CI RED
20th International Conference on Electricity Distribution
Prague, 8-11 June 2009
Paper 0494
INCORPORATING SHORT INTERRUPTIONS AND TIME DEPENDENCY OF
INTERRUPTION COSTS IN CONTINUITY OF SUPPLY REGULATION
GerdKJ0LLE
SINTEF Energy Research - Norway
gerd.kjolle@sintef.no
Karstein BREKKE
NVE- Norway
kab@nve .no
KnutSAMDAL
SINTEF Energy Research - Norway
knut.samdal@sintef.no
ABSTRACT
MOTIVATION FOR THE NEW REGULATION
This paper describes the extended incentive based
regulation on continuity ofsupply adopted in Norway as of
2009. The new interruption cost assessment methodology is
described incorporating short interruptions and time
dependency of interruption costs. Previous studies have
shown that annual costs of short interruptions are in the
same order as costs oflong interruptions, and that the costs
are highly time dependent on a weekly and daily basis.
Technical and economic consequences of the extended
regulation for the network companies are also described
The Norwegian fmancial incentive based regulation on
continuity of supply (CENS) gives the network companies
economic motivation to ensure an optimal resource
allocation when all minimum requirements are complied
with. The objective is to achieve the most optimal level of
continuity of supply for the society as a whole. The
customers' costs related to interruptions are detected
through nationwide surveys and will vary between different
customer groups, when the interruptions occur etc. The
costs related to investments to reduce the extent of
interruptions will on the other hand depend significantly on
the location of the customers' connection to the power
system, including network topology, geography, climate etc.
From the regulator's point of view it is important that
decisions influencing on the continuity of supply also is
based on cost-benefit analyses . I.e. the costs related to
reduce the extent of interruptions must be lower than the
future decrease in customers ' interruption costs due to the
investment.
INTRODUCTION
Incentives and penalty mechanisms are being developed and
introduced in the quality of supply (QoS) regulation to
assure an efficient provision of reliability of service by the
network companies [1]. A critical parameter in a credible
quality regulation scheme is information about consumer
valuation of different levels of reliability of supply, e.g.
customers ' costs of interruptions. Customer surveys carried
out around the world to collect such data, show that these
costs depend on interruption characteristics such as duration
and time of interruption as well as customer characteristics
like sector, size, energy consumption etc. [2].
QoS regulation has in many countries typically started with
monitoring and reporting of continuity of supply. The
Norwegian QoS regulation has been developed gradually
since the Energy Act entered into force in 1991. Mandatory
monitoring and reporting of long interruptions (> 3 min)
started in 1995 and standardization of the estimation of
energy not supplied in 2000. This laid the foundation for
introducing quality dependent revenue caps and the cost of
energy not supplied (CENS) arrangement in 2001 [3].
Reporting of short interruptions (:::; 3 min) and interrupted
power became mandatory in 2006. Previous studies have
shown that the total costs of short interruptions and long
interruptions are in the same order on a yearly basis when
taking the frequency of occurrence into account, and that
the costs are highly time dependent on a weekly and daily
basis [4]. This paper describes the extended continuity of
supply regulation in Norway from 2009. CENS now
includes short interruptions and time dependency of
customers ' interruption costs - hence influencing directly
on the network companies ' allowed revenues .
CIRED2009 Session 6
As described introductorily, the CENS arrangement entered
into force in 2001, but only with regard to long interruptions
(> 3min). The customers' annual costs related to short
interruptions are, however, estimated to be in the same
order as the customers' costs related to long interruptions,
see Figure 1. The total CENS cost for Norway (of long
interruptions) has from 2001 till 2006 been in the order of
400 - 500 million NOK per year, while the total costs of
interruptions and voltage dips are estimated to 1030 - 1350
million NOKlyear [4].
500 ,---450
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-------,
Average 2001 · 2006
400
" 350
~
300
i
- - - - Estimated
~ 250
z
~ 200
:E 150
100
50
Lorg interruptions (> 3 mm)
Short interruptions (S 3 min.)
Voltage dips (50 %, 1 5)
Figure 1 Total cost of interruptions and dips (Norway)
Paper No 0494
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C IRE D
20th International Conference on Electricity Distribution
Prague, 8-11 June 2009
Paper 0494
If costs related to short interruptions are not part of the
regulation, the network companies will have disincentives
to consider the consequences for society of short
interruptions. The main reason for the regulator to include
these in the CENS arrangement from 2009 is the fact that
the associated annual costs are in the same order as costs of
long interruptions. This change will lead to a more optimum
level of the continuity of supply for the society as a whole.
