Outage Cost Estimates Research Articles

Radar Outage Costs and the Value of Alternate Datasets

Abstract Quantifying the costs of radar outages allows value to be attributed to the alternate datasets that help mitigate outages. When radars are offline, forecasters rely more heavily on nearby radars, surface reports, numerical weather prediction models, and satellite observations. Monetized radar benefit models allow value to be attributed to individual radars for mitigating the threat to life from tornadoes, flash floods, and severe winds. Eighteen radars exceed $20 million in annual benefits for mitigating the threat to life from these convective hazards. The Jackson, Mississippi, radar (KDGX) provides the most value ($41.4 million), with the vast majority related to tornado risk mitigation ($29.4 million). During 2020–23, the average radar is offline for 2.57% of minutes or 9.27 days per year and experiences an average of 58.9 outages per year lasting 4.32 h on average. Radar outage cost estimates vary by location and convective hazard. Outage cost estimates concentrate at the top, with 8, 2, 4, and 5 radars exceeding $1 million in outage costs during 2020, 2021, 2022, and 2023, respectively. The KDGX radar experiences outage frequencies of 4.92% and 5.50% during 2020 and 2023, resulting in outage cost estimates > $2 million in both years. Combining outage cost estimates for all radars suggests that approximately $29.1 million in annual radar outage costs may be attributable as value to alternative datasets for helping mitigate radar outage impacts. Significance Statement This study combines information on radar status and monetized radar benefit models to attribute value to individual radars, estimate radar outage costs, and quantify the potential value of alternative datasets during outage-induced gaps in coverage. Eighteen radars exceed $20 million in annual benefits for mitigating the combined threat to life from tornadoes, flash floods, and severe winds. The first and third most valuable radars, both in Mississippi, experience outage frequencies twice the national average, accounting for a disproportionate share of the overall outage costs. Our findings suggest that characterizing and mitigating these outages might provide a near-term solution to better protect these communities from convective hazards. Combining outage cost estimates for all radars suggests that approximately $29.1 million in annual radar outage costs may be attributable as value to alternative datasets for helping mitigate the impacts of radar outages.

Market-based Estimation of Average Electricity Outage Costs in the United States

Electricity outage cost (EOC) estimates ($ per kWh unserved) are essential input data for optimal reliability planning and efficient pricing of electricity services. Based on the 2019-2020 market data published by two US government agencies for the lower 48 states, this paper’s EOC estimates by census region and year are median values of $1.39 to $2.93 per kWh unserved, well below the estimate of $9 per kWh unserved adopted by Texas for optimal reliability planning. The policy implications of adopting our lower EOC estimate are (a) a reduction in an electric grid’s optimal planning reserve to improve the grid’s cost efficiency; and (b) a decline in the grid’s marginal cost-based retail price to encourage welfare-enhancing end-use consumption.

Average residential outage cost estimates for the lower 48 states in the US

Motivated by diverse residential electricity outage cost estimates and possible hypothetical bias of contingent valuation (CV) survey data, this paper proposes a simple formula for market-based estimation of residential outage costs. Its key finding is that average residential outage cost estimates for the lower 48 states of the US range from US$0.12 to US$0.34 per kWh unserved, below the regional CV-based estimates of US$1.0 to US$4.2 per kWh unserved found by a national study. It makes three contributions to the literature of residential outage cost estimation. First, it obviates collecting and analysing CV survey data for estimating average residential outage costs. Second, its proposed formula has minimal data requirements and is applicable to any city, state, region, or country. Finally, it details the policy implications of our newly found empirics in electricity pricing, resource planning, resource procurement, electricity product differentiation, and performance-based regulation of electricity reliability.

A flexible framework for modeling customer damage functions for power outages

This paper develops a flexible method for estimating the customer cost of a power outage. We add to the current body of literature by outlining a framework which properly accounts for the effects of outage duration. We begin by separating costs into categories depending on whether the cost varies with outage duration and whether the cost is due to perishable inventory. We derive useful functional forms for each cost category and discuss how parameters vary by load type and outage characteristics. We derive outage cost estimates for an unexpected loss of power to both an example manufacturing plant and an example fire station. The framework described in this paper can easily be employed to model outage costs for a wide range of specific operating conditions.

Valuing electricity-dependent infrastructure: An essential-input approach

Electricity is an essential input to both the production of household commodities, and the provision of public infrastructure services. The latter, in turn, are essential to the generation of additional household goods. Thus, customers' willingness to pay to avoid power interruptions will reflect both aspects of foregone household production. We recognize this as an opportunity to value infrastructure services via stated preference methods based on power outage scenarios. We motivate our model using household production theory, and implement it empirically within a Random Utility framework to derive European households' willingness-to-pay to avoid disruption of electricity provision to the “front door,” as well as the loss of important public services. We find that a considerable portion of total willingness-to-pay, to the order of 20–80%, relates to the public service component. This stresses the importance of explicitly specifying the scale of outages and their effect on public services in stated preference elicitation. Failure to do so will produce welfare estimates that are unfit to inform policy, and normalized outage cost estimates that are biased - potentially by a very large margin.

A choice experiment on the willingness of households to accept power outages

Outage cost estimation is particularly important for investment decisions related to the security and reliability of electricity supply. The heterogeneity in approaches and findings calls for more research on this topic. This paper presents a model for evaluating household Willingness to Accept (WTA) power outages in relation to expected compensation for an electricity interruption. Using a choice experiment, applied to a test sample of Italian households, we evaluate the effect of different interruption scenarios based on duration and proposed discount. The results postulate an average value of 25.37 euro/kWh of lost load for a typical Italian household. Based on survey data, the value of lost load is correlated to a set of household characteristics as well as to different durations of the hypothetical interruption.

