Abstract
The regulation of distribution system operator is changing from the traditional approach to performance-based regulation (PBR). In this study a novel PBR approach is proposed for the regulation of a distribution company with consideration for asset management time scopes. In this regard a comprehensive separated regulation mechanism is presented so that the total expenditure for asset management is categorised into two: capital expenditure (Capex) and operational expenditure (Opex). A separate Capex and Opex regulation is proposed for electric distribution company regulation. A new reward and penalty scheme is proposed to efficiently regulate the quality of the network at a desirable level. The proposed methods are applied on the Iranian electricity distribution company.
Highlights
Distribution system operators (DSOs) have been regulated by two regulation methods namely ‘cost of service’ and ‘rate of return’
performance-based regulations (PBR) is a tool in the regulatory scheme for providing incentives to a regulated operator to behave in such a way that public interest is promoted
In all the regulation strategy, this coordination has not been considered. With regard to this issue, in this paper, as shown in Fig. 2, a comprehensive separated regulation mechanism is presented so that the total expenditure for asset management is categorised to capital expenditure (Capex) and operational expenditure (Opex)
Summary
Distribution system operators (DSOs) have been regulated by two regulation methods namely ‘cost of service’ and ‘rate of return’ Under these methods the profit of DSOs was somehow dependent on their costs; they had very little incentive to improve their efficiency [1,2,3]. The proposed regulations motivate the DSOs to increase their efficiency and cut costs, they lack incentives for service quality and reliability [5]. The major challenge for a distribution company is to optimally manage its assets along with its objectives, considering that there is a battle between improving service reliability and controlling costs. In all the regulation strategy, this coordination has not been considered With regard to this issue, in this paper, as shown, a comprehensive separated regulation mechanism is presented so that the total expenditure for asset management is categorised to capital expenditure (Capex) and operational expenditure (Opex). The separate Capex and Opex regulation is proposed for efficient electric distribution company regulation
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