INTERRUPTION COST ASSESSMENT (CENS)
The CENS arrangement has so far been based on the
mandatory reporting of long interruptions (> 3 minutes) for
end-users at all voltage levels> 1 kV and a standardized
method for estimation of energy not supplied (ENS) [3, 5].
Collection of interruption data and calculation of ENS and
CENS is made in accordance with the FASIT standard [6].
CENS comprises both notified and non-notified
interruptions. Since 2003 the customers have been divided
in six groups: industry, commercial, large industry, public,
agriculture, residential. The cost rates utilized in the
regulation up to 2009 have been calculated for an average
duration ofthe two types of interruptions for each customer
group based on data from a nationwide customer survey in
2001 - 2003 [5]. Cost data from the survey are provided for
interruptions occurring at a reference time which is a
working day in January. To summarize: the CENS
arrangement has up to 2009 been based on long
interruptions and fixed cost rates for an average interruption
duration and referred to a specific time of the year, week
and period of the day. After eight years of experience with
fixed cost rates irrespective of duration and time of
occurrence of interruptions, the cost assessment is now
changed to incorporate these aspects. This is described in
the following sections.
INCORPORATING SHORT INTERRUPTIONS
To incorporate short interruptions (:S 3 minutes) in the
CENS arrangement the cost rates are established as a
function of the interruption duration. The customer survey
conducted in 2001 - 2003 provided interruption cost data
for six customer groups related to hypothetical interruptions
of 1 minute, 1 hour, 4 hours and 24 hours duration (8 hours
for the residential group). These data are normalized per
respondent in the survey with the corresponding interrupted
power at the reference time. The interrupted power is
defmed as the estimatedpower in kW that would have been
supplied at the time of interruption if the interruption did
not occur [6]. The normalized cost data are used to establish
continuous cost functions based on linear interpolation
between the discrete surveyed data (arithmetic mean). Table
1 gives the cost functions in use from 2009 at reference
time, which is given in Table 2 for the different groups.
Table 1 Interruption cost functions in NOK1/kW at
interrup tiIon d ura fIon
re f erence time, r = In
0
Customer group
Agriculture
Residential
Industry
Commercial
Public
Large Industry
Cost function
All durations (r)
10.6' r + 4
8.8 . r + 1
r = 0 -4 hours
r> 4 hours
18.4 . r + 166
55.6' r+ 17
33.1·r+280
97.5' r+ 20
14.6 . r + 1
4.1' r+44
3.1 . r + 23
7.7·r+6
tion scenarios
The cost of an interruption of duration r at reference time,
ere!, can now be calculated as follows:
(NOK)
(1)
where
Cref = Interruption cost for an interruption at reference time
cret<:r) = Cost rate in NOK/kW for duration r (Table 1)
Pref= Interrupted power in kW at reference time.
The use of cost functions as described above gives a
consistent method for handling interruption duration in the
CENS arrangement including short and long interruptions.
TIME DEPENDENCY IN INTERRUPTION
COSTS
The customer survey also gave information about variation
in interruption costs by season, weekdays and time of day.
The time dependency in the interruption cost was found to
be significant, especially for the industrial, commercial and
public sectors over the week and by time of day. Weekly
and daily variation in the cost per interruption (monetary
value) is shown in Figure 2 and Figure 3 respectively. This
information is used to establish correction factors for the
cost of an interruption at any time j, determined by the
relative variation in cost in hour h, on day d and in month
m, assuming that these are independent. Hence, the cost of
an interruption of duration r occurring at any time j can be
determined according to (2):
1 9 NOK:::::: 1 Euro per January 2009
CIRED2009 Session 6
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20th International Conference on Electricity Distribution
CI RED
Prague, 8-11 June 2009
Paper 0494
..---.:
10.0
~
!¥
~ -20.0
~
_
-30.0
Residential
\
~ Publi c
~
All variables are the same as described above.
\"" '----
. . - Agricu'....e
~ -40.0
= cre/r)· f Ch . f Cd . f Crn . P'e/
Sundaylholidays
I'~
-+mmercial
~ co
"dustry
c
J
Otherwo~
Thursday
-10.0
I-
~
-
H
0.0
"---
The interruption cost assessment in the period 200 I - 2008
was in principle determined according to (5):
..............
-
\
.
