Scheduled System Maintenance:
On May 6th, single article purchases and IEEE account management will be unavailable from 8:00 AM - 5:00 PM ET (12:00 - 21:00 UTC). We apologize for the inconvenience.
By Topic

Impact of penalty-reward mechanism on the performance of electric distribution systems and regulator budget

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 $31
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

2 Author(s)
Mohammadnezhad-Shourkaei, H. ; Dept. of Electr. Eng., Sharif Univ. of Technol., Tehran, Iran ; Fotuhi-Firuzabad, M.

As a part of the ongoing debate about competition in the electricity industry, regulators are increasingly considering performance-based regulation (PBR) as an alternative to improve the service quality. The fundamental principle behind PBR is that good performance should lead to higher profits, and poor performance should result in lower profits. A penalty-reward structure (PRS) in a PBR mechanism can enhance utility performance to align utility interests with customer-s interests. During the implementation of PBR, regulators should spend or receive money to reward good performed utilities or penalised poor performed utilities, respectively. A technique is proposed, in this study, to not only motivate the utilities to improve their service quality but also equalise the total rewards paid and the total penalties received by regulators. This approach not only reduces the implementation cost of PBR for regulators but also removes any doubt from utilities that regulators apply PBR for money making. In addition, in order to achieve an efficient PBR for enhancing service reliability, more than one reliability index can be incorporated in PRS. Reward or penalty arisen from each index is weighted based on its impacts on the consumers and are combined to make a PBR cost for each utility. A comprehensive numerical study is accomplished to examine the applicability of the proposed approach. The results indicate that implementing the proposed method can effectively improve the service reliability and zero the implementation cost of PBR.

Published in:

Generation, Transmission & Distribution, IET  (Volume:4 ,  Issue: 7 )