(Oct. 29, 2010) Comments of Energy Probe Research Foundation on the initiative to develop electricity distribution system reliability standards in Ontario.

Comments of Energy Probe Research Foundation
(“Energy Probe”)
EB-2010-0249
Initiative to Develop
Electricity Distribution System Reliability Standards
October 29, 2010

Introduction
It is the submission of Energy Probe that the Board should develop an electricity distribution system reliability benchmark that includes the United Kingdom of Great Britain and Northern Ireland (`“United Kingdom” or “UK”) jurisdiction. The UK benchmark is stable and has been proven over time to be successful. The country has benefited from one of the most reliable electricity markets in Europe with few outages that generally affect fewer people and that are restored relatively quickly. Based on the results of Capgemini’s European benchmarking survey that took place in 2008, among 46 Distribution Network Operators (DNOs) in 13 European Union countries, the UK distributors achieve some of the lowest average European operating costs and the highest levels of efficiency [1].

Apart from the United Kingdom’s success in regulating its electricity distribution, the rationale for using it as a benchmark in Ontario is the following:

• The UK has a similar operational environment to that of Ontario, with a combination of both large and small cities, and rural and remote areas with low population density.
• Some customers are difficult to reach during power cuts because of the difficult terrain and long distances between a distributor’s warehouse and a customer.
• The current UK system is a successor of the Central Electricity Generating Board, a public power system similar in many ways to that of the old Ontario Hydro.
• The culture in the UK is similar to that of Ontario in terms of the public’s expectations regarding openness, privacy, and access to government information. The use of the same language is also an advantage for access to information as is a proven track record that is described below.

An independent regulator for the electricity markets, the Office of Gas and Electricity Markets (Ofgem) in the UK, uses both standards and incentive schemes to ensure quality and network reliability. Guaranteed Standards of Performance for Electricity Distribution Companies in England, Wales and Scotland (reported annually) ensures each individual customer receives a minimum level of service and describes fines that the distributor would face if certain standards of service were not achieved.

According to the standards, the payment for an electricity outage of over 18 hours during normal weather conditions is £54 for a domestic customer and £108 for a business customer, with an additional fine of £27 for every extra 12 hours of outage [2]. In the case of a major event, electricity distributors can make a claim to Ofgem of an extraordinary event occurrence, having a significant impact on their performance, and request exemption from a payment. Adjustment to performance measures could be made if Ofgem finds an event to be exceptional and a distributor proves that reasonable steps to prevent or minimize the outage and to reconnect customers in a timely manner were taken.

In addition to standards, Ofgem initiated the Information and Incentive Project (IIP) in 2002. The main goal of the IIP was to create a better connection between performance and allowed income. Currently, there are three system reliability indicators that are used to ensure high quality of service performance:

• Customer interruptions (CI) – comparable to SAIFI
• Customers minutes lost (CML) – comparable to SAIDI, and
• Quality and speed of telephone response.

Additionally, distributors must report the number of short supply interruptions per year (defined as the number of customer’s interruptions that lasted less than three minutes per 100 customers per year), information on interruptions by source, voltage and HV circuit [3].

The success and effectiveness of both standards and incentives are demonstrated in the 2008-2009 Electricity Distribution Quality of Service Report. According to this report, which was published by Ofgem, starting from April 2001 to March 2009 among 14 distributors, the average number of customer interruptions declined by 18 percent and the number of customer minutes lost declined by 8 percent [3].

Performance targets are set for each distributor based on its historical performance. In 2008-2009, 12 out of 14 distributors beat their CI targets and 8 beat their CML targets. These distributors were rewarded and those who didn’t meet their targets were penalized. Ten percent of interruptions on other networks that influenced the distributor’s performance are included in the performance results [3].

In the case of severe weather events that significantly impact their performance, distribution utilities may request an adjustment from Ofgem. Ofgem will then determine if an event is exceptional or not and allow an adjustment where appropriate. For exceptional weather events, their full impact on CI and CML performance will be excluded and for one-off exceptional events (any event falling outside of the severe weather exceptional events process; examples of one-off exceptional events are faults on transmission networks and third party damage such as vandalism or terrorism [4]), only the impact that exceeded the relevant CI and CML thresholds would be eligible for exclusion.

It is important to note that the size of an adjustment would also be determined based on prior steps that the distributor had taken to prevent the incident from happening as well as actions taken afterward. In 2008-2009 Ofgem recognized 11 exceptional weather events and a one-off exceptional event. For the one-off exceptional event it was allowed to exclude only exceeded relevant CI and CML thresholds [3].

In 2008-2009 the average number of short interruptions was 78 per 100 customers [3].

To read full submission please click here

Olena Loskutova, October 29, 2010, Energy Probe