## Projecting fuel budgets by means of degree days

*By Vilnis Vesma. January 2000*

Most people budget for heating fuel by reference to a prior
year's consumption. Some will attempt to allow for prevailing
weather by making an adjustment using
degree-day figures for the
regions in which their buildings are located. This is important
because a mild winter (and we have now had three in a row in the
UK) will, if unrecognised, result in an underestimate.
To carry out a degree-day adjustment you need to know how much
of your fuel consumption is **fixed**, and how much is **weather-
dependent**. The fixed element carries over from year to year but
the weather-dependent part will vary in proportion to degree
days. To forecast how much weather-dependent fuel you will need
next year, you must first work out how much you used last year.
That bit's easy - just deduct the fixed portion from the total
(as an approximation, your fixed portion is twelve times the
lowest monthly consumption).

Then you need to know the total degree days for last year
(available from yours truly) and ditto for next year (not so
easy, but I'll come back to that). The following arithmetic then
needs to be carried out:

- Divide last year's weather-dependent consumption by last
year's degree days
- Multiply the result by next year's expected degree days
- Add back the 'fixed' component of demand

**How do you arrive at next year's degree days?** The ideal way is
to use a 12-month weather forecast, but this is expensive and not
necessarily any more reliable than assuming that next year will
be "average". Twenty-year average degree days are available for heating and cooling, and to assorted
base temperatures, for the 18 standard Uk reporting regions.
Download them free as an Excel worksheet