Distribution utilityʹs trade-off decisions in obtaining sources of electricity

The unbundling of the power indushy and the development ofefficient pricing mean that the cost and availability of wholesale power purchases will be influenced by market forces and geographical location ofthe load An important issue facing electrical distribution utilities is to decide whether to continue to purchase from a main grid or generate locally, partially or totally. The complex nature of the problem requires careful formulation and effective solution methodology which can handle non-tangible issues such as customer perception and quality of service. ʹThis paper describes the results of a major seven-year project in which a general framework and meaningful solution methodologies were developed to assist the distribution utility management in assessing the feasibility and merits of building Non-Utility Generation (NUG).