Electricity Distribution Industry Research Articles

The hard impact low probabilities’ impacts on power distribution system economy

Electricity distribution systems benefit customers, investors, and operational managers economically. However, natural hazards pose significant risks to these networks, contributing to economic instability. This study assesses the impact of low-probability, high-impact events, particularly storms, on asset management and lifespan within the electricity distribution industry. By introducing three key indicators—rate of return, service rate, and cost per asset—the research investigates how different assets respond to various risks. Each asset has a distinct threshold for risk tolerance, which diminishes as its lifespan increases. Utilizing a cost model and analyzing breakpoint curves, the study evaluates the effects of high impact and low probability (HILP) incidents on the indicators mentioned earlier, factoring in asset composition changes. The study assesses the impact of storms with varying intensities on a sample network by formulating economic relations and allocating budgets for HILP events across different network conditions. Results highlight the allocation of budgetary resources for securing assets of different ages within the network. Furthermore, sensitivity analysis explores how changes in network expansion coefficients and failure rates influence these factors. Notably, findings reveal that systems with slower development rates exhibit greater asset resilience; as demonstrated in scenario 3, the assets are strengthened from a 70-year life to a 6-year life for a 145 km storm.

ОЦЕНКА ПОТЕНЦИАЛА СОКРАЩЕНИЯ ПЕРЕКРЕСТНОГО СУБСИДИРОВАНИЯ ТАРИФОВ НА ПЕРЕДАЧУ ЭЛЕКТРОЭНЕРГИИ В РОССИИ

The article provides evaluation of probable reduction of cross subsidies in the electricity distribution industry taking into account limits of tariff burden for population. Estimations are based on ad hoc mathematic model and on 2021 year data, including detailed data of household budget survey (conducted by Rosstat). The article includes estimation of probable electricity tariff changes for population in case of cross subsidies cancellation and targeted subsidies establishment. Amount of required targeted subsidies is evaluated. Results of calculations show that full abolishment of cross subsidies will increase household electricity price by 48% or by 29% if targeted subsidies will take place. Therefore, cancellation of cross subsidization should be accompanied with improvement of power utilities’ efficiency and household energy efficiency.

Organizational constraints and outsourcing under demand uncertainty: Evidence from the Brazilian electricity distribution industry

This paper examines how public firms’ organizational constraints affect the sensitivity of labor outsourcing to demand uncertainty. We focus on a single industry in which state-owned firms are subject to additional organizational constraints that private firms are not. We mitigate omitted variable bias by considering the endogenous trade-off between insourcing and outsourcing by measuring average labor prices for each firm. We find that, on average, private firms with strong incentives for profit and flexibility rely more on outsourcing; moreover, their outsourcing is more sensitive to relative prices of insourced and outsourced labor. However, when demand uncertainty arises, state-owned firms increase outsourcing more, making their outsourcing less sensitive to input prices. The results suggest the organizational constraints of state-owned firms, such as multiple objectives other than profit maximization and strong labor protection of insourced labor, exacerbate the downside risk of hiring insourced labor under fluctuating demand, leading state-owned firms to rely more on outsourcing.

Development of a novel Electrical Industry Safety Risk Index (EISRI) in the electricity power distribution industry based on fuzzy analytic hierarchy process (FAHP)

Many workers are exposed to electrical energy during the fulfillment of their tasks. It is necessary to identify the potential risk factors for electrical damages. The present study aimed to develop a novel Electrical Industry Safety Risk Index (EISRI) in the electricity power distribution industry based on fuzzy analytic hierarchy process (FAHP). In this study several different safety risk assessment methods were analyzed. Then, common activities in the electricity distribution industry were classified into ten occupational groups. To identify the general structure of risk assessment and determine three main components, including personal, environmental, and organizational a three-stage Delphi study was conducted with the participation of 30 experts. The fuzzy analytic hierarchy process approach was used to weight the components and parameters in each job group. Finally, the results of the EISRI were compared with the failure mode and effect analysis (FMEA) method. The most effective component in determining the risk level was the personal component (PC), with a 0.537 weighted average. Cronbach's alpha values for each of the personal, environmental, and organizational components and the entire model were 0.90, 0.85, 0.82, and 0.86, respectively, and model reliability was confirmed. The results obtained from the EISRI method were compared with the FMEA method, the results of both methods were very close to each other (p < 0.05). The results of this study revealed that the highest weighted average was related to the personal component due to the high impact of the human factors in carrying out activities in various occupations. The EISRI can be applied as a substitute for general risk assessment methods due to the suitability of this method with the nature of activities in this industry. The present technique can be a practical step toward developing suitable risk management algorithm.

