Abstract-A new regulatory model for the Swedish electrical distribution system operators has been proposed, and is now being implemented. The model is referred to as the Network Performance Assessment Model (NPAM). The NPAM is based on fictive reference networks. These emanate from a radial network that is reinforced with redundant components if it increases the customer value more than required investment cost for higher system reliability. The NPAM involves a paradigm shift for the Swedish DSO from a system based on compensation for costs to one based on performance. Evidently, it is of great importance to both the regulator and the different DSOs to evaluate how well the NPAM calculates the performance i.e. the customer values. The aim for this paper is to take a first step in this process; by putting light on how these redundant reference networks are created and used for the NPAM. In order to do this a comparative study has been made for a small test system where two different approaches are used for identifying the resulting redundant reference network for a system. The NPAM approach uses a Monte Carlo simulation technique, and the comparative approach uses an analytical based reliability assessment tool RADPOW, developed at KTH.Index Terms-Customer value, Electrical distribution systems, Network Performance Assessment Model, Outage cost, Power systems, Probability, Performance based regulation, Redundancy, Reference networks and Reliability. I. INTRODUCTIONlectrical energy customers generally require high availability in the power supply. However, if, as for other goods, the customer were to pay a price for electricity corresponding to the customer value, different customers, such as industrial or household, would have different values for energy not supplied Consequently, there would be different set of prices for power supply from a customer point of view. From the perspective of the electrical distribution system operator (DSO), there is a cost for operation and maintenance of the electrical distribution system, to balance against the requirements for system reliability and the profit for the stakeholders. In a perfect market environment, a balance would be reached where customers select the DSO with the best price for the required customer value. However, the infrastructure for the electrical distribution system is in most cases still under a monopoly. To manage this situation the authorities apply different regulatory tools. In Sweden, a The NPAM aims to regulate the network tariffs, i.e. the price that the DSO charges the power supply customers, based on the customer value. An increase in network tariffs should then only be valid if it creates higher customer value, e.g. by increased system reliability. It is important to realize, however, that an increase in system reliability does not necessarily lead to a corresponding increase in customer value. The increase in customer value might be lower than the cost of increasing the reliability and the DSO will not be completely compensated by the network ...

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