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market forces without electric utility actions, because they include substantial 

 amounts of switching that we do not think is cost effective, and because they do 

 not adjust for the fact that not all consumers would be willing to switch fuels even 

 if the switching was economic fi-om society's perspective. Our estimate includes 

 only fuel switching that would not be delivered by current market forces and only 

 the amount that we think would be cost effective relative to our resource 

 alternatives. 



We do not have comparable estimates of fuel switching potential in the commercial 

 and industrial sectors and we know of no recent estimates by others. There are 

 several reason for this; these sectors pose very difficult technical issues, there are 

 far fewer reliable data presently available, and collecting the needed data is 

 expensive and difficult. The limited information we do have indicates that the fuel 

 switching potential is relatively small, expensive, and difficult to influence with 

 utility actions compared to the residential sector. 



Current market conditions are providing sufficient incentives in some market 

 segments but may not be in others. Market incentives are sufficient in the new 

 single-family home market where natural gas is available. A very large fraction 

 (80 percent or more by some gas company estimates) of new single family 

 homes built where gas is available are choosing gas space and water heat. Some 

 smaller, entry-level homes with low annual heating needs and where low initial 

 costs are an important component of housing affordability are being built with 

 electric room heat rather than more expensive ducted central forced-air gas 

 systems. And some homes are being built with electric heat pump systems where 

 the cost of heating and cooling with such systems works out lower than the cost 

 of a comparable gas flimace and central air conditioner. These market results 



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