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Guidelines of Good Practice on customer cost surveys
as an input for infrastructure development and its regulation
Riccardo VailatiCo-chair CEER/ERGEG Electricity Quality of Supply task force
Autorità per l’energia elettrica e il gas, Italy
Florence Forum, Florence, 14th December 2010
2Florence Forum, Florence, 14th December 2010
Outline
• Cost estimation studies• The CEER Guidelines of Good Practice on estimation of
costs due to electricity interruptions and voltage disturbances and the Sintef Energy Research report which supported CEER work
• Importance of results for (transmission) infrastructure development
• Use of results of cost-estimation studies for regulatory purposes
• Conclusions
3Florence Forum, Florence, 14th December 2010
www.energy-regulators.eu
• Some NRAs and countries estimated cost of interruptions through surveys
• Few estimated cost of voltage disturbances
• Info: 3rd and 4th benchmarking reports on quality of electricity supply
European Energy Regulators and cost estimation studies
4Florence Forum, Florence, 14th December 2010
CEER recommendations (1)
• The CEER Guidelines of Good Practice on estimation of costs due to electricity interruptions and voltage disturbances - together with the consultancy study of Sintef Energy Research commissioned and published by CEER (www.energy-regulators.eu) - are intended as a guidance for NRAs and other parties interested in how to design and develop nationwide cost-estimation studies
• Survey-based approach (questionnaires sent to a large and representative sample) is complementary to a case-based approach (direct interviews for few significant cases with high impact of interruptions or voltage disturbances)
5Florence Forum, Florence, 14th December 2010
CEER recommendations (2)
• Some key steps (for costs of both quality disturbances):•Specification of customer groups (households; commercial services; public services; industry without large customers; large customers and infrastructure)•Choice of cost-estimation method (direct worth; direct worth in case studies for large customers and infrastructure; contingent valuation: willingness to pay and to accept; conjoint analysis)•Choice of means to conduct the survey (web; telephone; face-to-face interviews)•Design of scenarios (occurrence: time of day, day of week, season; duration: 1 s, 1 min, 1-4-8-24 h; warning?)
6Florence Forum, Florence, 14th December 2010
CEER recommendations (3)
• Some key steps (cont’d):•Selection of sample: assess expected response rate and expected standard deviation through pilot surveys; identify sub-sampling according to categories (NACE)•Cost analysis: execute logical tests; exclude careless responses; do not exclude zeroes; do no censor outliers
• Key steps for cost-estimation of voltage disturbances:•For case-based approach (to be used for industry, large customers and infrastructure): deployment of VQ measurement instruments; logging of VQ events; analysis of logging journals and measurement data
7Florence Forum, Florence, 14th December 2010
Use of results
• Customer cost estimations and surveys are traditionally largely used for power system development (e.g. as described in Cigré report of Task Force 38.06.01 “Methods to consider customer interruption costs in power system analysis”, year 2001, by R. Billinton et alii)
• Possible applications include:•Input to investment decision-making process by means of contributions to cost-benefit analyses •Evaluation of load shedding priorities•Contribution to contingency planning and minimisation of risks associated to maintenance•Setting of standards and reliability and security criteria
8Florence Forum, Florence, 14th December 2010
‘Regulatory’ use of results
• Setting proper financial incentives to pursue an ‘optimal’ level of quality (transmission continuity)
• Provide reference for setting compensations for customer e.g. after large (long) interruptions
• Contribute to the regulatory approval of investment plans proposed by the network companies
• Setting regulatory schemes for ‘interruptibility’ service• Contribute to monitoring quality of supply and to assess
customer expectations; understand VQ phenomena which impact more on customers, in order to prioritise VQ regulatory monitoring/treatment
• Contribute to monitor/understand customer satisfaction
9Florence Forum, Florence, 14th December 2010
‘Regulatory’ use of results
• Performance-based incentive regulation of transmission continuity (an example: rewards and penalties in Italy as determined by ENS)
Impact of the Italian incentive regulation of transmission continuity on TSO revenues year 2010 (under strong assumption that R-ENS indicator varies, NIU and UZI indicators do not vary)
2597
1536
1257
1397
-20
-15
-10
-5
0
5
10
15
20
25
0 500 1000 1500 2000 2500 3000
Regulated Energy Not Supplied R-ENS [MWh]
TS
O r
ewar
d (
+)
or p
enal
ty (
-) [
M€]
floor -1.5%
Over-performance reward
Under-performance penalty
Floor limiting risk
Reference level (target): 4% ENS improvement in 4 years
10Florence Forum, Florence, 14th December 2010
‘Regulatory’ use of results
Differentiated rates for distribution Single reward/penalty rate for transmission
11Florence Forum, Florence, 14th December 2010
‘Regulatory’ use of results
• Performance-based regulation of transmission continuity is being increasingly implemented in European countries
• Setting financial incentives:•An option is to reflect the results of estimations of the customer costs through survey, taking appropriately into account the complementary presence and impact of more indices e.g. ENS and frequency of interruptions (AEEG, transmission continuity regulation, 2008-2011)
•Another option is to define rates in order to stimulate TSO management attention on the costs of disruption to consumers and to encourage a strategy minimising the overall risk (Ofgem, reliability incentive consultation and decision, 2004)
12Florence Forum, Florence, 14th December 2010
CEER GGP conclusions I
• Customer costs due to electricity interruptions are of key importance in order to set proper incentives for continuity
• Customer costs due to voltage disturbances are important input when deciding where to focus regulation
• Society costs should be considered in addition to customer costs, as these can differ significantly
• NRAs should perform nationwide cost-estimation studies on interruptions and voltage disturbances
13Florence Forum, Florence, 14th December 2010
CEER GGP conclusions II
• CEER GGP should be used as basis for nationwide cost-estimation studies
• A pre-study should define objectives, clarify country-specific characteristics, budget and consultancy needs, possible funding partners, timeline for the nationwide cost-estimation study
• Results and experiences from cost-estimation studies shall be disseminated among interested stakeholders
14Florence Forum, Florence, 14th December 2010
Thanks for your attention
Guidelines of Good Practice on customer cost surveys
as an input for infrastructure development and its regulation
Riccardo VailatiCo-chair CEER/ERGEG Electricity Quality of Supply task force
Autorità per l’energia elettrica e il gas, Italy
Florence Forum, Florence, 14th December 2010