Forecasting Practices in Electric and Gas Utility Companies

FORECASTING PRACTICES IN ELECTRIC AND GAS UTILITY COMPANIES By George C. S. Wang Regression and econometric models are appropriate for forecasting the sales to residential and large customers … the impact of weather on electric sales increases as the weather gets hotter … for effective forecasting, forecasting model must be up to date at the time of forecast. Every utility company has a unit consisting of experts who perform the forecasting functions. The importance of forecasting cannot be over emphasized. A utility company requires forecasts of sales for its operating budget, for its financial planning and for its rate case proceedings. It needs peak load forecasts for long-term system planning and short-term purchases of electric power and gas supply. Although the sophistication of forecasting varies somewhat from company to company, the fundamental goals and procedures of forecasting are pretty much the same. The objective of this article is to summarize the common forecasting practices and make a few suggestions on forecasting techniques. FORECAST PROCESS Most major utility companies in the United States have a well-structured forecasting group. The group is responsible ...