Abstract
This paper presents the results of two simulations which analyze Hydro-Quebec development plan of March 1989. The first one takes as given Hydro-Quebec's electricity demand forecast and derives over time, financial implications of this demand. This simulation yields an electricity demand forecast of 1.8% and an average annual price increase of 5.0% over the 1990-2010 simulation period. In contrast, the second simulation takes into account the interaction between electricity price and electricity demand. Despite having the same underlying macroeconomic assumptions, the endogenous demand simulation yields an average annual growth in electricity demand of 2.2% and an average price increase of 5.5% over the simulation period. This translates by the year 2010 into an increased demand of 18 TWh or 8.8% more than forecasted. To satisfy this demand, energy generation would have to be increased by 21 TWh while peak production capacity would have to be increased by 3,893 MW. Finally, for several years, Hydro-Quebec would have difficulties in reaching the 25% capitalization ratio target.
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