Due to the complex and integrated nature of a power system, failures in any part of the system can cause interruptions which range from inconveniencing a small number of local residents to a major and widespread catastrophic disruption of supply.
The economic impact of these outages is not necessarily restricted to loss of revenue by the utility or loss of energy utilization by the customer but, in order to estimate the true costs, should also include indirect costs imposed on customers, society, and the environment due to the outage.
Cost-Benefit Considerations
For instance, in the case of the 1977 New York blackout, 84% of the total costs of the blackout were attributed to indirect costs. In order to reduce the frequency and duration of these events, it is necessary to invest either in the design phase, the operating phase, or both. A whole series of questions come to mind:
• is it worth spending any money?
• how much should be spent?
• should the reliability be increased, maintained at existing levels, or allowed to degrade?
• who should decide - the utility, a regulator, the customer?
• on what basis should the decision be made?
Cost-Benefit Considerations
The underlying trend in all these questions is the need to determine the worth of reliability in a power system, who should contribute to this worth, and who should decide the levels of reliability and investment required to achieve them.
The basic questions that therefore need to be answered are “Is it worth it?” and “Where or on what should the next dollar be invested in the system to achieve the maximum reliability benefit?”.
Cost-Benefit Considerations
The first step in answering the above questions is illustrated in the figure below, which shows how the reliability of a product/system is related to the investment cost, i.e., increased investment is required in order to improve reliability. This clearly shows the general trend that the incremental cost C to achieve a given increase in reliability R increases as the reliability level increases. Alternatively, a given increase in investment produces a decreasing increment in reliability as the reliability is increased. In either case, high reliability is expensive to achieve.
Incremental cost of reliability
Cost-Benefit Considerations
The incremental cost of reliability, C/R, is one way of deciding whether an investment in the system is worth it. However, it does not adequately reflect the benefits seen by the utility, the customer, or society in general. The two aspects of reliability and economics can be appraised more consistently by comparing reliability cost (investment cost needed to achieve a certain level of reliability) with reliability worth (benefit derived by the customer and society).
Cost-Benefit Considerations
The basic concept of reliability cost/reliability worth evaluation is relatively simple and can be presented by the curves of the figure shown below.
These curves show that the investment cost generally increases with higher reliability. On the other hand, the customer costs associated with failures decrease as the reliability increases.
Utility and customer costs
Cost-Benefit Considerations
The total costs are the sum of these two individual costs. This total cost exhibits a minimum, and so an “optimum” or target level of reliability is achieved. Two difficulties usually arise in the total cost assessment.
Firstly, the calculated indices are usually derived only from approximate models. Secondly, there are significant problems in assessing customer perceptions of system failure costs.
Cost-Benefit Considerations
The disparity between the calculated indices and the monetary costs associated with supply interruptions is shown in the figure. The left hand side of the figure shows the calculated indices at the various hierarchical levels. The right hand side indicates the interruption cost data obtained by user studies.
It can be seen that the relative disparity between the calculated indices at the three hierarchical levels and the data available for worth assessment decreases as the consumer load points are approached.
Cost-Benefit Considerations
There have been many studies concerning interruption and outage costs.
These studies show that, although trends are similar in virtually all cases, the costs vary over a wide range and depend on the country of origin and the type of customer. It is apparent therefore that considerable research still needs to be conducted on the subject of interruption costs.
Cost-Benefit Considerations
Broadly speaking, the cost of a power interruption from the customer's perspective is dependent both on the customer and interruption characteristics. Customer characteristics include type of customer, nature of his/her activities/demand requirements. Outage costs will therefore vary substantially between customers within a class, and between classes of customers. Interruption characteristics include the parameters of frequency, duration and magnitude of outage, time of occurrence, time of year, whether partial outage or complete, etc.
Cost-Benefit Considerations
The most fundamental and methodological approach that has been used to assess direct, short-term customer outage costs is the customer survey method. This approach appears to find favors with electric utilities for estimating the outage costs to be used for planning purposes. It is based on the premise that the customer is in the best position to assess his/her monetary losses associated with power failures. The surveys ask the monetary losses that would be sustained by them under certain specified scenarios of interruptions, and also their willingness to pay in order to avoid having those interruptions. A very important consideration in determining the interruption cost through surveys is the choice of the valuation method. Three types of approaches have been undertaken in this regard.
Cost-Benefit Considerations
1. The first and the most obvious approach is a direct solicitation of the outage costs for given outage conditions. The approach provides reasonable and consistent results in situations where losses can be directly identified.
2. The second approach seeks the customers' opinions on what they would be willing to pay to avoid having the interruption(s), or conversely what amount they would be willing to accept for having to experience the outage (pay and willingness-to-accept theories). This is based on the theory that incremental willingness to pay (accept) gives the corresponding marginal increments (decrements) in service reliability.
Cost-Benefit Considerations
3. The third and final approach is that of indirect worth evaluation, where customers' responses to indirect questions are used to derive a monetary figure. This approach includes the respondents' selection of interruptible/curtailable options, their predictions of what preparatory actions they might take in the event of recurring interruptions, their ranking of a set of reliability/rate alternatives and selecting an option most suitable for their needs, etc. This approach has been used in major Canadian surveys, and has also been used by many utilities and governmental agencies to estimate the costs of interruptions.
Cost-Benefit Considerations
Utilization of the gathered interruption cost estimates in a practical planning context could involve converting the gathered data into a functional representation or cost model. The traditional cost model is known as a composite customer damage function (CCDF), which defines the overall average costs of interruptions as a function of the interruption duration in a given service area that was used in the surveys. Since the customers are asked to provide their best estimates of monetary losses for selected outage scenarios, the interruption cost data collected using the survey method are duration specific. These data can be used to create customer damage functions (CDFs) for specific customer classes (sectors). The average sector costs associated with each studied interruption scenario are used to create sector customer damage functions (SCDFs) which are then (usually) weighted using their respective energy consumptions to create a CCDF for the entire studied area.
Cost-Benefit Considerations
Cost-Benefit Considerations
Cost-Benefit Considerations
Cost-Benefit Considerations
• Probabilistic, as opposed to deterministic, indices are more popular in reliability evaluation of electric power systems.
• Fundamental reliability indices are those of probability, frequency and duration of failures, regardless of whether the system study is at HLI, HLII or HLIII system levels.
• There should be some conformity between the reliability of various parts of the power system. It is pointless to reinforce quite arbitrarily a strong part of the system where weak areas still exist. Consequently, a balance is required between generation, transmission and distribution - this does not mean that the reliability of each should be equal. The reliability of different zones will, in general, be different since HLII failures can cause widespread outages whereas distribution failures are very localized.