measuring the health and providing direction for member cooperatives,” said Rice.
The depth of the forecasting group’s analysis use diverse variables and modeling tools to provide a strong basis for member co-op and Hoosier Energy planning. The forecasts developed give reliable information about the power network and its growth to support sound business decisions.