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Target Incentive

Target Incentive

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  • 1 INTRODUCTION
  • 1.1 BACKGROUND
  • 1.2 REPORT OUTLINE
  • 2 DEVELOPMENT KPI FRAMEWORK
  • 2.1 IDENTIFICATION OF KPI TARGETS
  • 2.2 REGULATORY INCENTIVE MECHANISMS
  • 2.3 SELECTION OF INCENTIVE MECHANISMS
  • 3 GENERATION
  • 3.1 KPI OVERVIEW
  • 3.2 DEVELOPMENT OF TARGETS
  • 3.2.1 International Comparisons
  • 3.2.2 Comparisons of power generation in Saudi Arabia versus International
  • 3.2.4 Power Generation of Marafiq
  • 3.2.5 Power Generation of Saudi Aramco and SWCC
  • 3.2.6 Summary of KPI Targets
  • 3.3 INCENTIVE MECHANISMS
  • 3.4 RECOMMENDATIONS GENERATION
  • 4 TRANSMISSION
  • 4.1 KPI OVERVIEW
  • 4.2 DEVELOPMENT OF TARGETS
  • 4.2.1 International Comparisons
  • 4.2.2 Comparisons Saudi versus International
  • 4.2.3 Conclusions
  • 4.3 INCENTIVE MECHANISMS
  • 4.3.1 Selection of Incentive Mechanism
  • 4.3.2 Incentive Mechanism Conclusions
  • 4.4 RECOMMENDATIONS TRANSMISSION
  • 5 DISTRIBUTION
  • 5.1 KPI OVERVIEW
  • 5.2 DEVELOPMENT OF TARGETS
  • 5.2.1 International Comparisons
  • 5.2.2 Comparisons Saudi versus International
  • 5.2.3 Conclusions
  • 5.3 INCENTIVE MECHANISMS
  • 5.3.1 Selection of Incentive Mechanism
  • 5.3.2 Incentive Mechanism Conclusions
  • 5.4 RECOMMENDATIONS DISTRIBUTION
  • 6 CUSTOMER SERVICE
  • 6.1 KPI OVERVIEW
  • 6.2 DEVELOPMENT OF TARGETS
  • 6.3 INCENTIVE MECHANISMS
  • 6.4 RECOMMENDATIONS CUSTOMER SERVICE

Development of KPI’s for the Electricity Sector in the Kingdom of Saudi Arabia Targets & Incentives Report

Submitted to: Electricity & Co-generation Regulatory Authority of the Kingdom of Saudi Arabia Submitted by: KEMA International B.V., The Netherlands

Arnhem 22 May 2009

TABLE OF CONTENTS

1

INTRODUCTION ....................................................................................................................................... 4 1.1 1.2 BACKGROUND ........................................................................................................................................... 4 REPORT OUTLINE ....................................................................................................................................... 4

2

DEVELOPMENT KPI FRAMEWORK............................................................................................................ 6 2.1 2.2 2.3 IDENTIFICATION OF KPI TARGETS .................................................................................................................. 7 REGULATORY INCENTIVE MECHANISMS .......................................................................................................... 9 SELECTION OF INCENTIVE MECHANISMS ....................................................................................................... 12

3

GENERATION ......................................................................................................................................... 15 3.1 3.2 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.3 3.4 KPI OVERVIEW ........................................................................................................................................ 15 DEVELOPMENT OF TARGETS ....................................................................................................................... 16 International Comparisons.............................................................................................................. 16 Comparisons of power generation in Saudi Arabia versus International ........................................ 21 Power Generation of SEC ................................................................................................................ 22 Power Generation of Marafiq ......................................................................................................... 29 Power Generation of Saudi Aramco and SWCC .............................................................................. 32 Summary of KPI Targets .................................................................................................................. 34 INCENTIVE MECHANISMS ........................................................................................................................... 35 RECOMMENDATIONS GENERATION .............................................................................................................. 37

