What electric reliability is actually worth and what it means for utilities

What electric reliability is actually worth and what it means for utilities

The cost of outages to utility customers is not always adequately included in utility planning, according to experts at calculating those costs.

But Pacific Gas and Electric (PG&E) and Southern Company, two very different types of investor owned utilities, are among the most advanced at including the cost into their planning. That raises a very interesting question about the way utilities spend money.

Utilities usually plan to certain minimum requirements or only consider their own costs and benefits, according to Nexant Utility Services Managing Consultant Josh Schellenberg, co-author of the just-released report, "Updated Value of Service Reliability Estimates for Electric Utility Customers" from Lawrence Berkeley National Laboratory (LBNL).

By providing a meta-analysis to understand the customer benefits associated with various types of reliability interruptions, Schellenberg said, this report helps address one of the barriers to utilities incorporating the customer perspective.

Incorporating customer interruption costs into planning, which is known as "value-based reliability planning," leads to a much better assessment of the societal costs and benefits, Schellenberg said.

Often the utility is comparing multiple investments, he added. If it looks only at utility costs and benefits and doesnt incorporate the customer perspective, it could make the wrong decision because the customer may benefit greatly from one investment and not much from another investment.

Who gets the costs and benefits?

Utility benefits from reliability investments include operations and maintenance savings and lower restoration of service costs. Though the utility incurs costs for reliability investments, those costs are generally recovered from ratepayers in time.

Power interruptions can be incredibly costly to customers, especially to commercial-industrial customers, Schellenberg said. Ignoring the potential benefits to customers in the cost-benefit assessment of reliability investments can undervalue them.

Source: Utility Dive

SMART GRID Bulletin March 2018

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