2014 FORECASTING BENCHMARK AND OUTLOOK SURVEY. Mark Quan and Stuart McMenamin September 16, 2014 Forecasting Brown Bag Seminar

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1 2014 FORECASTING BENCHMARK AND OUTLOOK SURVEY Mark Quan and Stuart McMenamin September 16, 2014 Forecasting Brown Bag Seminar

2 PLEASE REMEMBER» Phones are Muted: In order to help this session run smoothly, your phones are muted.» Full Screen Mode: To make the presentation portion of the screen larger, press the expand button on the toolbar. Press it again to return to regular window.» Feedback and Questions: If you want to give feedback to the presenter during the meeting or if you have a question, please type your question in the Q&A box. We will address it as soon as we can.

3 2014 BROWN BAG SEMINARS» The Frontier of Short-term Load Forecasting March 25» 2013 Weather Normalization Trend Survey - May 20» 2014 Forecast Accuracy Benchmarking Survey and Energy Trends September 16» Using AMI Data to Enhance Daily Tracking Processes December 9 All at noon, Pacific Time All are recorded. PDF and recording available after the session.

4 ENERGY TRENDS

5 UNITED STATES RETAIL ELECTRIC SALES

6 UNITED STATES RETAIL ELECTRIC SALES

7 2010 WEATHER Hotter than average summer in south and east Cold winter in the south east High Plains Regional Climate Center (

8 2011 WEATHER Hotter than average summer in South Colder than average winter West, but warmer in the East High Plains Regional Climate Center (

9 2012 WEATHER Warmer than average summer Very warm winter High Plains Regional Climate Center (

10 2013 WEATHER Very close to normal summer Very close to normal winter

11 UNITED STATES RETAIL GAS SALES 2010 Cold Winter in Southeast 2011 Cold Winter in West 2012 Warm Winter 2013 Normal Winter

12 UNITED STATES RETAIL GAS SALES

13 2014 SURVEY RESULTS

14 2014 FORECASTING SURVEY» In 2012 and 2013, Itron surveyed energy forecasters in North America. The goal was to get a benchmark for growth and forecast accuracy» In 2014, the survey is split into two portions: Forecast Outlook Forecast Accuracy Results updated June 1, 2014» Comparison values from the 2012 and 2013 Forecast Benchmark Survey Reports

15 2014 RESPONDENTS Forecast Outlook Forecast Accuracy Forecast Outlook survey represent 1,730 Billion kwh of electric sales and 1,050 BCF of natural gas in North America. Forecast Accuracy survey represent 1,930 Billion kwh of electric sales and 1,925 BCF of natural gas in North America Weights are approximate energy weights used in the weighted average calculations Other Electric include ISO and Retail Suppliers. These results are not included in regional or national weighted results

16 REGIONS

17 CUSTOMER GROWTH OUTLOOK

18 CUSTOMER GROWTH Residential Customer Count Growth (%) Commercial Customer Count Growth (%)

19 SALES GROWTH OUTLOOK

20 RESIDENTIAL SALES (%) Residential sales grows slower than residential customers Ten-year sales forecast is higher than the short term growth rates Long-term growth forecasts have slowly declined over the past three years

21 COMMERCIAL SALES (%) Commercial sales growth is slightly slower than customer growth Ten-year sales forecast are consistent with the one-year ahead outlook Long-term growth forecasts have slowly declined over the past three years

22 RESIDENTIAL/COMMERCIAL INTENSITY SAE Model Intensity trends based on AEO 2014 Reference Case

23 INDUSTRIAL SALES (%) High near-term growth reflects known projects. Long-term growth forecasts are consistent and similar to commercial growth forecasts

24 SYSTEM SALES (%) System includes additional classes beyond residential, commercial and industrial Near-term forecasts are slightly higher than long term forecasts due to known industrial projects Long-term forecasts appear stable

25 ELECTRIC SYSTEM SALES Mean = 0.30% Std Deviation = 1.7% Unweighted Growth Rates

26 PEAK FORECASTS (%) Short-term forecasts show considerable differences Historical values are reported as weather normalized Long-term forecasts appear stable

27 FORECAST COMPONENTS

28 KEY FORECAST COMPONENTS Results are unweighted and include other electric Electric Vehicles EV changes to 27% includes when West is removed. Photovoltaic PV changes to 30% includes when West is removed. Price Price continues to be an important forecast driver

29 FORECAST ACCURACY

30 RESIDENTIAL FORECAST ACCURACY Aggregated Growth Rate Forecasts and Results Absolute Average Error Survey Year Reported Year Error % % % 3 Year Average 1.63% Negative errors: Forecast is lower than normalized actual values (underforecast)

31 COMMERCIAL FORECAST ACCURACY Aggregated Growth Rate Forecasts and Results Absolute Average Error Survey Year Reported Year Error % % % 3 Year Average 1.91% Negative errors: Forecast is lower than normalized actual values (underforecast)

32 INDUSTRIAL FORECAST ACCURACY Aggregated Growth Rate Forecasts and Results Absolute Average Error Survey Year Reported Year Error % % % 3 Year Average 3.59% Negative errors: Forecast is lower than normalized actual values (underforecast)

33 RELATIONSHIP WITH KEY DRIVERS

34 SYSTEM FORECAST ACCURACY Aggregated Growth Rate Forecasts and Results Absolute Average Error Survey Year Reported Year Error % % 2 Year Average 1.52% Negative errors: Forecast is lower than normalized actual values (underforecast)

35 PEAK FORECAST ACCURACY Aggregated Growth Rate Forecasts and Results Absolute Average Error Survey Year Reported Year Error % % % 3 Year Average 2.57% Negative errors: Forecast is lower than normalized actual values (underforecast)

36 NATURAL GAS Negative errors: Forecast is lower than normalized actual values (underforecast) Small sample. 12 or less companies reporting results Residential and commercial sectors were overforecast. Industrial sector is under-forecast

37 FORECAST

38 2014 ELECTRIC SYSTEM FORECAST Historical Linear Growth through 2008 Annual Gain = 62 TWh/year Survey Says: Annual Gain = 30 TWh/year About 0.65% Growth

39 2014 NATURAL GAS FORECAST Average Sales Survey Says: Annual Gain = 0.12 Bcf/year About 0.67% Growth Forecast is the sum of Residential, Commercial, and Industrial sales

40 QUESTIONS? Press *6 to ask a question 2014 HANDS-ON WORKSHOPS» European Energy Forecasting Workshop Amsterdam, Netherlands; October 21-23» Fundamentals of Sales and Demand Forecasting Boston, MA; October OTHER FORECASTING MEETINGS» Itron Utility Week San Antonio, TX; October 19-21» Check out our forecasting blog at: blogs.itron.com/forecasting/» For more information and registration: Contact us at: , or forecasting@itron.com