4

TRANSMISSION ..................................................................................................................................... 39 4.1 4.2 4.2.1 4.2.2 4.2.3 4.3 4.3.1 4.3.2 4.4 KPI OVERVIEW ........................................................................................................................................ 39 DEVELOPMENT OF TARGETS ....................................................................................................................... 41 International Comparisons.............................................................................................................. 41 Comparisons Saudi versus International ......................................................................................... 42 Conclusions ..................................................................................................................................... 44 INCENTIVE MECHANISMS ........................................................................................................................... 45 Selection of Incentive Mechanism ................................................................................................... 45 Incentive Mechanism Conclusions .................................................................................................. 49 RECOMMENDATIONS TRANSMISSION ........................................................................................................... 50

5

DISTRIBUTION ....................................................................................................................................... 51 5.1 5.2 5.2.1 KPI OVERVIEW ........................................................................................................................................ 51 DEVELOPMENT OF TARGETS ....................................................................................................................... 52 International Comparisons.............................................................................................................. 52
Development of KPI’s for the Saudi Electricity Sector

Targets & Incentives Report 22 May 2009 2

5.2.2 5.2.3 5.3 5.3.1 5.3.2 5.4 6

Comparisons Saudi versus International ......................................................................................... 53 Conclusions ..................................................................................................................................... 54 INCENTIVE MECHANISMS ........................................................................................................................... 55 Selection of Incentive Mechanism ................................................................................................... 55 Incentive Mechanism Conclusions .................................................................................................. 59 RECOMMENDATIONS DISTRIBUTION ............................................................................................................ 61

CUSTOMER SERVICE .............................................................................................................................. 63 6.1 6.2 6.3 6.4 KPI OVERVIEW ........................................................................................................................................ 63 DEVELOPMENT OF TARGETS ....................................................................................................................... 64 INCENTIVE MECHANISMS ........................................................................................................................... 66 RECOMMENDATIONS CUSTOMER SERVICE..................................................................................................... 67

ANNEXES
ANNEX 1: DATA FOR TRANSMISSION KPI’s ANNEX 2: DATA FOR DISTRIBUTION KPI’s ANNEX 3: DATA FOR CUSTOMER SERVICE KPI’s ANNEX 4: PROCESS FOR SETTING LOCAL TARGETS ANNEX 5: DETERMINATION OF THE COST OF INTERRUPTIONS

Targets & Incentives Report 22 May 2009 3

Development of KPI’s for the Saudi Electricity Sector

1. This Targets & Incentives Report builds further on the KPI Report and assesses the desired level for these KPIs in terms of performance targets. this chapter sets out the options for designing regulatory incentive mechanisms and the factors that would drive the choice for a particular approach. distribution. As part of this project. Once targets have been determined. where incentives are found to be applicable. In doing so. the next step is to identify how deviations in performance relative to the target should be treated. which act as an intermediate between the existing performance level and the future desired performance level. Also. The long-term target reflects the desired level of the KPI.2 REPORT OUTLINE This Report is structured as follows: Chapter 2 presents a general overview of the conceptual background of deriving the targets for the different KPI’s. it will not be practical to apply longterm targets. Targets & Incentives Report 22 May 2009 4 Development of KPI’s for the Saudi Electricity Sector . this report also makes recommendations on short-term targets. The main objectives of this project are to develop KPI’s for generation. one also needs to take into account the time frame required to improve performance and therefore. for the short-run at least. we provide recommendations on the size and limitations of such incentives. A distinction has been made between long-term (to be achieved in 6 years) and short-term targets (to be achieved in 3 years). A number of options exist for implementing such incentives. Also. KEMA has been asked to assist ECRA in the implementation of the KPI project. and customer service.1 BACKGROUND The Electricity & Co-generation Regulatory Authority of the Kingdom of Saudi Arabia (hereafter ECRA) has initiated a project to develop Key Performance Indicators (KPI’s) for the Saudi power sector. In this report we develop recommendations on the type of incentive approach which would best fit a given type of KPI.1 INTRODUCTION 1. transmission. However. To bridge this gap. use is made of internationally available datasets and comparable performance statistics. a KPI Report has been produced setting out the recommendations for the KPI’s to be implemented.

