TOTAL ENERGY FORECAST MODEL FOR RURAL DISTRIBUTION COOPERATIVES

Sharad Rastogi

Gary Roulet

Marvin Ortbals

Western Farmers Electric Cooperative

P . 0. Box 429
ANADARKO, OK 73005
Tel # 405-247-3351
ABSTRACT :
The electric utility energy forecast. is an
essential part of the planning process. In
this paper, a total energy requirements model
has been suggested. This requires very little
data input and time, and can be developed on
a personal computer with the help of electronic spread-sheet and/or statistical program. Input components, used in determining
the energy forecast, for the suggested model
include population, weather, income, and a
major economic activity.

tives. Finally results of these examples have

been generalized.

2. INPUT DATA PREPARATION:

In this s e c t i o n , data preparation o f the
variables used in the model development are
discussed.
2.1 POPULATION

1. INTRODUCTION:
For rural distribution cooperatives, energy
forecasting is an essential part of their
budgeting and planning process. As a cooperative, they
have access to low-interest
const.ruction loans from Rural Electric Admin
istration (REA). In order to get such loans,
REA requires them t.o conduct a power requircments study prior to submission o f l o n o
application and construction work plan. This
poses a challenge to cooperatives which have
relatively small staffs and little, if any,
experience in forecasting techniques. Therefore, in most cases, these cooperatives a r e
unable to prepare realistic forecasts due to
non--availability of required data and manpow
er. Sometimes, if limited data is available.
i t is not possible to make a statistically
valid forecasts for different class of consumers due to the small sample of data and
errors caused by using data not gathered from
the cooperatives service area.
In order to avoid problems faced by rural
distribution cooperatives, a total energy
requirements model has been suggested in t h e
paper. This requires very little data inpiit
and time and can be developed on a personal
computer with the help of electronic spread
sheet and/or statistical program. The sug
gested model is described by the following
equation:
Annual kWh
sales

A +
+
+
+

Population and real per capita income for

cooperative service area were estimated using
county -level data. The following discussion
first will address estimation of population
and then calculation o f real per c a p i t a
income.
Since the Co-op serve only a portion of each
of the c o u n t i e s , i t was inappropriate t o
simply add the total population of the served
counties. Instead, an estimate was made of
the proportion of the county served by the
Co-op. The formula for estimating the service
area population is as follows:
COOPPOPt= Wl,tCOPOPl,t+ W2,tCOPOP2,t+

.....

Wn,t COPoPn,t

. . . . . . . . .1

Where
n = number of counties in the C O ops
service area
the population in Co-ops service
COOPPOPt
area in year t
Wi,t = a weight representing the portion
of county is population served
by the Co-op; in year t , and
COPOPi,t = is the total county population
for county i in year t.
REA supplies information on the number of
consumers served per county every seventh
year starting 1967. From this information ~t
i s easy to estimate the number of residential
consumers served by each county in the same
proportions for the REA survey years.

Bt(popu1ation)
C*(weather)
D*(income)
E*(major economic factor)

C i ,t =

Consumers in County i , in year t

Sum of consumers in all the counties,
in year t

.......

This model has been tested on several distribution cooperatives without sacrificing much
accuracy. Results indicated population as the
most significant variable followed by weather, income and finally other major economic
factors of the service area.

CORESi,t= Ci,t

COOPRESt

.......

Where,
C i , t = % consumers served in county i,
in year t

In the following sections, total energy sales

forecast model development will be discussed
for the typical rural distribut.ion coopera-

# of residential consumers in

county i , in year t

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I -

growth rate and thus, other weights could be

interpolated using this equation. However, it
was impossible to interpolate beyond 1987
since we do not know what will be the estimated weight in the next REA survey year.

COOPRESt= Residential consumers served by

co-op, in year t
Information on household size can be obtained
from the consumer survey done by the coopera-tive o r the State agency. For our selected
cooperatives, two consumer surveys had been
done, one in 1979 and the other in 1985.
These consumer surveys indicated typical
household size for the survey year. Because
of the lack of household size data for other
years it was assumed to be at 1979 level for
the years 1973 and 1980, and for the year
1987 it was assumed to be at the level of
1985 survey size. Then, the county population
weights were calculated as follows:

Where,
W i , x = the estimated weight for county i ,
in year x.
x = 1974 through 1979

(Household size)t
CORESi,t
Wi,t' _ - - - _ _ - _ - - _ _ - - - - - - _ _ - - - - - - - - - - - - - - - - - COUNTYPOPi,

.....

'i,t"

(wi,1980/wi,1987)1/7 'i,x-l

. . . . .6

Where,
Given these weights in 1973, 1980 and 1987,
it w a s necessary to estimate comparable
values for 1974 through 1979 and 1981 through
1986. S i n c e information on the number o f
consumers
was available only for the REA
consumer survey years, it was not possible t o
use equations to calculate all the necessary
weights. The equation below assumes that each
weight grew at an equal annual percentage

x = 1981 through 1986

'i, y = 'i,

1987

. . . . .7

Where,
W,,y= t h e estimated weight for county i
in year 1988 and beyond.

