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Regulation of continuity of supply in the electricity sector and cost of energy not supplied

pubblicazioni - Articolo

Regulation of continuity of supply in the electricity sector and cost of energy not supplied

energy not supplied Ilaria Losa*, Osvaldo Bertoldi** The International Energy Workshop (IEW) Venezia, 17-19 Giugno 2009 * ERSE SpA ** ENGINET S.r.L. The expectation of customers to be served by electric utilities with higher levels of continuity of supply becomes more stringent as long as the share of electricity to total energy consumption grows worldwide, and mostly in developed areas and countries. Indeed, electricity supply interruptions are less and less accepted by customers mainly because their social-economical effects become heavier and heavier. At the same time, in a liberalised electricity market, if continuity of supply is neither contractible nor incentivized, utilities could reduce investments aimed at guaranteeing adequate reliability standards, thus decreasing the levels of continuity of supply to final consumers (this trend has been demonstrated with practical experiences and theoretical analyses). Therefore incentive regulation for continuity of supply can ensure that cost cut policies driven by price-cap regimes are not achieved at the expense of continuity of supply. This paper shows and discusses the main results of a survey on methodologies and techniques used worldwide to assess the cost of electricity supply interruptions, as well as on the actions of European Regulators aimed at incentivizing the continuity of supply. The final target is to provide a reference framework to define economic indices to estimate the Cost of Energy Not Supplied (CENS), as well as to provide a reliable estimation of costs and benefits related to investments aimed at increasing the actual levels of reliability of electricity supply.

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