Waterway Traffic Projections Waterway traffic demand projections are estimated for each lock and navigable river within the Ohio River Basin (ORB). A complete update of the traffic projections for all commodities was last published in 1994. Utility coal traffic projections were updated in FY 95, FY 96, and FY 98 as part of the periodic updating of the projection database. These periodic updates are necessitated by Federal legislation that fundamentally changes the operating environment of the electric utilities. Tracking these changes is important because the electric generating industry accounts for half of all ORS traffic.
Coal, the primary commodity shipped on the ORS, has been greatly affected by the 1990 Clean Air Act Amendments (CAAA) and implementing regulations. The effects of deregulation in the electric utility industry, initiated by passage of the Energy Policy Act of 1992, are continuing to evolve. The Administration's Clear Skies Initiative and other proposals, with their potential effects on multiple emissions, would have substantial impacts on utility coal burn and coal sourcing. In light of these and other important changes, periodic updating of the ORS projections is necessary to keep pace with the evolving electric generating market for coal.
Addressing the effects of current and proposed energy regulations has been highly important to gaining Administration support for nearly all of the Corp's major navigation modernization projects in pre-construction development. There is universal recognition that this legislation will affect coal flows, the mainstay of system commerce. The CAAA set successively more stringent sulfur emission limits for coal-fired electric generating plants for target years 1995 (Phase I) and 2000 (Phase II). Additional implementing regulations are currently affecting sulfur, nitrogen oxide and other pollutant emissions. In an effort to minimize the cost of complying with emission requirements, Congress has allowed utilities considerable flexibility in meeting the emission limits. As a result, most utilities' compliance strategies are evolving as they move through a very complex decision-making process involving fuel selection, coal selection, coal sourcing, and the competitive aspects of these decisions.
How the evolving regulations and accompanying business decisions will affect future coal flows was re-assessed in FY 03, and new system forecasts were completed. The new forecasts involved both utility steam coal and all other commodities moving on the ORS. An important input to the forecasts was the information gathered during a survey of ORS utilities. The survey responses formed the basis for the short-term utility coal traffic forecast. The long-term forecast was based on the output of the ORS Coal Model, which underwent major modification in FY 02-03. The Coal Model was used to generate both a base case and an additional forecast scenario assuming high economic growth.
Besides the forecast scenarios based on the Coal Model, three additional forecast scenarios were developed based on a linear programming forecast approach. The forecast scenarios evaluated the impacts of proposed regulations aimed at controlling multiple emissions. The proposed regulations were those contained in the Administration's Clear Skies Initiative.
In FY 02 the Center began to refine and further automate the Coal Model. The Coal Model allows the analyst to move from utility survey responses to estimating utility coal waterway flows. The model is also key to producing alternative future traffic forecasts. In FY 03, the model structure and programming required additional development, in part, because of changes in the availability and formats of independently-produced model inputs. The model now runs in a Visual Basic format versus the older dBase computer language. Further refinements of the model are planned for FY05 to make the model more user-friendly.
In FY 03, a forecast of the non-utility commodities was prepared, based, in large part, on the results of an extensive non-utility survey. During this survey, more than 200 of the major commodity shippers/receivers on the ORS were contacted. As a result of this survey, normal traffic levels were determined in specific commodities, expected short-term traffic increases or decreases, and industry plans for expansions or closures. This information provided a base from which long-term forecasts were developed.
The major efforts during FY 04 were the independent technical review/response process and documentation of the forecast effort. The goal was to complete a single-volume report presenting the commodity traffic background and recent developments, procedures and assumptions used in developing the forecasts and the forecast results. The document is about half complete as of the first quarter of FY05. A major effort during FY 05 will be the completion of this document. This report will make the forecast procedures and results accessible to all interested parties.