We study the impact of deployment of low cost, low power micro base stations along with macro base stations on energy consumption and capacity of downlink LTE. We add three important elements to the existing studies: a traffic layer analysis that take both the physical and traffic layer specifications of LTE downlink into account; a threshold-based policy to associate users to base stations; and an allocation scheme to allocate the frequency band to macro and micro sites. We investigate all combinations of these elements through numerical evaluation. We observe that 1. there are important differences between traffic layer and physical layer analysis, 2. threshold-based user association policy improve the capacity of the network by up to 33% without affecting the energy profile of the network, and 3. considerable energy saving and capacity gain can be achieved thought an optimal allocation of the frequency band to macro and micro sites. Finally, we show that up to 46% saving in energy can be achieved by a careful network deployment as compared to the case that no micro sites are deployed in the network.