99 



5a. What is the potential for cost-effective electricity savings in the Northwest region 

 from tue\ switching to natural gas? Do current market conditions create a 

 suCQcient i:icentive for fuel switching? If not, what measures should BPA 

 undertake to encourage fuel switching? 



Based on our own analysis for Oregon, we believe that the regional potential for cost- 

 effective load reduction from households converting electric water heaters and space 

 heat systems to natural gas may be as much as 850 average megawatts. The potential is 

 in two main areas: 1) replacing worn out electric water heaters in homes already heated 

 with natural gas and 2) replacing home electric forced-air furnaces with natural gas 

 furnaces. 



We have not estimated the potential for increasing the use of natural gas for space and 

 water heat in new homes, but we believe the potential is small. Today in Oregon, for 

 example, natural gas space heating systems are installed in more than half of the new 

 single family homes built. For comparison, a decade ago only a quarter of new single 

 family homes were built with gas systems. Natural gas is failing to capture a significant 

 share of the new housing market only where it is generally not the cost-effective choice 

 for space heating fuel, such as in small homes and apartments. Further, the vast 

 majority of new homebuyers who are installing natural gas space heating systems are also 

 installing natural gas water heaters. 



We also have not estimated the cost-effective potential for substituting natural gas for 

 electricity to heat commercial buildings and fuel manufacturing processes. There may be 

 some potential, but we suspect it is small and would be difficult to achieve. 



Market trends do point to substantially more natural gas and space heating systems in 

 the Northwest. Last year in Oregon, for example, more than 5,500 households converted 

 to natural gas space heat — many from electric space heat systems. In addition, about 

 7,800 homes have converted from electric water heaters to natural gas water heaters. 

 We estimate 50,000 to 75,000 Oregon households could cost-effectively convert to natural 

 gas space heat systems; 150,000 to 200,000 homes could cost-effectively convert to 

 natural gas water heaters. 



6- 



