Weather and Electricity Demand Forecasts:
During the first half of 2001, the electricity crisis in California has garnered a number of headlines, often combined with dire predictions for other areas of the United States. Rolling blackouts took place during the winter months in the state. Spring difficulties eased, but forecasts for summer include more blackout warnings. New York state and other areas have also been mentioned as possible problem areas during the summer.
Where do such predictions come from? Are they accurate and can managers rely on the predictions for electricity demand? One source of such forecasts is Climaton, an electricity consultancy based in Fairfax, Virginia.
If you access their Web site and click around a bit, you'll see that Climaton sells their service, only allowing in subscribers for the most up-to-date reports concerning national, regional, state, and local electricity usage forecasts. You can access a few demo forecasts of outdated information.
One interesting piece of information the company provides, concerns the development of its forecasting method. Click on the link "Scientific Basis" from this main page. Read over the specifics of the forecasting model and then keep it handy as you answer the following questions.
Q1. What type of forecasting tool does Climaton use?
Q2. What time series components are apparent in the forecasts?
Q3. How good a fit is this forecasting technique? Do you see any problems with employing it for planning energy needs?
Q4. Given the accuracy of this type of demand forecast, why do you think California had such problems with electricity consumption?