Abstract

In the past two years, ERCB has developed an integrated engineering and econometric system to forecast Alberta energy and energy resource requirements. The system consists of three basic models: an Alberta IDEA (Industrial Disaggregated Economic Activity) model, an Alberta ENERGY (Energy and Energy Resource Requirement) model, and an Alberta ERA (Energy Resource Allocation) model. The IDEA model, with 600 economic indicators, 17 industries, 67 commodities, and 27 final demand categories, provides a detailed supply demand framework to produce a consistent set of economic forecasts. Based on these economic activities, energy and energy resource requirements are derived from a bottom-up energy model. In the ENERGY model, elaborate engineering processes and econometric techniques are used to capture technological information at the process level and the influence of economic forces, and to make these two major factors consistent. The ERA model is designed to produce an industrial profile consistent with both demands and supplies of Alberta energy resources. The industrial profile is used to drive the economic activity model.

A. OVERVIEW DF THE SYSTEM

Energy is a derived demand. To forecast energy requirements, we must forecast all energy consuming activities and their technologies. For example, in the industrial sector, we must look at differenceplants and corresponding technologies to derive appropriate energy requirements. We look at housing activities of the residential sector and fuel penetrations in the residential heating fuel demands. For electrical consumption, we look at electrical appliance stocks. In the transportation sector, we look at stocks of cars by types and ages to forecast motor gasoline demand, etc.

There are two basic driving forces in Alberta energy consuming activities. The first farce is created by EX-Alberta demands and government policies. For example, oil sand projects are created to meet ex-Alberta demand. The project investment and operation will draw a substantial amount of outside investment and labour. Other activities will be generated within Alberta such as an increase in population, housing, services, transportation, etc. This is the second force, which is induced by Alberta economic performance.

To take into account these two distinct forces in the projections of energy consuming activities, we use an Alberta Industrial Disaggregated Economic Activity (IDEA) model. The Alberta IDEA model provides a detailed framework which treats both demand and supply simultaneously. In this model, disaggregated demands of expenditure account are used to forecast short term fluctuations, and the 1974 Input Output tables are used to detect structural changes of the provincial economic activities. There are 17 industries, 47 commodities and 27 final demands in the model. The exogenous industries in the Alberta IDEA model cover the primary sector and almost all energy producing activities, which consist of mining and petrochemical complex. From a detailed industrial profileof exogenous industries, Which are based on market intelligent information, the Alberta IDEA model will generate a set of energy consuming activities. prices, and costs consistent with the perceived industrial profile. Such activities, prices, and costs are population, housing stocks by types of dwelling, commercial and industrial activities, construction and labour costs etc.

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