Assessment of customer supply reliability in performance-based contracts

The number of performance-based contracts between customers (end-users of electricity) and transmission system providers is expected to grow when the electricity market opens up to competition and for customer choice. In these contracts, specified levels of supply reliability with regard to service continuity and power quality will be specified and rewards for honoring these performance levels may be awarded and penalties may be imposed for failing to honor them. These rewards and penalties will be clearly spelled out in the contracts. Transmission system providers may have to assess in advance the level of supply reliability to customers before entering into any of these agreements in order to minimize the financial risk associated with these contracts. This paper describes a probabilistic method for evaluating the level of supply reliability to a customer entering into a performance-based contract with a transmission provider. The evaluation process includes performance measures that reflect both reliability and quality of power supply to the customer. The proposed method can be used not only to assess various utility solutions for improving the reliability and power quality to the customer but also to link the level of supply reliability to the cost of service. An example is given to illustrate the concepts involved.