~g~
'<fl. ·50.0
~
-60.0
Figure 2 Deviation (%) in cost from working day
!
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
,
10.0
+------------7"~==~--i
0 .0
t=::;;::;;~~;;:;:?:t';::~~~==;~~~;:;~
~ -10.0
~
~
-20 .0
+----'-'--r----r.f---""~r_~~.......;:::::_-
I
E
,go
·30 .0
..g
-+- Co mmercial
~ -40 .0
*-
ndustry
.50.0 t-_~/
r-----~~..---,
----j """' ReSidential
~ Ag ri culture
-60.0 t --
/ "-
-
-70 .0 1---
-
-
-
...... Public
-
----j ....... Largei ndustryr----
(5)
(NOK)
-70.0
20.0 , - --
(4)
<= cre/(r)' f Ch' f Cd' f Crn' ; / ~ (NOK)
20.0
-
-
-
-
,
-
-
-
-
-'
where
C/ = Interruption cost for an interruption at timej (NOK)
crer' = Fixed cost rate in NOK/kWh at reference time, for an
average duration of2.85 hrs for non-notified and 1.3 hrs for
notified interruptions respectively
Figure 4 gives a comparison of interruption costs for two
different interruptions calculated according to (4) and (5),
the new and old method respectively. The figure illustrates
that the old method in (5) occasionally overestimates or
underestimates the cost, depending on type ofcustomer, the
duration and the time of occurrence of the interruption.
7000
-
-
-
-
-
-
-
-
-
Hours
6000
Cj
= c/r). Pj
(NOK)
(2)
-
4000
-
3000
-
2000
-
-
1000
-
-
<
r-
r:
=cre/r) . f Cj 'T'~
0
where
Cj = Interruption cost for an interruption at timej (NOK)
clr) = Cost rate in NOK/kW for duration r at timej
Pj = Interrupted power in kW at timej
fcj = Correction factor for normalized cost at time j
fCj = Correction factor for cost (in monetary terms) at time j :
= f Ch . f Cd . f Crn
-
J", ,,
Satu rday .
4 pm , 2 hrs
J
(3)
In order to determine the time variation fcj in the normalized
cost one should take into account the variation in the
normalization factor (interrupted power) as shown in (2).
The time dependency in the interruption cost is thus handled
through correction factors which are based on the
information about deviation in cost in monetary terms from
the cost at reference time as shown in Figs . 2 and 3.
Inserting (3) in (2), the cost of an interruption of duration r
occurring at a timej can now be expressed as follows :
CIRED2009 Session 6
. 2001 - 2008
6000
~
= cre/(r) · fcj . ~
f Cj
[C F~ ,m~
r-t-
Figure 3 Deviation (%) in cost from reference time
.,
- M
Tuesday .
pm, 0.5 hr
Comme rci al
at
'I
J", et IT'~d" . M
.,at
Saturday .
4 pm, 2
tn
pm, 0.5 hr
'I
..
S aturday.
Re6ldent lal
'1'
J", ,,
4 pm, 2 hI'S
.----
Tuesday ,
M
.,
et z
pm, 0.5 hr
Public
Figure 4 Comparison of methods for interruption costs
CENS REGULATIONS FROM 2009
The CENS arrangement from 2009 comprises both short
and long interruptions based on the mandatory reporting of
interruptions according to the FASIT specification [6, 7].
The cost of a single interruption should be calculated using
the method in (4), taking account of duration and time of
occurrence of the interruption. The cost functions and
correction factors are given for each of the six customer
groups in the regulations [8]. The monthly variation is
represented by a factor per month , while there are three
factors describing the weekly variation divided in Mondays
through Fridays, Saturdays and Sundays/holidays
respectively. The daily variation is separated in six periods
of the day. If the duration of an interruption affects more
than one of the periods covered by the correction factors , a
weighted average for the time periods should be used .
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CI RED
20th International Conference on Electricity Distribution
Prague, 8-11 June 2009
Paper 0494
Furthermore, the total interruption costs must be adjusted
annually to account for the inflation. For a notified
interruption the cost calculated by (4) should be multiplied
with a reduction factor. This factor varies from 0.7 (30 %
reduction) for the Commercial and Public sectors to 0.9 for
the Large industries. The interruption cost for series of
interruptions caused by one and the same disturbance
should be calculated as the sum ofthe cost for each separate
interruption, limited to the cost of a continuous interruption
lasting for the total time span covered by the series.
