As Expected, PJM’s Demand Projections Are Falling

Those of you who have been following PJM’s claims in the state PSC cases (as opposed to their stupid advertising), know that PJM and AEP/Allegheny’s claims about the need for PATH are based entirely on PJM’s original predictions in 2006 that demand in the PJM region was rising rapidly.

That was then.  This is now.  Here is the latest Baseline Reliability Update that was presented to PJM’s Transmission Expansion Advisory Committee today.

The fun starts on page 22 where you will see this graph —

This graph is not actual demand, except for the 2009 figures at the far left of the graph.  The remainder of the graph is PJM’s projection of future demand through 2025, the far end of their 15 year planning period.  These are the numbers they use to project their claims about the need for PATH.  The higher line was their prediction of future demand at the beginning of last year, their 2010 figure.  The lower line is their revised prediction of year to year demand.

Keep in mind also that the list of assumptions on page 28 shows that this year’s projections are based on the addition of Duke Energy’s power companies in Ohio and Kentucky, which further inflates the lower demand projections in 2011.  Without the Duke Energy companies, the 2011 line would have been even lower.

Note that the new 2011 prediction is still a constantly rising line, although demand in PJM has fallen every year from 2007 to the present, with perhaps a slight increase in 2010, still leaving us nowhere near the actual 2006 figure.  These projections, filed by PJM in 2009 with the PATH applications in WV, MD and East VA, showed projected increases of 1.5% per year throughout this same period.  That’s how bad PJM demand forecasting is.  The other thing you should notice is that PJM is revising downward their predicted rate of growth.  The slope of the 2011 line is flatter than the 2010 line.  Even though PJM engineers still have their happy faces on, the ends of those smiles are starting to droop.

Here is another look at demand from the US Department of Energy’s Energy Information Administration.  The figures in the table are not based on PJM.  They are split up into the federal government’s reliability areas.  PJM is part of the Reliability First area which appears in the eighth section from the top.  Here are the figures for the Reliability First area –

Year……………………………..   2009         2008           2007            2006            2005
Net Internal Demand ………161,241     169,155     177,200     190,800     190,200
Capacity Resources…………215,700     215,477     213,544     214,693     220,000
Capacity Margin (percent) .     25.2             21.5             17.0              11.1             13.5

The figures don’t go back any further than 2005, because that was when the Reliability First area was created.  The demand and capacity figures are in megawatts.  Update 2Here is the area of Reliability First.  According to its Web site, Reliability First’s service area covers “all of New Jersey, Delaware, Pennsylvania, Maryland, District of Columbia, West Virginia, Ohio, Indiana, Lower Michigan and portions of Upper Michigan, Wisconsin, Illinois, Kentucky, Tennessee and Virginia,” a much larger area than just PJM Interconnection.

The first row is basically total demand for the region.  Capacity resources are the total capacity of the generation, distribution and transmission system in the area.  The capacity margin is basically the margin of safety that the power system must maintain to manage unforeseen increases in peak demand.  You will notice that the percentage of the capacity margin has almost doubled in the last five years, primarily as a result of declining demand.

Any way you slice it, the actual demand figures are telling everyone that PATH is not needed.  Even though PJM continues to predict rising demand, their rosy predictions of just three years ago are long gone.

Update:  Here is a look at the reality of US electrical demand, again from the Dept. of Energy’s EIA Electric Power Annual for 2009, published Nov. 2010, revised Jan. 2011:

Electric Power Industry 2009: Year in Review

Highlights

Generation. Electricity markets in 2009 were keenly affected by economic and environmental developments. Electricity generation was down 4.1 percent, reaching its lowest level since 2003; this was the largest decline in 6 decades1 and follows a 0.9-percent decline in 2008. The drop in power demand reflects a 2.6-percent decline in economic activity (GDP) during 2009.2

Summer temperatures during 2009 were relatively mild, resulting in a 1.1 percent decline in residential electricity sales between 2008 and 2009.

A 9.1-percent decline in industrial demand for electricity, which fell to the lowest level since 1987, accounted for most of the decline in overall electricity consumption. The drop in industrial electricity demand reflected the 9.3-percent drop in industrial output, as measured by the Federal Reserve Bank’s index of industrial production.3

There was warmer weather in summer 2010, and some slight increase in industrial demand, but how many years will it take for electrical demand to recover from the 9.1 percent drop in 2009?