CALCULATION OF POPULATION WEIGHTS

HISTORIC TOTAL
WEWBERS FROM
COOP. RECMMS

COUNTY FROM REA

CONSUER SURVEY

POPULATION BY
COUNTY

HISTORIC TOTAL
RESIDENTIAL CONSMRS
FROM COOP. RECORDS

HISTORIC HOUSE HOLD

HISTORIC FRACTION
INDICATING EMBEAS

HISTORIC DISTRIBUTION OF
RESIDENTIAL CONSMAS

C O N S W SURVEY

SERVED BY COUNTY

FRACTION OF COUNTY
POPULATION SERVED

FIGURE 1

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consumer price index (CPI) and per capita

income (PCI) data for Oklahoma Counties was
obtained from the United States Department of
Commerce, Bureau of Census and the Bureau of
Economic Analysis for 1966-1988 and PCI was
calculated from this information.
Future
projections for CPI were made by inflating
CPI by 5% annually. P e r Capita real income
projections were made as described below:

By combining results obtained from the above

equations, t.he estimated population served by
the c o o p e r a t i v e was developed.
Figure 1
explains some of the steps followed in the
above discussion.
2.2

Number of Residential Consumers

Growth in the number of residential consumers

depends explicitly on population and family
size. P o p u l a t i o n and family s i z e d e p e n d s
mainly
on many economic factors, such as
employment, income, inflation rate, interest
rate etc. for the coop. service area.

PER CAPITA INCOME

The calculation o f t h e a v e r a g e real per
capita income earned by consumers served by
the c o o p e r a t i v e r e q u i r e s t h e w e i g h t s de-veloped for the estimation of population.

Attempts were made to develop an explanatory

model for the number of residential consumers
for the Co-op. Lack of accurate data for the
region made i t impossible to arrive at any
reasonable s t a t i s t i c a l valid explanatory
model. We expecl this is what will happen in
most of the distribution cooperative situations.

COOPINCt= (Wi,tCOINCl,t+ Wz,tCOINC2,t+

. . . . + Wn,tCOINCn,t)/CPIt

F i n a l l y , project.ed number of residential

consumers for the Co-op were determined by
dividing Co-op's area population by the aver--age family size. T h e a v e r a g e family s i z e
obtained in t h e 1 9 8 5 c o n s u m e r s u r v e y is
assumed constant for the forecast period.
Figure 2 describes the calculation of thc
number of residential consumers served by the
cooperative.

COOPINCt= the value of real personal incomc

in each Cooperative service area in
year t ;
W i ,t = the weights representing the pro-portion o f county i's population
served by the cooperative;
C O I N C i , t = t.he value of personal income re-ported by Bureau of Economic Analysis for county i.
C P I t = the value of the Consumer Price
Index (CPI) in year t.
By dividing the estimated value of personal
income in the service area by the CPI, the
nominal dollar value is converted into 1967
dollars.

2.3 INCOME

Another factor which may have a significant

impact on energy sales in both residential
and small commercial classes is the growth in
real (inflation-adjusted) income. Historical

Average annual real per c a p i t a income is

calculated as the ratio of income to populat ion:

CALCULATION OF PROJECTED NUMBER OF RESIDENTIAL CONSUMERS

HISTORIC WEIGHTS INDICATING

FRICTION OF CWNTY
POPULATION SERVED

FOACAST OF COUNTY
POPULATION

PRhlECTEO TOTAL POPULATION

SEMD SUI OF PROJECTED
POWLATION SERVED I N

PROJECTED
HOUSEHOLD SIZE

RESIDENTIAL

FIGURE 2

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- - 1 --

. . . . .8

Where,

coNsuMRs

COOPPCIt = COOPINCt/COOPPOPt

.....

mills/kwh markup was calculated based on the

difference between historical w h o l e s a l e
purchase price (calculated in section 2.5.2)
and price to the ultimate consumer. Average
real markup for the previous 10 years was
calculated and assumed to be the same for the
future. The projected markup was added to
coop wholesale purchase price to estimate
cooperative distribution price to its consumers/members

Where,
COOPPCIt= the estimated value of average real
per c a p i t a i n c o m e earned by i h e
consumers served by the cooperative
in year t ;
COOPINCt= the value of real personal income
in the cooperatives service area
in year t ; and
COOPPOPt= the population in the cooperatives
service area in year t.

