Estimating future electricity demand in an era of increasing energy scarcity

This paper compares forecasts using trend extrapolation and an econometric model for electricity use in the residential, commercial, and industrial sectors. The principal merit of the latter is that it relates future electricity demand to changes in individual causal factors, whereas the trend method merely replicates the past. Thus the detailed knowledge of demand structure embedded in the econometric model provides an analytical framework for forecasting demand in a period of abrupt changes in the causal factors. If future prices of electricity and other substitutes fall into the assumed range and if future levels of income, population, and other independent variables are consistent with the assumptions, the econometric model predicts that total electricity demand in the U.S. will increase 3.8 percent to 4.1 percent per year during 1973 to 1985. On the other hand, the trend model yields a forecasted annual growth rate of 6.9 percent for this period. (auth)