Reflecting the recent years of economic downturn and ever-widening state budget deficits, California’s annual growth in natural gas demand exclusive of load for power generation is projected to be under 1% annually over the next 10 years, according to the California Energy Commission staff’s draft energy demand report, 2003-2013, released Feb. 12.

Natural gas prices will increase by less than 2% annually through 2013 after declining by more than 40% in 2002, according to the staff report, which is expected to be revised soon based on a new gas price forecast.

Peak power demand is estimated to grow at 2% annually, or 1,150 MW, over the same period, a decrease from last year’s projections of 2.2% annually. “This forecast assumes no savings from energy efficiency programs funded in 2003 or later,” the draft report stated. An ad hoc integrated energy report committee will hold a two-day workshop to receive comments on the draft Feb. 25-26.

Final forecasts of power demand, peak electricity demand and natural gas demand will be used to form a baseline for the energy commission’s broader, more detailed “2003 Integrated Energy Policy Report.” The draft reports and subsequent refinements and other reports will be posted on the energy commission web site (www.energy.ca.gov/energypolicy/index.html).

Regionally, the state report envisions greater growth annually in the southern half of the state for both electricity and natural gas. Growth in direct access power demand is set at an annual 1% level, which the staff calls “conservative” because of the uncertainty of the future regulatory policies in this area. Energy efficiency is projected to slowly decline over the same 10-year period. The highest growth area is projected to be San Diego County for both gas and electricity.

While natural gas growth statewide is projected at 0.8% annually, growth among San Diego-based Sempra Energy’s two utilities is estimated at 0.9% annually for Southern California Gas, and 1.9% annually for its sister utility, San Diego Gas & Electric, while Pacific Gas and Electric covering the northern half of the state is expected to have a 0.5% annual growth rate in its gas demand.

For electricity, the PG&E utility also has the lower estimated annual growth rate (1.8% in both the short (through 2006) and long ranges); Southern California Edison is slated for 2.3% annual growth through 2006 and 2% annually after that; and SDG&E is estimated to have 3% annual growth in the short-term and 2.4% annually over the 2006-2013 period. By customer grouping, the state energy commission estimates the fastest power growth in the residential sector (3% annually), with commercial growth estimated at 2%.

As part of the economic variables affecting future energy demand, the draft report makes estimates for future power and natural gas retail prices, seeing power on a downward trend and gas moving up slowly over the ten years. After this year, electricity rates are projected to fall for all three major private-sector utilities next year — PG&E’s utility (10%); Edison (8.5%); and SDG&E (5%), and in 2008, the report predicts all three utilities will be able to lower their rates another 6% each when they finish paying off debt incurred because of the 2000-2001 energy crisis.

“Rates for the three utilities after 2004 would slowly increase to capture the cost of energy and the effect of inflation until 2008, ” the report stated.

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