According to the regulations, the CENS cost is not paid to
the customers but is used to make a quality adjustment of
the network companies' revenue caps [8]. The companies
may, however, enter into individual agreements with
customers of direct payment ofCENS. Such agreements are
only allowed for customers with an expected use of
electricity above 400 000 kWh per year and require agreedupon cost rates for non-notified and notified interruptions
respectively, of varying interruption durations. Further, the
cost rates must be calculated based on the expected costs for
the specific customer, and the agreement shall include any
assumption upon which the calculation is based.
CONSEQUENCES OF NEW REGULATION
Evidently the new CENS regulation gives some benefits for
the customers, network companies and the society as a
whole. Table I , Figure 2 and Figure 3 illustrates that the
customers' interruption costs are a function ofboth duration
and the time of occurrence of interruptions. Annual costs of
short interruptions are previously estimated to be in the
same order as the costs of long interruptions (Figure I) for
Norway as a whole. The new regulation provides the
network companies with incentives to consider these costs.
Before the regulation was settled, possible technical and
economic consequences for the network companies were
investigated. Reporting of short interruptions (:::; 3 min .) and
interrupted power became mandatory in 2006 [7]. Despite
this fact registrations of short interruptions in FASIT are
still not complete. This is mainly due to lack of necessary
routines and lack of facilities in some stations for
registration of automatic breaker reclosure (typically in
small companies). Some companies need to upgrade their
equipment to be able to register the time of occurrence and
duration of short interruptions. The total cost for this
upgrading is grossly estimated to aboutNOK 10 mill. (:=::; 0.9
mill . Euro) for Norway as a whole.
The FASIT system is used to calculate the interruption costs
in addition to the collection of interruption data. It has been
necessary to make changes in the software to represent cost
functions and correction factors in addition to the method in
(4). There are six FASIT software vendors and the total
implementation costs are estimated to about NOK 1.2 mill
in total for Norway. The sum of these costs and the above
CIRED2009 Session 6
mentioned upgrading cost is regarded as limited compared
with the benefits.
CONCLUSIONS
The Norwegian incentive based regulation on continuity of
supply is extended from this year incorporating short
interruptions and time dependency ofinterruption costs . The
motivation for the regulation is described as well as the new
interruption cost assessment methodology. By this
regulatory step the network companies will not only have
incentives to ensure a sufficient level of continuity of
supply regarding long interruptions but will additionally be
provided with incentives to consider the short interruptions
and the time dependency in interruption costs in planning,
operation and maintenance of the transmission and
distribution systems. Regarding the time dependency will
for instance give incentives to perform maintenance work in
periods when the interruption cost is low. This lays a better
foundation for optimizing the continuity of supply, in
balancing network costs and the value of reliability as it is
seen from the customers' point of view. There will be
limited technical and economic consequences for the
network companies of the new regulation.
REFERENCES
[I]
[2]
[3]
[4]
[5]
[6]
[7]
CEER, 200 1, 2003 , 2005, Benchmarking reports on
quality ofsupply, http: //www .energy-regu lators.eu
R. Billinton et al, 2001 , Methods to consider customer
interruption costs in power system analysis, CIGRE
SC38.06.01 , Ref no. 191.
T. Langset, F. Trengereid, K. Samdal, J. Heggset,
200 I,"Quality dependent revenue caps - a model for
quality of supply regulation", Proc. CIRED 2001.
K. Samdal, G. H. Kj0lle, B. Singh, O. Kvitastein,
2006, "Interruption costs and consumer valuation of
reliability of service in a liberalized power market",
Proceedings PMAPS 2006.
G. H. Kj0lle, K. Samdal, B. Singh, O. Kvitastein,
2008, "Customer Costs Related to Interruptions and
Voltage Problems: Methodology and Results", IEEE
Trans. on Power Systems, vol. 23, no . 23, 1030 - 1038
J. Heggset, G. H. Kjolle, K. Sagen, 2009, "FASIT - a
tool for collection, calculation and reporting of
reliability data", Paper acceptedfor CIRED 2009.
Regulations relating to the quality of supply in the
Norwegian power system, Reg. No. 1557 of 30 Nov.
2004, Norwegian Water Resources and Energy
Directorate (NVE), http: //www.nve.no
[8]
Regulations governing fi nancial and technical
reporting, income caps f or network operations and
transmission tariffs, Reg. No. 302 of II March 1999,
changed as of 7 Dec. 2007, NVE, http ://www.nve .no.
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