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T&D Reliability: The Next Battleground in Re-Regulation

Fortnightly Magazine - March 1 1999

extends to retail customers, the choice of energy supplier will not much affect the means of energy delivery. Unfortunately, when the industry and regulators think of supply adequacy, they often use the term reliability (as in the North American Electric Reliability Council, or NERC), and its regional counterparts.

As generation is unbundled and reserve margins in control areas are set by independent system operators or other quasi-public entities, regulators will lose much of their ability to control supply adequacy. But distribution and sub-transmission reliability, as measured by outage frequency and duration, will continue to be heavily regulated. In fact, as the figure, Increase in States With New Rules, indicates, such regulation will expand.

Consider this story. When a certain big city mayor was told by the local utility that, under the state's deregulation plan, no single entity would be responsible for ensuring supply adequacy to his city's customers, the mayor was overheard to ask his staff advisor, "Is that right?" to which he received a concerned nod, "Yes."

A Pattern Emerges

My firm has reviewed in detail the new regulations relating to T&D reliability and service quality.fn1 From our review a pattern is clear. The new regulations tend to have five focus areas:

1. System measures (em the usual measures of system interruption frequency and duration;

2. Public events (em hour-by-hour reporting and coordination during major storms and events;

3. Worst circuits (em frequency and duration measures for the worst five percent or so of circuits;

4. Reliability programs (em activities and spending associated with preventing outages and restoring service; and

5. Customer service (em other service quality measures for things like call handling and new service connections.

In each of these focus areas (see Table 2), we have identified different degrees of regulatory control: (A) Mandatory Reporting (often in prescribed format); (B) Standards (prescribed performance minimums, involving averages, percentiles or benchmarks); and (C) Incentives (with fines for missing targets, or occasional upside rewards).

1. System measures. Many utilities for years have had to report average system interruption performance, with the most common measures being SAIDI, SAIFI and CAIDI (defined in the sidebar, Performance Measures). All of these measures are derived from a database that each utility must maintain. For each outage lasting more than a few minutes (typically, five, but sometimes less), the utility estimates the number of customers interrupted and the duration for which each was interrupted. Some types of outages may be excluded, as in supply-caused outages or planned outages for making new service connections or disconnecting service to a building on fire, etc. The data are typically reported with and without major storms. Note that momentary interruptions, often caused by a temporary fault that can be cleared by the operation of an automatic recloser or feeder circuit breaker, are not counted, although some commissions have begun to ask that a frequency measure for such interruptions (MAIFI) be included as well, since customers increasingly complain about their digital clocks blinking when they return home.

Among other points, an audit might examine whether the utility is properly reporting its reliability