MODELLING THE VALUE OF RELIABILITY FOR COMMERCIAL ELECTRICITY CUSTOMERS

With increasing deregulation of electricity markets, increased emphasis is being placed on electric service reliability. The objectives of this paper are to: first, provide new estimates of the value of reliability for commercial customers; second, model the determinants of the value of reliability using multivariate regression analysis; and, third, compare the results of this work with other studies of the value of reliability for commercial customers. Key findings are as follows. First, costs per outage vary by time of day, season of the year and length of the outage. Average cost per outage varies from $22.27 for a twenty minute outage at 8Am in the summer to $628.80 for an 8 hour outage in the summer. Second, regression models successfully explain 97% of the variation in costs per outage. Third, costs per kWh lost also vary by length of the outage, time of day and season of the year. Average cost per kWh varies from $1.17 for an 8 hour outage at 8am in the winter to $231.50 for a twenty minute outage at 4pm in the summer. Fourth, multivariate regression models successfully explain 556% of the variation in cost per lost kilowatt hour.

[1]  Janusz Bialek.  Recent blackouts in US and continental Europe: is liberalisation to blame? , 2004 .

[2]  Richard S. J. Tol,et al.  An Estimate of the Value of Lost Load for Ireland , 2011 .

[3]  Magdalena Ligus.  The value of supply security , 2015, 2015 IEEE 15th International Conference on Environment and Electrical Engineering (EEEIC).

[4]  Roy Billinton,et al.  Probability distribution approach to describe customer costs due to electric supply interruptions , 1994 .

[5]  Kjell Sand,et al.  Quality of supply regulation in Norway going beyond EN 50160 , 2005 .

[6]  Roy Billinton,et al.  Reliability issues in today's electric power utility environment , 1997 .

[7]  Michael J. Sullivan,et al.  Estimated Value of Service Reliability for Electric Utility Customers in the United States , 2009 .

[8]  George Gross,et al.  Value of service reliability , 1990 .

[9]  Roy Billinton,et al.  Cost-benefit analysis of power system reliability: two utility case studies , 1995 .

[10]  Joseph H. Eto,et al.  Cost of Power Interruptions to Electricity Consumers in the United States (U.S.) , 2006 .

[11]  A. V. D. Welle,et al.  An Overview of Selected Studies on the Value of Lost Load ( VOLL ) , 2007 .

[12]  B. N. Suddeth,et al.  Interruption costs, customer satisfaction and expectations for service reliability , 1996 .

[13]  Roy Billinton,et al.  Determination of reliability worth for distribution system planning , 1994 .

[14]  M. Lehtonen,et al.  Interruption costs of service sector electricity customers, a hybrid approach , 2015 .

[15]  Ronald N. Allan,et al.  Bibliography on the Application of Probability Methods in Power System Reliability Evaluation 1996-1999 , 1984 .

[16]  Paul L. Joskow,et al.  Lessons Learned From Electricity Market Liberalization , 2008 .

[17]  Luca Lo Schiavo,et al.  The use of customer outage cost surveys in policy decision-making: The Italian experience in regulating quality of electricity supply , 2005 .

[18]  P. Balducci,et al.  Electric Power Interruption Cost Estimates for Individual Industries, Sectors, and the U.S. Economy , 2003 .

[19]  M. Munasinghe,et al.  Economic criteria for optimizing power system reliability levels , 1979 .

[20]  Roy Billinton,et al.  Evaluation of reliability worth in an electric power system , 1994 .

[21]  M. D. Nooij,et al.  The value of supply security The cost of power interruptions: Economic input for damage reduction and investment in networks , 2007 .

[22]  K. K. Kariuki,et al.  Evaluation of reliability worth and value of lost load , 1996 .