Residential outage cost estimation: Hong Kong

Hong Kong has almost perfect electricity reliability, the result of substantial investments ultimately financed by electricity consumers who may be willing to accept lower reliability in exchange for lower bills. But consumers with high outage costs are likely to reject the reliability reduction. Our ordered-logit regression analysis of the responses by 1876 households to a telephone survey conducted in June 2013 indicates that Hong Kong residents exhibit a statistically-significant preference for their existing service reliability and rate. Moreover, the average residential cost estimate for a 1-h outage is US$45 (HK$350), topping the estimates reported in 10 of the 11 studies published in the last 10 years. The policy implication is that absent additional compelling evidence, Hong Kong should not reduce its service reliability.

정전에 따른 지역 및 산업종별 부가가치 저감을 고려한 거시적 관점에서의 지역별 공급지장비 단가 산정에 관한 연구

To establish the transmission system expansion plan based on reliability, valuation of outage cost become more important. In previous studies about outage cost estimation, macroscopic, microscopic and analytic methods are proposed but they have some limit. For instance, microscopic method involves a complex field survey process and macroscopic method can not estimate regional outage cost. So in this paper, a new method to estimate regional macroscopic outage cost using the reduction of value added due to power outages is proposed. This method uses regional add value according to production activities called Gross Regional Domestic Product(GRDP) and regional electricity sales.

Approximate Methods for Event-Based Customer Interruption Cost Evaluation

There is increasing interest in the new deregulated electric utility environment in assessing the customer costs associated with failures in electric power supply and the responsibilities associated with these failures. The customer interruption cost when an electric supply failure occurs depends on many factors, such as the customer types interrupted, the actual load demand at the time of the outage, the duration of the outage, the time of day and the day in which the outage occurs. The absence of many of the data sets required in a detailed evaluation of the customer costs makes it difficult to estimate precise individual customer outage costs due to a specific failure event. This paper illustrates the development of approximate methods for event-based customer interruption cost evaluation on a distribution feeder subjected to a specific outage event. A series of approximate methods are presented and the outage cost estimates are compared with a set of base method results. The approximate methods are based on the use of customer sector data sets, i.e., commercial, industrial, residential data, which are generally available to most utilities. The paper also illustrates further simplifications of the approximate techniques which reduce the effort required to estimate the outage costs. The approximate techniques provide a practical approach to evaluating a specific outage event.

Rural distribution system reliability worth evaluation using individual customer outage cost characteristics

Customer interruption costs are a function of both interruption and user characteristics. The specific customer characteristics at a load point in a distribution network can have a significant effect on the estimated customer outage costs at that load point and for the entire feeder. This paper illustrates the effects on outage cost estimates of using generalized sector customer outage cost estimates and actual customer specific outage cost functions. The data used in these analyses are from customer cost surveys conducted in Canada. A small distribution system is used to illustrate the possible variation in interruption cost estimates due to incorporating specific customer characteristics in the evaluation. The results presented clearly show that different customer compositions can result in significantly different feeder interruption cost estimates. The estimated interruption costs can be used in feeder design to create an optimal configuration based on reliability cost/worth analysis.

Power interruption costs to industrial and commercial consumers of electricity

This paper summarizes the results of a survey of 210 large commercial and industrial customers to obtain detailed descriptions of the components of interruption costs they would experience under varying outage conditions. In addition, the survey observed plant operating schedules, products and services, processes used, machinery used in production, backup generation and equipment designed to ensure power quality. The paper describes a statistical approach for obtaining inexpensive outage cost estimates for individual customers by combining information from onsite interviews with less costly information obtained from utility representatives. Results from regression models estimated from the information obtained in the onsite survey are described in detail.

Integrated Analysis of Customer Value of Generation System Reliability in India

An analytical framework that integrates generation resource outage characteristics and customer value of electricity supply is developed to represent and evaluate reliability of the power system in north India. The composite outage cost function is estimated to be of log-linear form based on the regression analysis of data obtained through extensive customer field surveys in the region. The research illustrates that potentially higher direct outage costs have been displaced by relatively lower adaptive response investments to counteract the impact of interruptions. The implicit reliability of the country`s generation capacity plan through 2000, used along with the outage cost estimates, gives an interrupted energy value, a customer-value-based reliability index, of 2.30 Rupees per kilowatt-hour not served in 1990 ($US 1990 = Rupees 17.50). The outage cost-based reliability planning criterion provides an optimal level of reliability equivalent of 9.1% loss of load probability (LOLP). A comparison reveals that the generation capacity program is unreliable in the beginning but becomes overly reliable toward the later years of the plan.

Sectoral outage cost estimation using an emergency action strategy for reliability optimization studies

This paper presents an alternative approach to estimate consumer outage costs by incorporating an emergency action strategy for several levels of reliability. The probabilistic framework of the frequency and duration method is used in conjunction with emergency actions to calculate the outage costs of various consumer sectors. The use of an emergency action strategy plays a significant role in curtailing consumer outage costs due to an unreliable supply of electricity. The methodology presented will be used mainly in reliability optimization studies in generation expansion planning. The frequency and duration of emergency actions and the consumer outage cost results for several levels of reliability for generation expansion plans based on the IEEE Reliability Test System data set are presented.

Economic costs of electricity supply interruptions: US and foreign experience

This paper investigates the costs of interruptions in electricity service to customers. This information is a key input in planning power system reliability using an economic cost-benefit approach. The paper reviews the literature from the perspective of identifying alternate methodological approaches used, their strengths and weaknesses, and potential for bias; it presents and compares outage cost estimates found in the literature on a common denominator basis; it attempts to explain the sources of the wide range of variation observed in different study estimates; and it identifies the need for further work on this important topic.