Incentivized Mergers and Cost Efficiency: Evidence from the Electricity Distribution Industry*

We propose an endogenous merger algorithm to evaluate the impact of government‐provided incentives on consolidation patterns for services such as electricity distributors, school boards, hospitals and municipalities. The algorithm replicates the observed industry reconfiguration, with calibrated parameters used to simulate consolidation patterns that would have resulted from policy incentives. We apply the method to the case of Ontario, where transfer tax reductions have been proposed to incentivize consolidation of electricity distributors. We find that the proposed incentive would have no impact on efficiency and consolidation, and even subsidies would still leave many more electricity distributors than desired by policy makers.

Smart Grid Systems Code of Ethics

The use of smart technology in the electrical distribution industry provides the opportunity to better support the addition of renewable technology. These smart grids utilise enhanced communication systems to enable an intelligent response to changes in the network. However, with them comes ethical concerns that should be addressed during development and operation. This paper investigates these concerns and aims to produce a code of ethics that can be used to guide decision making throughout the smart grid lifecycle. These principles draw from concerns around privacy, socio-political impacts, and safety and security. The result is a set of six principles that address these main issues and are demonstrated in a hypothetical case study.

Asset management optimization in smart grids

AbstractElectricity distribution companies manage financial resources to maximize profits. While the stability of the electricity distribution system depends on the efficiency of the resources used by this system. The regulator is responsible for balancing and aligning the stability of the electricity industry with the profits of electricity distribution companies, which does so by adjusting penalty indices and service rates. This article investigates the management indicators of the electricity distribution industry and how to spend each of them is studied by electricity distribution companies and provides a model that can guide the optimization of the division of financial resources and investment between the indicators. Adjust indicators for regulators to align the benefits and profits of electricity distribution companies with the stability of the electricity distribution system. The implementation of this model was observed in Bushehr Electricity Distribution Company and increased the efficiency percentage.

Unbundling, Regulation, and Pricing: Evidence from Electricity Distribution

Unbundling of vertically integrated utilities has become an integral element in the regulation of network industries and has been implemented in many jurisdictions.The idea of separating the network, as the natural monopoly, from downstream retailing, which may be exposed to competition, is still subject to contentious debate, as there is much empirical evidence that unbundling eliminates economies of vertical integration, though evidence on overall price effects is still lacking. In this paper, we study the effect of legal unbundling on grid charges in the German electricity distribution industry. Using panel data on German distribution system operators (DSOs), we exploit the variation in the timing of the implementation of legal unbundling and the fact that not all DSOs had to implement unbundling measures. We are also able to identify heterogeneous effects of legal unbundling for different types of price regulation because we observe a switch in the price regulation regime from rate-of-return regulation to incentive regulation during our observation period. Our findings suggest that legal unbundling of the network stage significantly decreases grid charges in the range of 5% to 9%, depending on the type of price regulation in place.

Pattern Recognition using Support Vector Machines as a Solution for Non-Technical Losses in Electricity Distribution Industry

Contending with Non-Technical Losses (NTL) is a major problem for electricity utility companies. Hence providing a lasting solution to this menace motivates this and many more research work in the electricity sector in recent times. Non-technical losses are classed under losses incurred by the electricity utility companies in terms of energy used but not billed due to activities of users or malfunction of metering equipment. This paper therefore is aimed at proffering a solution to this problem by first detecting such loopholes via the analysis of consumers’ consumption pattern leveraging Machine learning (ML) techniques. Support vector machine classifier was chosen and used for classifying the customers’ energy consumption data, training the system and also for performing predictive analysis for the given dataset after a careful survey of a number of machine learning classifiers. A classification accuracy (and subsequently, class prediction) of 79.46% % was achieved using this technique. It has been shown, through this research work, that fraud detection in Electricity monitoring, and hence a solution to non-technical losses can be achieved using the right combinations of Machine Learning techniques in conjunction with AMI technology.

