[ ]-Customer Cost of Electric Service Interruptions

Click here to load reader

  • date post

  • Category


  • view

  • download


Embed Size (px)


Customer Cost of Electric Service Interruptions

Transcript of [ ]-Customer Cost of Electric Service Interruptions

  • Customer Cost of Electric Service Interruptions

    lnvited Paper

    There is an increasing interest in the quantitative assessment of power system relrability worth and its application to cost-benefit evaluation in power system planning. An approach often used to estimate reliability worth is to determine consumers monetary losses resulting from service interruptions, i.e., the cost of unreli- ability. Numerous studies have been conducted to provide esti- mates of customer interruption costs and a wide range of metho- dologies has evolved. There is no universal agreement on the appropriafeness of methodologies to particular situations nor on the interpretation of the results obtained, but some appear to be more acceptable and useful to the industry than others. This paper presents a survey of the techniques available for estimating cus- tomer interruption costs, discusses the rationale of those which are currently popular, and explores the application of such cost data in creating a composite customer damage function.


    The basic function of a modern electric power system i s to provide an adequate electrical supply to its customers as economically as possible and with a reasonable level of reliability. In this context, the term reliability has a broad, general meaning. It includes load or demand-side mea- sures such as quality and continuity of service as under- stood bythecustomer. It also includes utilityor supply-side concerns such as present and future energy reserves and operational constraints, like equipment ratings and system stability limits, which are not directly seen by the cus- tomers. As a consequence of this broad meaning, some researchers have approached the reliability issue primarily from the demand or customer viewpoint with little regard for system imperatives, while others have viewed the sit- uation primarily from the system and utility vantage point with little regard for customer considerations. Since the pri- mary purpose of the system i s to satisfy customer require- ments and since the proper functioning and longevity of the system are essential requisites for continued satisfac- tion, it i s necessary that both demand- and supply-side con- siderations are appropriately included.

    Manuscript received March 15 , 1988; revised October 13, 1988. This work was supported by the Canadian Electrical Association and the Natural Sciences and Engineering Research Council.

    The authors are with the Department of Electrical Engineering, Power Systems Research Group, University of Saskatchewan, Sas- katoon, Saskatchewan, Canada S7N OWO.

    I E E E Log Number 8928070.

    From the customer viewpoint, the issue of service reli- ability is, for many types of customers, simply a question of whether the supply i s available or not. Other customers, though fewer in number, have quality requirements more stringent than normal utility-allowed voltage or frequency variations and momentary interruptions, which might be considered as a state of partial availability.Voluntarycur- tailment by customers in response to utilityappeals also fits this category. Basically, customers have come to expect electrical supply to be continuously available on demand. While most consumers would accept that this i s not real- izable in practice since equipment failures will occur, nevertheless the expectation remains and, to many, it i s considered almost a right. This is due, at least in part, to the high levels of reliability enjoyed in most service areas, and it has been exacerbated by escalating rate increases during the last two decades. These factors, along with the inherent characteristics of electrical supply systems such as their monopolistic nature, virtually universal clientele, perva- siveness into a l l areas of society and typical large size, result in a major impediment to the determination of reliability worth. Customers have little or no choice in terms of rates versus quality, nor do they have experience or background to choose if they were given that option. If this i s coupled with the notion that electrical supply i s almost a social right,thequestion What istheworth of electrical supply reliability? becomes an exceedingly difficult one to address. Unable to assess reliability worth directly, many researchers have turned their attention to evaluating the impacts or losses resulting from electrical supply interrup- tions, that is, the societal cost of unreliability. It i s generally recognized that interruption costs are not equal to reli- ability worth but rather only indirect assessments thereof, perhaps a lower bound. Avarietyof methods which attempt to assess interruption costs have evolved and are discussed later in this paper.

    The power utility has continually attempted to respond to societys expectations regarding service reliability. Plan- ning, design, and operating strategies and criteria have evolved over many decades with the objective of ration- alizing and optimizing the reliability, economic, and oper- ational considerations. Improvements in reliability, which are measured using various reliability criteria and indices,

    0018-9219/89/ObO0-0919$01 .OO :C 1989 IEEE

    PROCEEDINGS OF THt IEEE. VOL. 77, NO. 6, l U N t 1989 919


    Downloaded from http://www.elearnica.ir

  • areaccompanied by increases in expenditure. Although the cost of improved service i s initially borne by the utility, sub- sequent rate changes transfer this cost to the consumer. Therefore, in the simplest sense, if the aggregate total of all customers interruption costs i s assumed to be a mea- sure of the worth or benefit of service reliability to society, then an optimal target reliability level i s one in which the marginal cost of incremental improvements in service reli- ability would result in equal marginal reductions in societal interruption cost.

    The criteria and techniques first used by system planners to address reliabilityconcerns were deterministic in nature. The major weakness of these approaches i s that they d o not reflect the probabilistic or stochastic nature of system behavior, customer demands, or component failures. A wide range of probabilistic techniques has evolved during the last several decades. These include reliabilityevaluation techniques, probabilistic load flow, and probabilistic tran- sient stability calculations. Enhanced computational capa- bility, an increased understanding and acceptance of prob- abilistic techniques, and the collection and computation of appropriate performance data made these approaches pos- sible, although economic considerations were a primary motivator. Present-day practice suggests that the worst-case conditions (and their attendant infrequent occurrence) should not be utilized as design limits or criteria because of economic considerations. In contrast, appropriate prob- abilistic techniques not only recognize the l ikel ihood of occurrence of an event but also predict its severity and its impact on system behavior and operation. Such approaches enable system planners and operators to achieve practical systems in which the overall cost to society of providing quality and continuity of electrical supply i s more closely related to the societal worth or benefit of having that quality and continuity.

    The conceptual objective of undertaking reliability cost- benefit analysis makes i t necessary to independently assess the cost of providing reliability and the worth of having it. Most of the techniques currently available for reliability evaluation focus on generation and transmission facilities since inadequacies here can have widespread implications. Reliability assessments and attendant costs of implemen- tation are becoming well established [I]. In contrast, worth assessments are immature procedures and have been undertaken mainly at the customer load points, wi th most evaluations based on losses due to interruptions. Hence, the costs of providing reliable service and the losses arising from unreliability are being assessed at different locations in the system. It i s clear that considerably more research is required in this entire area; nevertheless, the current approaches represent an initial attempt to optimize the operational reliability of power systems.


    The worth or value of electrical service reliability is not particularly easy to define and more difficult to evaluate. Yet the need for its evaluation i s becoming more important in planning and operating power systems as outlined above; therefore, an attempt to define i t i s essential. To an econ- omist, value i s determined using the appropriate demand function so that, at the margin, the price at which the prod- uct i s traded in the marketplace establishes its value. There

    is a concern, however, that customers willingness to pay may not be an entirely appropriate method to evaluate elec- tric service reliability worth.

    Reliability, dependability, durability, etc., is a marketable entity and has established market values in areas such as automobiles, business services, and home appliances. That is, there are manufacturers or suppliers whose products have become established in the marketplace as having superior reliabilityattributes and thereforecommand prices higher than similar products which do not have the high reliability reputation.An interesting anomaly isthatthe reli- ability/durability may be real or i t may only be perceived, which, some would argue, can result in an erroneous mar- ket value. Additionally, there are products or services for which the use of a demand function may not be appro- priate, such as, for example, matters related to social or per- sonal safety orwell-being. If willingness to pay methods are used in such markets byoffering thecl ien