Impacts of service quality regulation on distribution automation investment

Abstract

This paper investigates the effects of service quality regulation on investing in distribution automation. Among different regulatory instruments for quality regulation, the Reward-Penalty Scheme (RPS) has been selected to evaluate the effect of monetary incentive on behavior of Electric Distribution Utility (EDU) for service reliability. By implementing different automation strategies, the value of enhancing reliability indices and consequently the value of rewards and penalties are calculated for each strategy. For achieving to more realistic outcome, ten years horizon is considered. Furthermore, in the calculation of reliability indices, the time varying failure rate of components is taken into account. The proposed approach is applied to the Swedish Urban Reliability Test System to show the effectiveness of the proposed technique. This paper can be useful for decision makers in EDU to select the best automation strategy to maximize the utility profit in the presence of service quality regulation.

Effective design of the reward-penalty schemes to reach the highest persuasiveness in selecting investment strategies by electric distribution utilities

“…In other words, it was conceived that a system with this SAIDI level does not need any bias in its RPS. As suggested in [4], the cap value of reward and penalties should be selected as a percentile of the system Total Annual Revenue (TAR) which is calculated in [5]. In this regard, 2, 4 and 6 percentile of TAR is selected as different caps of rewards and penalties.…”

“…In the opposite side, the system with SAIDI value of 23 hours per year is considered as a system that must be penalized more severely. Note that based on the data presented in [5], and by selecting the PS equal to 2.3 hours per year, both SAIDI values of 0.23 and 23 hours are located in the caped zone of Figure 3. Also note that the numerical example presented here is just to present the use of the carrot and the stick theory in designing the distribution system SQR in the form of RPS, and so, it is not a conclusive example.…”