Economic Forecast Review

ERCOT

Calvin Opheim

October 12, 2012

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Outline

• Forecast Overview

• Economic Forecast Review

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Forecast Overview

To create a long-term load forecast requires:

i. Employment or economic data forecast for each county for the duration of the forecasting time-frame

ii. Hourly weather forecast for each weather zone which will be used for each forecasting year

These values are used by forecasting models to create the hourly demand forecasts for ERCOT

The employment forecast drives the long-term energy and demand forecast since the weather forecast is constant

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Economic Assumptions

Moody’s provides ERCOT with three county-level economic forecasts:

i. Base

ii. High economic growth

iii. Low economic growth

Which forecast should be used?

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Moody’s Non-Farm Employment Scenarios – 11/8/2011

2000 to 2009 0.9% AAGR

2009 to 2022 AAGR

Low 1.8%Base 2.3%High 2.8%

AAGR – annual average growth rate

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Moody’s Non-Farm Employment Scenarios – 11/8/2011

2012 to 2015 AAGR

Low 3.2%Base 3.7%High 4.3%

8/30 update 3.3%

AAGR – annual average growth rate

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Energy and Non-Farm Employment

AAGR – annual average growth rate

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Historical Non-Farm Employment Forecasts (low case)

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Historical Non-Farm Employment Forecasts (base case)

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Historical Non-Farm Employment Forecasts

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Historical Non-Farm Employment Forecasts

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Actual Non-Farm Employment Data

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Summary

• ERCOT reviews the non-farm employment forecasts

• ERCOT has added an additional provider of economic data (Woods and Poole) in 2012

• ERCOT is exploring receiving additional economic forecasts from Moody’s

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Questions

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