Financial and Revenue Forecasting

A financial and operational planning load forecast takes into account variables that influence a budget over a period of five years. Load forecasting models are typically long-range (15 to 30 years) or short-term (hourly or day ahead). This can be problematic for utility staff who need projections that can be entered into their monthly financial models. PSE’s financial and operational planning load forecasts are built with these users in mind so they not only produce output for monthly financial models, but use inputs that are more likely to drive monthly sales compared to annual or daily inputs. Many of these monthly variables are related to weather and economic influences. The variability in summer weather over the last five years is shown in the graph below. These changes can have profound effects on annual sales and thus revenues.  Budgets have also been recently impacted by the loss of major industrial customers due to the recession.

PSE works with the utility to hone the weather, economic, and demographic variables to fit into monthly projections, which in turn feed the forecast models that produce outputs for monthly budgets. These results can be used to develop “normalized” budgeted sales and purchase volumes. In addition, they allow for the development of multiple budget projections based upon various weather, economic, and price scenarios.  

By incorporating these impacts and scenarios into the budget process, a utility can be confident that its budget reflects a more “normal” level of sales, revenues, and power supply costs in addition to knowing the potential impact of different scenarios.

PSE would be happy to assist your utility by modeling your situation to help you get a better handle on what a “normal” budget may look like and your exposure to potential scenarios.