2017 RETAIL SALES FORECAST

City Light Review Panel

John Rudolph and Carsten Croff

January 8th 2018

| 2| 2| 2

CITY LIGHT RETAIL SALES FORECASTS

1,000

1,020

1,040

1,060

1,080

1,100

1,120

1,140

1,160

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Avera

ge A

nn

ual M

Ws

2012 Strategic Plan

2014 Strategic Plan

2016 Strategic Plan

2017 Update

(2018 Strategic Plan)

Actuals

Weather

Adjusted Actuals

Chart Scale Zoomed In

*2017 based on actual sales through September

| 3| 3| 3

SYSTEM LOAD HISTORY

800

850

900

950

1,000

1,050

1,100

1,150

1,200

1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

Avera

ge A

nn

ual M

Ws

Historical System Load Weather Adjusted System Load Smoothed Trend

1

1. Energy Crisis and Dot Com Bubble

2. Great Recession

3. Strong Economy with Flat Load

23

End of Growth?

| 4| 4| 4

BACKGROUND AND FORECAST GOALS

• 3rd party methodology review • Completed in March 2017

• Conclusion: New methodology needed to account for

changing environment (Multi-year effort)

• Goals for 2017 forecast (rebuilding year)• Leverage Conservation Potential Assessment for

changes in end uses

• Develop robust weather normalization model

• Account for new customers being more efficient

• Develop a technical work team from across the utility

RESIDENTIAL SALES

| 6| 6| 6

HOUSING STOCK

0

2,000

4,000

6,000

8,000

10,000

12,000

20

17

201

8

20

19

20

20

20

21

20

22

20

23

20

24

20

25

202

6

20

27

20

28

20

29

20

30

20

31

20

32

20

33

203

4

20

35

20

36

20

37

20

38

New

Ho

usi

ng

Un

its

Seattle Multifamily Seattle Single Family Suburban Multifamily Suburban Single Family

Strong multifamily growth in short-term but growth cooling in medium to long-term

| 7| 7| 7

INCREMENTAL CHANGE IN RESIDENTIAL SALES

-8

-6

-4

-2

0

2

4

6

8

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

Ave

rage

An

nu

al M

Ws

Economic_Growth Electric Vehicles Customer_Efficiency Programmatic

Distributed Generation Climate Change Net Change

3.5 aMW is ~1% of Residential Sales

| 8| 8| 8

RESIDENTIAL ENERGY INTENSITY

4,000

5,000

6,000

7,000

8,000

9,000

10,000

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

20

37

Residential kWh per meter

Actuals Forecast

weather adjusted

COMMERCIAL SALES

| 10| 10| 10

SERVICE SECTOR EMPLOYMENT

0

5

10

15

20

25

30

35

40

45

Em

plo

yees

Ad

ded

(1000s)

Service Sector Employment Growth

Actuals Forecast

Job growth remains strong in short-term returning to

more modest levels in medium to long-term

| 11| 11| 11

INCREMENTAL CHANGE IN COMMERCIAL SALES

-20

-15

-10

-5

0

5

10

15

20

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

Ave

rage

An

nu

al M

Ws

Economic_Growth Electric Vehicles Customer_Efficiency Programmatic

Distributed Generation Climate Change Net Change

6 aMW is ~1% of Commercial Sales

| 12| 12| 12

COMMERCIAL ENERGY INTENSITY

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

Commercial kWh per employee

Actuals Forecast

weather adjusted

INDUSTRIAL SALES

| 14| 14| 14

INDUSTRIAL

0

20

40

60

80

100

120

140

160

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

Avera

ge A

nn

ual M

Ws

Industrial_Actuals Industrial_Before_Programmatic Industrial_After_Programmatic

2017-2038 AAGR: -0.5%

Assume Industrial will decline in-line with IHS long-term

manufacturing employment forecast ~-0.2% per year and add new

programmatic efficiencies

SUMMARY

| 16| 16| 16

0

2,000

4,000

6,000

8,000

10,000

12,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

GW

hs

Weather Adjusted

2017 RETAIL SALES FORECAST

2017-2038 AAGR: -0.4%2017-2022 AAGR: -0.7%

AAGR = average annual growth rate

| 17| 17| 17

TAKEAWAYS

• Recent History• The past few years have experienced strong economic growth

• However, weather adjusted retail sales have remained flat

• Energy efficiency is offsetting economic growth

• Outlook for the future • Recent economic growth is expected to slow down

• Robust EE will continue but at a gradually declining rate

• Net impact is a small decrease in sales

• Electric Vehicles are expected to have relatively small impact

• There is still lots of uncertainty• New methodology can help decrease uncertainty but can’t

eliminate it

• Planning processes using retail sales forecast need to consider

more than just a point forecast

THANK YOU

QUESTIONS?

SUPPLEMENTAL SLIDES

| 20| 20| 20

RELATIVE CHANGE BY CLASS: 2017-2025

2017 2018 2019 2020 2021 2022 2023 2024 2025

Residential GWh 3,146 3,164 3,179 3,197 3,172 3,150 3,128 3,112 3,084

0.6% 0.5% 0.6% -0.8% -0.7% -0.7% -0.5% -0.9%

Commercial GWh 5,261 5,197 5,128 5,071 4,993 4,941 4,890 4,855 4,799

-1.2% -1.3% -1.1% -1.5% -1.0% -1.0% -0.7% -1.2%

Industrial GWh 1,014 987 972 963 951 943 937 936 930

-2.7% -1.6% -1.0% -1.3% -0.8% -0.6% -0.2% -0.6%

Total Gwh 9,421 9,348 9,279 9,230 9,116 9,034 8,955 8,903 8,814

-0.8% -0.7% -0.5% -1.2% -0.9% -0.9% -0.6% -1.0%

| 21| 21| 21

RELATIVE CHANGE BY CLASS: 2026-2038

2026 2027 2028 2029 2030 2031 2032 2033 2034

Residential GWh 3,067 3,054 3,050 3,034 3,026 3,020 3,020 3,002 2,991

-0.6% -0.4% -0.1% -0.5% -0.2% -0.2% 0.0% -0.6% -0.4%

Commercial GWh 4,763 4,733 4,728 4,704 4,702 4,697 4,714 4,711 4,724

-0.8% -0.6% -0.1% -0.5% -0.1% -0.1% 0.4% -0.1% 0.3%

Industrial GWh 927 924 924 919 917 915 916 911 909

-0.3% -0.3% 0.0% -0.5% -0.2% -0.2% 0.0% -0.5% -0.2%

Total Gwh 8,756 8,711 8,702 8,657 8,645 8,632 8,650 8,623 8,624

-0.7% -0.5% -0.1% -0.5% -0.1% -0.2% 0.2% -0.3% 0.0%