By Topic

Quality of service provision in electric power distribution systems through reliability insurance

Sign In

Cookies must be enabled to login.After enabling cookies , please use refresh or reload or ctrl+f5 on the browser for the login options.

Formats Non-Member Member
$31 $13
Learn how you can qualify for the best price for this item!
Become an IEEE Member or Subscribe to
IEEE Xplore for exclusive pricing!
close button

puzzle piece

IEEE membership options for an individual and IEEE Xplore subscriptions for an organization offer the most affordable access to essential journal articles, conference papers, standards, eBooks, and eLearning courses.

Learn more about:

IEEE membership

IEEE Xplore subscriptions

4 Author(s)
Fumagalli, E. ; Politecnico di Milano, Italy ; Black, J.W. ; Vogelsang, I. ; Ilic, M.

Traditional methods for regulating electricity distribution grids have several weaknesses in terms of incentives, risk allocation, consumer preferences, and the value of reliability. Rate of Return and Performance Based Regulation do not provide incentives for both cost efficiency and quality of service. These regulatory structures also allocate the risk of outages almost entirely to consumers and fail to incorporate consumer preferences for reliability/service quality. Additionally, investments in system reliability are not explicitly valued. This paper proposes an insurance scheme for reliability as a possible solution. Reliability insurance provides economically efficient investment incentives and alleviates consumers' reliability risk. Consumers provide economic signals to the distribution provider for their desired quality of service through insurance contracts. The value of reliability to consumers is thereby made transparent, allowing Distribution Companies (DisCo's) to make efficient investment decisions. Insurance also allocates outage risk to the DisCo (which controls the system), instead of consumers (who have little or no control over reliability). Reliability insurance effectively unbundles delivery and reliability services and enables consumers to receive differentiated reliability based upon their value for this service. This paper describes the potential for reliability insurance to improve both efficiency and risk allocation compared to conventional regulatory structures.

Published in:

Power Systems, IEEE Transactions on  (Volume:19 ,  Issue: 3 )