Regulatory Control of Quality of Service Leads to Balanced Risk Based Decision Making

Arjen G. Jongepier, Walter T.J. Hulshorst, Gabriël A. Bloemhof, KEMA, The Netherlands

As a consequence of the liberalization of energy markets, grid owners and operators (including industries and railways) are re-orientating on asset management and investments. The regulatory authorities, involved in sustaining security, reliability and availability of supply, represent the society's requirements that grid companies have to cope with, under their financial and corporate policies, limitations and targets.

Quality of supply is of major social concern. Grid companies and regulators have to decide at what costs this is achieved and sustained. On the customers side there is a growing awareness for the quality of supply, of which reliability of the grid is an important factor. To balance sustaining or improving the quality of supply with the cost consequences of investments in power systems, quantification is unavoidable.

The combination of available outage data, the valuation of outages to customers and new probabilistic tools, makes it possible to find the social optimum for power system design under the new quality regulation and increasing planning uncertainties.

These analyses typically result in investment and management decisions that combine the social, legal, technical and financial risks, cash-outs and revenues.