Post on 28-Jan-2020
© 2007, Itron Inc.
Methods for Analyzing Sales TrendsLooking at Florida
Energy Forecasting GroupLas Vegas, May 15 to May 16
© 2007, Itron Inc.
The 2008/2009 Budget Year ForecastFor many utilities, development of the 2008/09 customer and sales forecast has proven to be extremely challenging> High energy prices – expected rate increases> Collapse of the housing market> Slowing economic activity> End-use changes
• Air conditioning efficiency increasing faster than saturation
Where are sales going in 2008?> To tell the story you need to understand what is driving
demand
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Florida Utilities Had All These ProblemsDramatic fall in customer growth beginning in the second half of 2007Flat residential average useEconomic forecasts that were more pessimistic with each new monthly economic forecast releaseExpected rate cases and (hopefully) higher rates by 2009
© 2007, Itron Inc.
Residential Sales Trend (GWh)
Average Annual Growth 2001 - 2007: 2.6%
Average Annual Growth 2001 - 2007: 2.6%
Weather Normalized Average Annual Growth 2001 - 2007: 2.8%
Weather Normalized Average Annual Growth 2001 - 2007: 2.8%
Given history, management had expectations of atleast 2.0% sales growth in 2008 and 2009
Management was somewhat surprised when told theywould be fortunate to see 1.0% sales growth in 2008
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Factors Driving Demand
Driven byIncome, Price,
Billing Days, End Use Factors
Driven by HDD,Heating saturation
and efficiency trends
Driven by CDD,Cooling saturation and
efficiency trends
Need to separate customer usage trends from customer growth to figure out what is happening
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Residential Sales
To understand expected sales growth you needto untangle average use from customer growth
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Residential Average Use (kWh per customer)
Weather Normal Average Use Growth: 0.4%
Moving AverageMoving AverageMonthly Average UseMonthly Average Use
Flat average use growth – why?
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Estimated End-Use Sales (Annual Average Use)
Other Use
Cooling
Slight decline in per household cooling and heating usage over the last five years
Heating
Cooling 39.0%
Other Use 54.0%
Heating 8.0%
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Cooling Efficiency Trends
3.0
6.0
9.0
12.0
15.0
1990 1995 2000 2005 2010 2015 2020 2025
Effic
ienc
y [B
TU/W
h]
CAC HPCool RAC
With 100% cooling saturation and strong heat pump penetration efficiency gains are over riding other factors driving cooling use
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Usage growth will largely be driven by “plug loads”
1993 2007 2030Source: Energy Information Administration, US News & World Report
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Quarterly Household Income Growth
-2.0%-2.0%
2007 1.37%2008 -1.62%2009 -0.37%2010 1.33%
But electronic purchases likely to slow in 2008 and 2009
Actual Forecast
2002 to 2006: 2.0% growth2002 to 2006: 2.0% growth
© 2007, Itron Inc.
Average Use Per Billing Day (kWh)
moving average
Since 2006, average use may actually be trending downwards
Average use per billing day (kWh)
Not likely to see much average use growth in 2008
Increasing vacancy rates may be contributing to this trend
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Residential Average Use Trends (kWh per day)
Florida
Southeast
Midwest
Northeast
Softening average use trends for many utilities
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Double-Whammy for Florida Utilities
2.6% customer growth between 2000 and 2006
0.5% customer growth in 2007
Sales have been driven by customer growth
Not likely to get much help from customer growth in 2008
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Quarterly Florida Household Growth
2007 1.40%2008 1.40%2009 1.80%2010 2.30%
2001 to 2006: 2.4% growth2001 to 2006: 2.4% growth
Actual Forecast
1.2%1.2%
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Commercial Sales
Actual Growth: 2.4%Weather Normalized Growth: 2.2%
Actual Growth: 2.4%Weather Normalized Growth: 2.2%
2006 to 2007Actual Growth: 2.2%
Weather Normalized Growth: 1.6%
2006 to 2007Actual Growth: 2.2%
Weather Normalized Growth: 1.6%
Strong commercial sector sales growth
Actual 2007 sales growth were relatively strong,but weather normalized sales were just 1.6%
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Commercial Average Use (kWh per month)
2002 – 2007: 0.2% average use growth
moving average
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Sales driven by commercial sector growth
Commercial Employment
Output per Employee
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Commercial Sales vs. Commercial Output
Commercial Output
CommercialSales (Gwh)
Strong correlation between commercial
output and sales.
Strong correlation between commercial
output and sales.
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Commercial Sales Drivers
07:Q1 3.9%07:Q2 4.0%07:Q3 3.6%07:Q4 2.6%08:Q1 1.5%08:Q2 0.7%08:Q3 0.6%08:Q4 1.0%09:Q1 1.9%09:Q2 2.9%09:Q3 3.7%09:Q4 4.3%
07:Q1 0.7%07:Q2 0.6%07:Q3 0.3%07:Q4 0.1%08:Q1 -0.1%08:Q2 -0.1%08:Q3 -0.1%08:Q4 0.1%09:Q1 0.2%09:Q2 0.3%09:Q3 0.4%09:Q4 0.5%
Output Growth Employment Growth
No likely near-term help from commercial business activityNo likely near-term help from commercial business activity
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Commercial Sales Projection
Commercial Sales
Actual
normalized growth: 2.2% normalized growth: 2.2% 0.8% growth 0.8% growth
Sales per dollar output model
2.5% growth 2.5% growth
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ConclusionsUnlikely to see 2.0% sales growth in 2008> Don’t need a sales model to reach this conclusion
• Residential sales 1.5% to 2.0%• Commercial sales 1.0% to 2.0%
Customer growth (both residential and commercial) will drive electric sales growth
• No real sales turn around until residential housing market firmsup
© 2007, Itron Inc.
What does the data tell youSignificant information about likely sales trends can be gleanedfrom historical sales data > Need to break out customer growth from use per customer
growth
You can generally get a good picture of class usage trends by calculating 12-month moving average of actual and weather normalized sales
Examine average use and customer correlation with economic drivers> Households, Income, Employment, and Output
Look at quarterly sales as well as monthly sales trends and growth pattern
© 2007, Itron Inc.
What is Happening in Your Service Area?
Residential Sales Trend> Average use growth> Customer growth> Primary drivers in your current forecast
Commercial Sales Trend> Sales growth> Customers growth> Drivers
Other Loads> Industrial> Lighting> Wholesale