Designing a new procedure for reward and penalty scheme in performance-based regulation of electricity distribution companies

Abstract

Summary This paper introduces a new fuzzy‐based design procedure for more efficient application of reward‐penalty schemes in distribution sector. To achieve a fair as well as applicable regulation scheme, the fuzzy C‐means clustering algorithm is employed to efficiently determine the similarity among distribution companies. As setting procedure of the reward‐penalty scheme parameters can significantly affect the income of different companies, a new procedure based on the membership degrees obtained from the fuzzy C‐means algorithm is proposed to fairly determine these parameters for each electricity distribution company. Some numerical studies are performed on the Iranian electricity distribution companies.

Electricity Distribution System Switch Optimization Under Incentive Reliability Scheme

“…The enhanced network reliability in Case I is also reflected by a lower EENS value, compared to Case II. These results represent the significance of implementing incentive reliability regulations in the electricity distribution sector, which is a monopoly business requiring price and quality control regulations [18], [22], [23].…”

“…In this paper, the reliability worth is estimated based on an incentive reliability regulation implemented on SAIDI as well as the revenue lost due to undelivered energy to the customers during power outages. Such incentive reliability regulations, known as reward-penalty schemes, provide financial motivations for DISCOs to keep their service reliability at an acceptable level [18]- [20], [22]. Compared to the state-of-the-art literature on distribution switch optimization in which customer interruption cost approach is employed, reward-penalty values provide a more realistic measure of the reliability worth.…”

“…In this section, an MILP model is developed for the reward-penalty scheme, i.e., a regulatory tool based upon which the distribution network regulator rewards the DISCO if it maintains an appropriate reliability level and penalizes it in case it fails to fulfill an adequate level of reliability. Such incentive schemes have been implemented in many countries around the world [22]- [24].…”

Reliability-Oriented Electricity Distribution System Switch and Tie Line Optimization

“…Equations (23)- (26) jointly determine the annual interruption duration of network customers because of the faults in tie lines. Expression (23), which represents the non-negativity of τ r,n , determines its lower bound only when load node n is not located in the feeder connected to the normally-closed side of tie line r. Constraint (24) sets the minimum of τ r,n if node n is connected to the normally-closed side of tie line r. However, if an RCS is neither installed at the normallyclosed side of faulted tie line nor exists between load node n and the tie line, (25) and (26) determine the lower bound of τ r,n . In this circumstance, if an MS exists either at the normally-closed side or between the faulted tie line and the load node, (25) dictates the lower bound, since the right-hand side of (26) would be 0 or less.…”

“…As noted earlier, the proposed MILP model considers a reward-penalty scheme, on the basis of which the distribution regulator rewards the distribution utility if it maintains a sufficient level of reliability and penalizes it if it fails. It is worth mentioning that reward-penalty schemes are regulatory tools that have been implemented in many countries, to ensure that distribution utilities provide a reliable service for their customers [23]- [25]. Accordingly, the general structure of the reward-penalty scheme is represented in Fig.…”