Performance regulation of distribution systems using reference networks

It is becoming very important to be able to demonstrate and quantify the necessity and benefit of particular investment and operational decisions in electricity distribution systems, particularly in the context of service quality. Consequently, network performance, traditionally considered mainly from the network owner´s perspective, is now becoming customer driven, leading to the need to include an assessment of customers´ worth of supply and the benefit they derive by system investment. This concept is at the heart of performance-based regulation. However, the development requires a framework to be created that would enable strategic decisions to be determined. In the UK, this centres on the Information and Incentive Project (IIP). This was set up to strengthen the incentives with respect to delivering the quality of output. As the IIP is based on financial penalties and rewards, the overall distribution revenue is a function not only of the operating and capital costs incurred by the network owner in providing the service, but also of the quality of customer service. These new performance-based developments in regulation, including the UK IIP activities, require a framework to be created that would enable strategic decisions to be determined. This necessitates an understanding of the relationship between certain input and output parameters involved in the decision-making process which in turn requires tools for quantifying the relationship between investment and operational decisions with system performance. Such a quantitative understanding would enable a strategy to be set, subsequent to which specific designs could be implemented. At UMIST, considerable work has been carried out on the development of alternative approaches, concepts and techniques to support and facilitate the strategic decision-making process related to distribution network operation and investment expenditure. These are discussed in this article.