Cost of Losses for Network Investment


Date & time: 
Mon, May 30, 2011 - 09:00
Duration / timezone: 

1 hour / Brussels time


Harry Colebourn


The cost of losses is a critical input to the planning, design and operational activities of distribution network businesses. Whilst the cost of losses will rarely provide the complete justification for an augmentation project, it will change the relative ranking of alternatives, particularly when comparing development options of different voltages.

The cost of losses can also influence the preferred timing of a project at times of moderate load growth. Furthermore, lifecycle costs used for the specification of optimal cable and line conductor sizes and transformer designs are critically dependent on this input.

The supply industry is at a turning point where the forecast costs of energy generation are expected to increase beyond “traditional” levels. The potential impact of Government policies influencing the move to renewable energy sources and the likelihood of some form of carbon price add to energy generation costs. Future generating costs are expected to be very significantly higher than the current market prices. Networks, too, have been the subject of recent regulatory determinations which have dramatically increased their costs.

This webinar proposes a Long Run Marginal Cost approach for calculating the cost of losses at various levels within the distribution network. The approach developed has relevance both for the regulatory incentives on networks to manage electrical losses and on the minimum energy performance specifications (MEPS) of distribution equipment.


Harry Colebourn retired as EnergyAustralia’s Executive Manager – Regulation and Pricing in July 2008. He has since been consulting within the power industry, on a broad range of engineering and regulatory assignments. Harry was involved in the development of Australian electricity markets from their inception in the early 1990’s, through to the establishment of the National Electricity Market in 1998. He was contributor to the development of the transmission and distribution pricing arrangements that remain in place. Harry’s longstanding interest in the economics of infrastructure businesses led to the introduction of a number of innovative changes to improve the cost reflectivity of EnergyAustralia’s network pricing. He is the author of several papers on pricing and related matters. Harry has degree qualifications in Electrical Engineering and Business Administration and is a member of the Institution of Engineering and Technology and the Electric Energy Society of Australia.



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