Investment in electricity distribution capital infrastructure in South Africa: The role of regulation

Background: The electricity distribution industry in South Africa is faced with numerous challenges that include distribution capacity shortages and backlog in investments. Aim: This study was carried out to investigate the role of regulation in enabling investment in distribution capital expenditure. Setting: The study focusses on the licensed electricity distributors and the energy regulation institution in South Africa. Methods: Primary data for the study was collected through interviews with 16 Energy Regulator officials responsible for analysing and approving electricity distributor tariff applications. Secondary data was collected and analysed through a sample of 112 electricity distributors in South Africa. Results: It is established that the National Energy Regulator of South Africa has put a number of processes and methods in place to ensure that electricity distributors (EDs) are efficient in their operations and that the tariffs they charge customers are not excessive and are aligned to specific benchmarks as approved by the regulator. However, a majority of EDs are not performing according to the benchmarks. For instance, they are operating at a negative surplus, which does not allow them to make sufficient investment in infrastructure refurbishment and acquire new infrastructure. The study also discovered that EDs are spending the minimum 6% required by regulation on repairs and maintenance. Conclusion: The conclusion of the study is that in the absence of a regulatory methodology that allows EDs to earn a required return on assets, benchmarks play a big role in ensuring that they are performing at the level required and that through the surpluses they generate, they can invest in the acquisition of new infrastructure for capital gain. However, regulation alone is not sufficient to ensure that capital investment is adequate; government intervention through infrastructure grants is also necessary and a private sector capital injection.

Unbundling, Regulation, and Pricing: Evidence from Electricity Distribution

Unbundling of vertically integrated utilities has become an integral element in the regulation of network industries and has been implemented in many jurisdictions. The idea of separating the network, as the natural monopoly, from downstream retailing, which may be exposed to competition, is still subject to contentious debate, as there is much empirical evidence that unbundling eliminates economies of vertical integration, though evidence on overall price effects is still lacking. In this paper, we study the effect of legal unbundling on grid charges in the German electricity distribution industry. Using panel data on German distribution system operators (DSOs), we exploit the variation in the timing of the implementation of legal unbundling and the fact that not all DSOs had to implement unbundling measures. We are also able to identify heterogeneous effects of legal unbundling for different types of price regulation because we observe a switch in the price regulation regime from rate-of-return regulation to incentive regulation during our observation period. Our findings suggest that legal unbundling of the network stage significantly decreases grid charges in the range of 5% to 9%, depending on the type of price regulation in place.

Incentivized Mergers and Cost Efficiency: Evidence from the Electricity Distribution Industry

Incentivized Mergers and Cost Efficiency: Evidence from the Electricity Distribution Industry

Investing for the Future: How Small Utilities are Finding Success With Advanced Distribution Management Systems

It is no secret that the electric power distribution industry is in the midst of unparalleled disruption. From the continually evolving development of renewable energy sources to catastrophic storms to an onslaught of incoming data, utilities are being forced to adapt to even more change and issues requiring resolution than they have seen in a century

The dynamics of the occupational morbidity rate in the Eastern Siberia

The dynamics and structure of the occupational morbidity rate in main branches of the industry in the Eastern Siberia for the 2000-2015 (on the example of the Irkutsk region) is presented in this paper. During the observation period there were noted the significant gain in the number of cases of occupational diseases registered in such different branches of industry as Coal and Lignite Mining, ship and aircraft building, and in some other branches (metallurgical production, air transport, pulp production, electric power distribution industry). In the structure of the occupational morbidity leading positions are occupied by diseases associated with the exposure to physical factors, industrial aerosols, physical overload and overexertion of certain organs and systems. The main reasons and factors contributing to the gain of the occupational morbidity rate are the imperfection of technological processes, working places, personal protective equipment and/or their lack, constructive defects of machines and equipment, the violation of safety regulations, regimen of the work and rest, insufficiently high level of medical and preventive maintenance, delayed making of decisions for the rational employment to the workers with the revealed early forms of occupational diseases. There pointed out priority directions of the prevention the implementation of which will allow to decline the level of the occupational morbidity rate. The main directions are the implementation of economically caused mechanisms of the interest in the preservation of workers ’ health; implementation of the regional aimed programs; the introduction of new processes, equipment and mechanisms meeting modern hygienic requirements; the assessment of occupational risk with the creation and implementation of the system of monitoring for the dynamics of working conditions and the state of the workers ’ health for the making corrective management solutions on the optimization and elevation of the efficacy and relevance of developed and implemented preventive health measures.

