Factors affecting customer outage costs due to electric service interruptions

Abstract

In the UK the concept of reliability worth has been considered a factor in justifying reliability investment since the late 1970s. Two specific considerations which have been developed are the ‘implied cost per kWh saved’, and the ‘value of lost load’ (VOLL). These considerations apply historical methods for the assessment of reliability worth which rely on placing a worth value to the ‘energy not supplied’. While the authors do not fault these applications, they are, however, of the opinion that placing a worth value to the ‘energy not supplied’ is an essential weakness of historical methods for evaluating the worth of reliability perceived by customers. To overcome this weakness, the authors have been conducting extensive surveys and studies to assess customer outage costs (COC), these being considered as proxies of reliability worth. As part of these studies, the authors have investigated the factors affecting customers' perceived costs caused by supply interruptions. The results show that, contrary to the relations inferred by the historical methods, customers are only concerned with the inability to use their equipment and the costs of likely damages when considering the costs of supply interruptions. On the basis of these findings, the authors conclude that rather than evaluate the benefits of ‘reliability investment’ to electricity customers by placing a worth value on the ‘energy not supplied’, a method based on customers' actual valuation of these benefits is more appropriate.