When is an Outage not an Outage?

When is an outage not an outage? This isn’t some new riddle, so you can stop now if you are expecting a punch line. With all the media attention on power outages, and the subsequent focus of attention on improving system reliability and outage reporting, outages have become a topic that is difficult to avoid. Just this past July, New York City was subject to an outage that lasted several hours and affected 63,000 people.

In an effort to reduce outages and increase quality of service, it is becoming more common for utilities to face penalties if quality of service falls below predetermined levels by incorporating performance based rates (PBR). I live in Massachusetts, where outages have had a lot of attention over the last couple of years. So what measures are being used to measure service quality?

Massachusetts and many other states are adopting service quality measures. To measure anything you need either an absolute scale or a relative scale so there is a benchmark against which to make an assessment. In Massachusetts, this assessment is made for each distribution company against its historical performance. This is not the fairest method since companies with good historical performance may be more likely to be penalized than those with poor historical performance. Regulators recognized this disparity and from Jan. 1, 2002, companies have been required to collect data for new standardized measures. That way, future performance can be assessed not against each company’s prior performance but against other companies in the state.

The Department of Telecommunications and Energy (DTE), which regulates Massachusetts utilities, proposed that service quality penalty measures known as SAIDI (System Average Interruption Duration Index) and SAIFI (System Average Interruption Frequency Index) be used for assessing performance with respect to outages. Other indexes are collected but are not used in the penalty assessments. These other measures are CAIDI (Customer Average Interruption Duration Index), CAIFI (Customer Average Interruption Frequency Index) and MAIFI (Momentary Average Interruption Frequency Index). Currently, due to cost and difficulty of measurement, MAIFI data are not required to be collected or reported. The DTE implemented a system by LiveData which automatically provides up-to-the-second information about outage duration, consumers affected and the utility’s restoration response.

In the U.K., the Office of Gas and Electricity Markets (OFGEM) published the initial proposals for its Information and Incentives Project (IIP) in July 2001, with one of the objectives being to increase the quality of output by creating incentives to improve service quality. As in Massachusetts, the initial focus has been on defining and collecting standardized measures from all distribution companies. The approach taken in the U.K. combines incentives for companies that exceed their service quality targets and penalties (up to 2 percent of revenue) for those who fail to meet their targets. This will be determined by measuring the number and duration of supply interruptions to customers. OFGEM announced introduction of its scheme on April 4, 2002.

OFGEM also took the position that if the customer experiences an interruption of supply, it is classified as an outage for the purposes of measuring service quality whether it is a planned outage, an outage due to embedded generation, or due to third-party damage and other sources. The distribution companies were not too happy at having their performance tied to the performance of embedded generators, and the same balancing problem is faced by all regulators who want to use PBRs to improve service quality for customers in their jurisdictions.

On one hand, the intention is to improve service quality by penalizing distribution company for outages, but on the other hand, you don’t want to penalize the distribution companies for outages that are beyond their ability to influence or control.

There is another scenario that must also be taken into account-rolling blackouts. Given that rolling blackouts are an attempt to maintain system quality by controlling where and when limited outages occur, how should these outages be measured in the wider context of avoided outages?

Mark Knight has been involved in electricity market restructuring since 1989, helping companies adapt to competitive, regulatory and data management pressures caused by deregulation. For more information, contact Knight at mark.knight@ic4life.net

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