Homeostaticity of energy systems: How to engineer grid flexibility and why should electric utilities care

Today’s power generation and distribution industry is being faced with a number of issues, from violent weather phenomena to earthquakes, fires and landslides; including acts of arson, terrorism and vandalism, all of which pose serious concerns for the sustainability of the distribution and supply of electricity. Electric utilities like ENEL are cognizant of this fact and know they must take action. Moreover, they are required by law to be prepared and act proactively to prevent service disruption, by responding to such challenges rapidly and effectively so as to preserve stability and continuity of operation. Homeostaticity of energy systems seeks just that: to bring about a rapid, effective and efficient state of equilibrium between energy supply and expenditure at all times, whatever the circumstances, to preserve stability of systems operation. The paper presents a prescriptive energy homeostaticity model being considered by ENEL as a means to further the incorporation of renewables in the electricity generation and distribution industry. The aim is to enhance control and energy management systems in distributed generation installations tied to the grid for urban and rural communities, in order to complement and diversify their electric power distribution services. The theoretical groundwork underlying the subject as well as other relevant contextual factors are also discussed and simulation results are presented under different tariff scenarios, and energy storage alternatives, in order to compare the proposed model with the actual case. Energy storage (ES) is found to be of paramount importance in the overall analysis of the results as it enhances and reinforces thriftiness on energy consumption.

Lost economies of scope and potential merger gains in the Norwegian electricity industry

In 2016, the Norwegian Parliament amended the Energy Act, with changes taking effect from 2021. The amended legislation will introduce strict separation of all generation and distribution companies within the electricity industry in Norway. Economies of scope studies from Norway show evidence of large economies of scope. Further, the companies in the industry could utilize the economies of scale potential if they merged. In this paper, we perform merger analysis to investigate potential merger gains in the Norwegian electricity distribution industry. By providing a method of testing for optimal mergers, we can present the best merger combination to the Norwegian electricity industry.

Unbundling, Regulation and Pricing: Evidence from Electricity Distribution

Unbundling of vertically integrated utilities has become an integral element in the regulation of network industries and has been implemented in many jurisdictions. The idea of separating the network, as the natural monopoly, from downstream retailing, which may be exposed to competition, is still subject to contentious debate. This is because there is much empirical evidence that unbundling eliminates economies of vertical integration while empirical evidence on price reducing effects is still lacking. In this paper we study the effect of legal unbundling on grid charges in the German electricity distribution industry. Using panel data on German distribution system operators (DSOs) we exploit the variation in the timing of the implementation of legal unbundling and the fact that not all DSOs had to implement unbundling measures. We are also able to identify heterogeneous effects of legal unbundling for different types of price regulation, because we observe a switch in the price regulation regime from rate-of-return regulation to incentive regulation during our observation period. Our findings suggest that legal unbundling of the network stage significantly decreases grid charges in the range of 5% to 9%, depending on the type of price regulation in place.

The rise and decline of the X factor in performance-based electricity regulation

‘RPI minus X’ incentive regulation—a 1990s UK import—never resonated beyond a handful of states and provinces for controlling regulated electric utility prices. As the North American electricity distribution industry continues to evolve toward a platform for facilitating a more decentralized and carbon-free energy supply, RPI minus X will face increasing difficulties in dealing objectively with the sharply rising investment costs represented by that new role.

Air Products awarded contract to build, own and operate coal-to-syngas plant to supply syngas for Jiutai New Material Co in Hohhot, China

The Turkish electricity distribution and electricity supply businesses have been substantial affected by the transition from a vertically integrated public monopoly model to a model of regulated competition with privatized and unbundled firms. We analyze how select elements of sustainability have been and will be affected by this transition. Specifically, we consider transparency of the electricity market as a whole and implications for electricity supply and distribution, the financial soundness of the electricity distribution industry, the quality of electricity delivered by the distributors, and the competitiveness of the electricity supply business. The key finding is that little if any progress toward sustainability has been achieved. We conclude that there remains much for policymakers to do to establish a sustainable market structure.

Impact of High-Powered Incentive Regulations on Efficiency and Productivity Growth of Norwegian Electricity Utilities

This study examines the hypothesis that changes to high-powered incentive regulations have a positive efficiency and productivity growth effects in a regulated electricity distribution industry. We estimate an input distance function using the stochastic frontier analysis method to compute technical efficiency scores for 121 Norwegian utilities over the period 2004-2012. We explore sources of productivity growth by parametrically decomposing the Malmquist productivity index into efficiency change, technical change, and scale change. Unlike previous studies, we examine the difference in performance across two regulatory regimes: yardstick competition (2007-2012) and RPI-X incentive regulation (2004-2006). Results show significant efficiency and productivity growth improvements with embodied technical change as the main driver.