Reliable Power

Reliable Markets

Reliable People

Future Demand and Energy Outlook (2008 – 2028)Assumptions, Methodology and Processes

April 2, 20099 am – 11am

2

Agenda

Introduction Doyle SullivanDirector, Regulatory

Long-Term Load Forecast• Future Demand and Energy Outlook

(2008 – 2028)• Area Studies• Recent Economic Events – Impact on long

term load forecast?• 2009 Forecast Schedule

LaRhonda PapworthSupervisor, Long-Term Load Forecasting

Confidence Bands Steven EverettEconomic Analyst

Forecasting Group Rob BakerManager, Forecasting

Questions Doyle SullivanRob BakerLaRhonda PapworthSteven Everett

Closing Remarks Rob Baker

3

What is the AESO?

• Established in 2003 through the EUA to integrate Power Pool of Alberta and Transmission Administrator

• Performs “Independent System Operator” function

• Non-profit organization independent of all other electricity market participants

• Governed by independent board appointed by the Minister of Energy

• Regulated by Alberta Utilities Commission

Transmission Tariff

Transmission Development AESO Rules

• Operation of the AESO funded through Pool Trading Charge and Transmission Tariff

4

Our Core Business

Markets: develop and operate Alberta’s real-time wholesale energy market to facilitate fair, efficient and open competition

Transmission System Development: plan and develop the transmission system to ensure continued reliability and facilitate the competitive market and investment in new supply

Transmission System Access: provide system access for both generation and load customers

System Operations: direct the reliable operation of Alberta’s power grid

5

AESO Forecasting Group Introduction

• Rob Baker, Manager Forecasting

• LaRhonda Papworth, Supervisor Long Term Forecasting

– Steven Everett, Economic Analyst

– Jenni Fontaine, Forecast Analyst

• Ashikur Bhuyia, Supervisor Mid Term Forecasting

– Mike Wu, Senior Forecasting Engineer

All can be contacted at forecast@aeso.ca

Reliable Power

Reliable Markets

Reliable People

Long-Term Load Forecast – FC2008

LaRhonda PapworthSupervisor, Long-Term Load Forecasting

7

Long-Term Load Forecast Topics

How long-term load forecast is used

Future Demand and Energy Outlook (2008 – 2028)•Why?•How?

Recent Economic Events – impact on long-term load forecast

2009 Forecast Schedule

8

How: Example of How Long Term Load Forecast Is Used

Transmission Planning

Long-Term Adequacy assessments

Tariff Billing Determinants

Loss Forecasting

Input into WECC studies

Area Studies

– Area or region of interest is identified

– Work with DFOs, TFOs, Transmission Planning, industry and mapping consultants, customers to evaluate current long-term load forecast and adjust for recent and detailed information

– Identify possible long-term load expectations

9

Why does the AESO produce a Long Term Load Forecast?

Electric Utilities ActTransmission Regulation

Part 2Transmission System Planning

Transmission planning ‑ forecasting need8   In forecasting the needs of Alberta under section 33 of the Act, the ISO

a) Must anticipate future demand for electricity, generation capacity, and appropriate reserves required to meet the forecast load so that transmission facilities can be planned to be available in a timely manner to accommodate the forecast load and new generation facilities,

b) Must make assumptions about future load growth, the timing and location of future generation additions and other related assumptions to support transmission planning,

k) to collect, store and disseminate information relating to the current and future electricity needs of Alberta and the capacity of the interconnected electric system to meet those needs, and make information available to the public,

Electric Utilities ActDuties of Independent System Operator

Emphasis added

10

How Long-Term Load Forecast is Created

2008 Sector GWh

Farm3%

Commercial19%

Industrial (w/o

Oilsands)47%

Oilsands12%

T-Losses, D-Losses, UFE

6%Residential

13%

Source: ERCB Table 11: Electric Energy Distribution Sales and Number of Customers, 2008AESO metered volumesAESO estimation of load served by on-site generation (behind-the-fence load)

11

• Industrial (without Oilsands)• Oilsands• Commercial• Residential• Farm

Customer Sector EnergyForecast Methodology

Residential*Customer Sector

Industrial*Customer Sector

Commercial*Customer Sector

Farm*Customer Sector

A Picture of Alberta Internal Load (without Losses) by Following Customer Sectors:

Load Served by On-Site Generation (Behind-the-Fence)**Transmission Connected Customer Load**

*Source: ERCB**Source: AESO

12

Economic Inputs – Alberta GDP

150,000

200,000

250,000

300,000

350,000

400,000

Alb

erta

GD

P (

bas

ic 2

002

$mil

lio

n)

Provincial Outlook 2008

Outlook Autumn 2008

Outlook Winter 2009

Long-term load forecast based on economic inputs from March 2008

Source: Conference Board of Canada

13

Industrial (w/o Oilsands) Sector Energy Forecast

10,000

20,000

30,000

40,000

50,000

60,000

70,000

En

erg

y (G

Wh

)

FC2008

Actuals

Model Inputs: Alberta Mining GDPLagged Sector Sales

Source: Conference Board of Canada, AESO

14

Oilsands SectorEnergy Model

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

000

bp

d

AESO *Adjusted* CAPP In-Situ

AESO *Adjusted* CAPP Mining

Oilsands Energy = Annual Mining Production * Mining kWh/barrel + Annual In-Situ Production * In-Situ kWh/barrel

Source: Canadian Association of Petroleum Producers –Crude Oil Forecast, Markets & Pipeline Expansions – June 2008AESO adjustments included

