SYSTEM LOAD FORECAST OVERVIEW

City Light Review Panel Meeting

January 5, 2016

| 2

AGENDA

•Why Forecast Load?

• Forecast Preparation & Assumptions

• 2015 Load Forecast

• Load Forecast Trends

•What About the Future?

| 3

WHY FORECAST LOAD?

• Portfolio Management

oLong term Resource & Conservation Acquisition

oContractual Requirements - BPA obligation

• Rate Setting / Finance

oRetail Projections / Revenue Requirements

• Reliability / Infrastructure

oDistribution System Design & Adequacy

oWECC Planning

• Regulatory Reporting

| 4

TYPES OF LOAD FORECASTS

• Energy Consumption

oResource Planning / Energy Conservation

oRevenue Projection

oRegulatory Reporting

• Peak Usage

oReliability

oResource Planning / Demand Conservation

oRevenue Projection

oRegulatory Reporting

| 5

TYPES OF LOAD FORECASTS

• Geographic Usage

oTargeted Conservation

oDistribution Planning / Reliability

| 6

ASSUMPTIONS OVERVIEW

• Economic outlook includes inputs on U.S. growth

in GDP, industrial production, employment,

income, CPI, housing starts & population

• Forecast based on “normal weather”

• Load forecast assumes historic achieved

conservation continues into the future

• Forecast of tunnel boring machine not included

| 7

LOAD FORECAST MODEL STRUCTURE

City Light’s Service Territory

Load Forecast

City Light’s Service Territory

Economy

King County Economy

Boeing & MicrosoftU.S. Economy

| 8

1,000

1,020

1,040

1,060

1,080

1,100

1,120

1,140

1,160

1,180

1,200

Aug

2000

Aug

2001

Aug

2002

Aug

2003

Aug

2004

Aug

2005

Aug

2006

Aug

2007

Aug

2008

Aug

2009

Aug

2010

Aug

2011

Aug

2012

Aug

2013

Aug

2014

Aug

2015

Syst

em

Lo

ad

in

aM

W

dot.com recession

&

>30% real rate increase

record

warmth

Great

RecessionExpansion housing

boom

Current 12-Month Load

≈2.8% LESS THAN

15 Years Ago

CITY LIGHT LOAD HISTORY – ROLLING 12 MONTH

| 9

0

2000

4000

6000

8000

10000

120001

99

9

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

Gig

aw

att

-Ho

urs

Total Retail Commercial Residential Industrial

LOAD HISTORY & FORECAST BY CUSTOMER CLASS

Forecasted 20-year Average Growth Rates

Total Retail: 0.4% Commercial: 0.6%

Residential: -0.1% Industrial: 0.5%

| 10

“NEW NORMAL” OF ECONOMIC GROWTH?

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

An

nu

al

Gro

wth

Rate

Real GDP Average Real GDP (Post-War)

| 11

LOCAL LABOR MARKETS

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%1

99

9

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

Em

plo

ym

en

t G

row

th /

Un

em

plo

ym

en

t R

ate

Seattle Employment Growth King County Unemployment Rate

| 12

LOAD, EMPLOYMENT, AND HOUSEHOLDS

200

300

400

500

600

700

800

900

1000

1100

1200

200

300

400

500

600

700

800

900

1000

1100

1200

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Em

plo

ym

en

t &

Ho

use

ho

lds

(00

0's

)

Avera

ge M

eg

aw

att

s

Weather-Adjusted System Load (aMW) Wage & Salary Employment Households

| 13

ENERGY EFFICIENCY, CODES, & FUEL SWITCHING.... RESIDENTIAL MWH PER HOUSEHOLD

0

2

4

6

8

10

12

14

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

20

22

20

24

MW

h p

er

Ho

use

ho

ld

| 14

2015 SUMMARY

• Economic growth expected to continue, yet does

so below historical trend

• Local labor markets expected to moderate after

recovery from recent downturn

• Rapid growth in residential construction not

expected to be sustainable in long-term

• Load demand growth expected to slow relative to

historical trend due to numerous factors

• 20-year average annual growth rate ≈ 0.4%

| 15

COMPARISON OF RECENT LOAD FORECASTS

1,100

1,110

1,120

1,130

1,140

1,150

1,160

1,170

1,180

1,190

1,200

Avera

ge M

eg

aw

att

s

2012 Forecast 2013 Forecast 2014 Forecast 2015 Forecast

| 16

ECONOMIC GROWTH PROJECTIONS FOR THE U.S.FOMC REAL GDP FORECAST

0.0

1.0

2.0

3.0

4.0

2010 2011 2012 2013 2014 2015 2016 Long Run

Q4

/Q4

%

ch

an

ge

Actual June 2010 June 2011 June 2012 June 2013 June 2014

| 17

ELECTRIC VEHICLESENERGY AND CAPACITY

0

5

10

15

20

25

30

35

Cap

aci

ty M

W, En

erg

y M

Wa

Base Case

Capacity Energy

0

5

10

15

20

25

30

35

Cap

aci

ty M

W, En

erg

y M

Wa

High Adoption Case

Capacity Energy

| 18

DISTRIBUTED ROOFTOP SOLAR INSTALLATIONSCUMULATIVE TOTAL SYSTEM CAPACITY AND ENERGY

• Installations total

approximately 0.08% of

retail load

• Residential and

community solar

-

5

10

15

20

25

30

35

40

45

CA

PA

CIT

Y M

W. EN

ER

GY

-M

Wa

ROOFTOP SOLAR- HIGHEST CASE

ROOFTOP SOLAR- NO INCENTIVES

ENERGY -HIGHEST CASE

ENERGY -NO INCENTIVES

| 19

I-502 COMPLIANT CANNABIS PRODUCERSAVERAGE MONTHLY LOAD

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Average Monthly Load (MW)

- Estimated 0.84MW from seventeen I-502 compliant cannabis producers in Seattle.

- Due to the infancy of this customer base, current data are very rough estimates.

| 20

WHERE IS LOAD GOING IN THE FUTURE?

• City Light’s customers are changing the way they

use electricity

▼ Customers have embraced conservation with large

long lasting effects

▼ Distributed generation is reducing load the utility is

paid for (not consumption)

▲ Plug loads are increasing significantly

▲ Electric vehicles and battery storage will increase

consumption

| 21

WHAT’S NEXT?

• A bottom up investigation will look at issues

affecting load including:

oBuilding code & appliance standards

oOver-achievement of energy conservation

oReduced usage due to real rate increases

oAppliance loss to natural gas fuel

oWhile small so far effects of DG Solar, EV’s, cannabis

production, etc. need study

| 22

WHAT’S NEXT?

• Customer loads are changing – We need to

understand why

• This is a regional problem and we are working

with regional players to understand the causes

• Last end-use load study occurred before:

oPersonal computers were popular

oCable and satellite set top boxes were in common

use

oMost common plug loads were not yet invented

OUR VISIONTo set the standard—to deliver the best customerservice experience of any utility in the nation.

OUR MISSIONSeattle City Light is dedicated to exceeding our customers’expectations in producing and delivering environmentallyresponsible, safe, low-cost and reliable power.

OUR VALUESExcellence, Accountability, Trust and Stewardship.