2.6. RBFINKRS ACQUISITION COST OF OIL

The refiners acquisition cost of oil (domes-tic) is a measure o f w h o l e s a l e c r u d e o i l
prices. Since wholesale crude oil prices may
influence t.he oil exploration and production
activities
in the Co-ops service area, the
refiners acquisition cost. of oil was considered as a possible explanatory factor for
electric growth in C o - o p s s e r v i c e area.
Historical data was obtained from the U . S .
Deportment of Energys Annual Energy Review.
The
producer price index (PPI) for the
future has been assumed to escalate by 5
percent thru our forecast period.
Projected
annual percent increase in refiners acquisition cost has been assumed to be average of
DRT and The Department o f Energy Forecasts.

2.4 WEATHER
Temperature data w e r e collected for t h e
representative weather stations established
by National Climate Center, Ashville, NC in
the Co-ops service area for the period 19741988. Data for each month was obtained from
the monthly publication, published by National Climate Center.
It was further properly
weighted by load served in the area of each
representative weather station.
Fourteen year averages of annual heating and
cooling degree days for the Co-op were used
in future studies.

3 . METHODOLOGY & RESULT

2.5 REAL PRICK OF ELECTRICITY

Projected real price of electricity to ultimate consumers was estimated in the following
steps :
2.5.1 Estimation of projected s u p p l i e r s
wholesale price of electricity:
This was determined by considering future GWH
sales of the supplier, variable production
cost, new power s u p p l y fixed c o s t s , new
transmission capital investment, new transmission debt service, annual load control
c o s t s , old fixed and variable costs. T h e
spreadsheet showing these information and the
projected cost of electricity percent relat.ive to 1988 is obtained from the Supplier.

o Per capita income

o
U

Price of crude oil

Previous eieciriciiy use

Ultimate sales models developed for individual cooperatives are described in Table 1. The
coefficients of the variables and their tstat.istics (in parenthesis) are in the corre
sponding column of the table.
Resu1t.s of this study indicated, population
as the most significant variable followed by
w e a t h e r , -income and f i n a l l y other m a j o r
economic factor of the service area. In the
select.ed cooperatives, however, the major
economic variable was price of oil. A general
kWh sales equation thus can b e writ.t.en as
follows :

Note cooperative purchase price o f electricity is not really equal to Suppliers whole
sale price of electricity. Individual cooperative wholesale price is different and depends on their demand factor, transmission
losses etc.

Annual kWh
= A + R*(populat.ion)
sales
+ C*(weather)
t D*(income)
+ E*(major economic factor)

In order to d e t e r m i n e the c o o p e r a t i v e s
wholesale purchase price o f e l e c t r i c i t y ,
historical d i f f e r e n c e between S u p p l i e r s
wholesale price and cooperative wholesale
purchase price were calculated. More probable
average differences ( ten years ) was then
assumed to c o n t i n u e in the future. T h i s
difference w a s added/subtracted from the
supplier wholesale price ( obtained in section 2.5.1 ) to e s t i m a t e the c o o p e r a t i v e
wholesale price.

After arriving at these sales projections, it

was easy to calculate kWh requirement and
finally non.-coincidence and coincidence kW
demand using proper distribution losses, load
and coincidence
factors.

2.5.3 Estimation of real price of electricity

to ultimate consumers/members:
real

o Number of residential consumers

o Heating and cooling degree days

o Price of electricity

2.5.2 Estimation of Cooperatives projected

wholesale purchase price
of electricity:

Historical

Figure 2 shows t.he flow chart of the method-~

ology. Regression analysis was used to develop kWh sales models for twenty cooperatives.
The following variables were included in thc
mode 1 devel opmen t. :

4 . CONCLUSION:

(inflation -adjusted)

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I N D I V I D U A L MEMBER SYSTEM LOAD FORECAST

TOTAL
WWH SALES

p1-j
COINCIDENCE

FIGURE 3

many rural electric cooperatives, a simple

methodology for estimating annual kWh has
been discussed. This methodology is not a
replacement of the sophisticated methods in
use. However, it has an advantage over trending in which one is unable decide as how to
trend - m e a n i n g w h a t part o f the h i s t o r y
should be chosen for trending. The met.hod
discussed does have some explanatory reasons
of the forecast as well.
This method has been tested on twenty rural
electric cooperatives. R e s u l t s i n d i c a t e d
s a t i s f a c t o r y forecast w i t h e x p l a n a t i o n s .
Because of the unpredictable behavior of t.hc
large commercials, a slight improvement to
this method could be made by first not in-cluding the large commercials
in the total
sales model development, and then adding back
the projected large commercial load to the
sales thus projected.

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5.REFERENCES
-

1 . Sharad Rastogi, Gary Roulet, Power He-quirements Study of Member Systems, report
written for Western Farmers Electric Cooperative, 1986.

2. Sharad Hastogi, Gary Roulet, Power Re:

yuirements Study of Member Systems, report
written for Western Farmers Electric Cooperative, 1987.
3 . Sharad Rastogi, Gary Roulet, Power Requirements Study of Member Systems, report
written for Western Farmers Electric Cooperative, 1988.

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