Brattle Principal William Zarakas recently gave a presentation to the Edison Electric Institute’s (EEI) Fall 2013 Transmission, Distribution and Metering Conference, which took place October 6 – 9, 2013 in Charleston, SC.
Mr. Zarakas’ presentation, “Electric Reliability, Resiliency, Rates and Region,” was based on analysis previously conducted along with Brattle Principal Phillip Q Hanser that examined the empirical relationships among reliability, rates, geography, and customer satisfaction. Mr. Zarakas and Mr. Hanser found that the reliability and rates were statistically significant variables in explaining the satisfaction scores customers gave their electric utilities. However, they also found that a few other variables, notably the geographic location of utility service areas, provided even stronger statistical power in explaining customer perception and satisfaction scores. Their analysis was summarized in an article published in Public Utilities Fortnightly earlier this year (link).
Mr. Zarakas’ presentation also provided an overview of the economic foundation underlying reliability and resiliency targets in electric utility distribution systems, and discussed the methodologies for assessing the benefit-cost ratios for utility investment in electric distribution systems. Electric utilities and their regulators are currently engaged in assessing major investments in system reliability and, in the aftermath of major outage events in the mid-Atlantic and northeast, investments in system resiliency. Most of these investments don’t “pay for themselves” by reducing ongoing operations and maintenance expenses. Instead, the primary beneficiaries are utility customers who can avoid the inconvenience, hardship and/or business disruption that come with power outages. Benefits to customers can be estimated using a value of lost load (VOLL) methodology and can then be compared with investment costs.
A copy of the presentation is available for download below.