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

26.0

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

kWh

/bb

l

Mining

In-Situ

15

Oilsands SectorEnergy Forecast

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

En

erg

y (G

Wh

)

FC2008

Actuals

Source: AESO

16

Commercial SectorEnergy Forecast

10,000

12,000

14,000

16,000

18,000

20,000

22,000

En

erg

y (G

Wh

)

FC2008

Actuals

Model Inputs: Alberta GDPLagged Sector Sales (one-year)Constant

Source: Conference Board of Canada, AESO

17

Residential & Farm SectorsEnergy Forecast Models

Model for Residential:

-40

-20

0

20

40

60

80

100

1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026

00

0s

Population

Customers

6,700

6,800

6,900

7,000

7,100

7,200

7,300

kW

h/c

us

tom

er

FC2007

FC2008

10yr Average

Model for Farm: Model Inputs: Alberta Agricultural GDPHeating Degree DaysConstant

Model Inputs: Average Use Per Customermultiplied by# Customers (function of Population)

18

FC2008 Sector Totals

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

GW

h

0

2 0000

4 0000

6 0000

8 0000

1 00000

1 2 0000

1 4 0000

1 6 0000T-Losses, D-Losses, UFEOilsandsIndustrial (w/o Oilsands)CommercialFarmResidential2008 ActualsFC2007

19

Past Forecast Results - Energy

Year Actuals (GWh)

Year over year

change

FC2005 FC2006 FC2007 FC2008

2006 69,370 - -1.6% +1.2% - -

2007 69,660 +290 -3.4% -1.5% -1.2% -

2008 69,946 +286 -7.7% -4.9% -4.8% -1.3%

Source: AESO

20

Past Forecast Results – Winter Peak

Year Actuals (MW)

Year over year

change

FC2005 FC2006 FC2007 FC2008

2005/06 9,580 - +0.5% - - -

2006/07 9,661 +81 -4.0% -3.8% - -

2007/08 9,710 +49 -5.6% -5.4% -3.2% -

2008/09 9,806 +96 -8.1% -8.0% -6.2% -0.3%

Source: AESO

21

How: Energy to Individual Metering Points

Oilsands

Industrial(w/o Oilsands)

Commercial

Residential

Farm

Project InformationLoad Forecast Assumptions

DFO InformationProject InformationLoad Forecast Assumptions

DFO InformationHistorical Growth Rates

Project Information

~500 Metering

Points

Annual

Energy

Forecast

DFO InformationHistorical Growth Rates

22

Recent Economic Events . . .

What do the economic events of the last 6 months mean to the results of the 2008 Future Demand and Energy Outlook?

• The economic models used for the customer sector forecasts are based on 20+ years of historical data – containing an number of past economic downturns

• Numerous opinions exist regarding severity and time length of this economic downturn

• Important to remember that the scope of this report is long-term …5 …10. . . 15…20 years.

BUT it is prudent for the AESO to perform analysis to quantify what the impact could be, short-term and/or long-term

23

Forecasted AIL Winter Peak

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

MW

FC2007

FC2008

Autumn 2008 Update

Winter 2009 Update

2018: 675 MW

2028: 927 MW

Source: AESO

24

2009 Forecast Schedule

• DFO substation level information to the AESO – April 2009

• Customer Sector Models completed – May 2009

• Reconciliation of Long-term forecast with Mid-Term Forecast – May 2009

• Conference Board of Canada Provincial Outlook 2009 –delayed 2 months to May 2009

• Publication of Long-term load forecast - September 2009

• Stakeholder Presentation of 2009 Report – Sep/Oct 2009

Reliable Power

Reliable Markets

Reliable People

Confidence Bands

Steven EverettEconomic Analyst

26

Confidence Intervals

Alberta Internal Load (AIL) Energy Confidence Intervals

45,000

65,000

85,000

105,000

125,000

145,000

165,000

En

erg

y (

GW

h)

FC2008

P2.5

P97.5

P10

P90

Source: AESO

27

Confidence Intervals

Alberta Internal Load (AIL) Winter Peak Demand Confidence Intervals

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

Peak D

em

an

d (

MW

)

FC2008

P2.5

P97.5

P10

P90

Source: AESO

28

Confidence Intervals

FC2008(MW)

P97.5 (MW)

P2.5 (MW)

Actual(MW)

2008 9,833 10,219 9,460 9,806

+386 -373 -27

2018 14,659 15,668 13,505

+1,009 -1,154

2028 19,271 21,063 17,396

+1,791 -1,875

Alberta Internal Load (AIL) Peak Demand Confidence Intervals

Source: AESO

Reliable Power

Reliable Markets

Reliable People

Closing Remarks

30

AESO Forecasting

• AESO has consolidated some forecasting into one group:

– Mid term load forecasting (0 – 26 months)

– Long term load forecasting (0 – 20 years)

– Ancillary Services Forecasting

– Losses Forecasting

• More integration in 2009:

– Mid and long term forecasts – coordination/optimization continues

– Forecasting products - gathered to one area of our web site

– Updates will be posted

• Formal enquiries through forecast@aeso.ca

– Allows for a complete response and high standard of service

31

Questions?

Reliable Power

Reliable Markets

Reliable People

Conclusion

33

Conclusion

• Thank you for attending – please forward to us any ideas not addressed or further questions:

– forecast@aeso.ca

• Please remember to complete exit survey.

• Presentation will be posted in about a week on AESO website

• Limited number of hard copies of the Future Demand and Energy Outlook (2008 – 2028) are available