Energy Power Plan Draft Fuel Price Forecasts

Draft Fuel Price Forecasts for Fifth Power Plan

Council document 2002-7   |   April 25, 2002

Related links

• Final version of this paper (Sep 10, addresses public comments)

• Public comments were received for this paper (deadline was July 15, 2002):

  • Renewable Northwest Project (420k Acrobat PDF)

  • Snohomish PUD (5k PDF)

  • Martin Thompson (10k PDF)

Summary

Fuel prices enter into electricity planning in two primary ways. They influence electricity demand because they are substitute sources of energy for space and water heating and some other end-uses as well. They influence supply because they are potential fuels for electricity generation. Natural gas, in particular, has become the most cost-effective generation fuel when used to fire efficient combined-cycle combustion turbines.

Traditionally, the Council has developed very detailed forecasts of electricity demand using models that are driven by economic, fuel price, and technological assumptions. For a number of reasons, the Council has chosen to retain many elements of its long-term demand forecasts from the 4th power plan, making modifications as needed to reflect significant changes that might affect the long-term trend of electricity use. Therefore the fuel price assumptions will not directly drive the demand forecasts of this power plan. But to the extent they are significantly different from the assumptions underlying the 4th power plan, we will examine the effects we might expect on demand forecasts.

The fuel price forecasts will continue to affect the expected absolute and relative cost of alternative sources of electricity generation. Through their effects on generation costs, they will also largely determine the future expected prices of electricity, which could also indicate a need to adjust the electricity demand forecast if it is significantly changed from the 4th power plan electricity price forecast.

This paper describes draft fuel price assumptions for the Northwest Power Planning Council's 5th power plan. Three major sources of fossil fuels are addressed; natural gas, oil, and coal. For each, the paper provides some background on historical consumption patterns and prices. This is followed by a description of the methods used to forecast fuel prices and the resulting forecasts. Appendices provide more detail on the methods and forecasts.

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