Chapters 3. Each chapter starts with an overview of the KPI’s that were selected and present the results of the international comparisons that have been performed in order to arrive at suitable targets. each chapter assesses the preferred regulatory incentive mechanism to be used for inducing target performance. transmission. and customer service. 4. distribution. Further. Targets & Incentives Report 22 May 2009 5 Development of KPI’s for the Saudi Electricity Sector . and 6 respectively deal with the development of targets for the KPI’s related to generation. 5.

1. Generation G1 G2 G3 G4 G5 G6 G7 Availability Factor (AF) Forced Outage Factor (FOF) Scheduled Outage Factor (SOF) Equivalent Forced Outage Rate (EFOR) Starting Reliability (SR) Gross Capacity Factor (GCF) Net Capacity Factor (NCF) Transmission T1 T2 T3 T4 T5 T6 T7 ENS SAIDI-T SAIFI-T MAIFI-T Out100 km Voltage Dips Network Losses Distribution D1 D2 D3 D4 SAIDI SAIFI MAIFI Network Losses Customer Service C1 C2 C3 C4 C5 C5 C7 C8 Average Time to Supply – Existing Connections (ATSE) Average Time to Supply – New Connections (ATSN) Average Time to Reconnect After Payment (ATRAP) Notification of Interruption of Supply (NIS) Frequency of Complaints (FC) Frequency of Billing Complaints (FBC) Average Time to Resolve Billing Complaints (ATRBC) Average Waiting Time Call Center (AWTCC) The second issue is the identification of a proper target level performance for the selected KPI’s.2 DEVELOPMENT KPI FRAMEWORK In developing a KPI framework there are three key issues that need to be considered. Thirdly and finally. Targets & Incentives Report 22 May 2009 6 Development of KPI’s for the Saudi Electricity Sector . This issue has been the central theme for the KPI Report that has previously been produced and in which the final set of KPI’s were recommended. a selection of the performance areas to be included in the framework need to be identified and the performance indicators to be used for quantifying the utility’s performance should be selected. Overview of KPI’s to be included in the KPI Framework. Table 2. An overview of the selected KPI’s is provided in the following table. there is the issue of choosing an appropriate regulatory incentive mechanism to induce the utility to reach the target performance level. First.

for example. μ ± σ. regulators consider the historical performance of the utility and an assessment of this performance in. identically distributed random variables tends towards the normal distribution theory of normal distributions. This is illustrated in Figure 2. The short-term target acts as an intermediate performance target for the utility which should be achieved in 3 years. The mean value is equal to the median value in a normal distribution and about 68% of the values are within 1 standard deviation of the mean (mathematically. a distinction can be made between long-term and short-term targets. where μ is the arithmetic mean and σ is the standard deviation). distribution. and about Targets & Incentives Report 22 May 2009 7 Development of KPI’s for the Saudi Electricity Sector . the utility is expected to gradually increase its performance towards this long-term target. about 95% of the values are within two standard deviations (μ ± 2σ).1 IDENTIFICATION OF KPI TARGETS Once the KPI’s have been identified the next step is to formulate the desirable level of performance. Acknowledging the fact that performance improvement is difficult to achieve overnight. Comparisons with (international) counterparts can provide useful information for the regulator in order to identify the potential for improvement and to formulate long-term targets which the utility should achieve. however historic performance is not always necessarily the optimal performance level. for setting the target. This states that the distribution of a sum of many independent. After this. This is expressed in terms of the targeted performance level for the KPI. The general idea is that historical performance should be something that the utility is expected to achieve. transmission. Typically. the utility can improve further aiming towards the level of the long-term target in the next 3 years. The expected performance level can be gradually increased each year over the duration of the time-period in which the long-term target should be achieved. and customer service) and detail the issues in the context of the specific set of KPI’s. For identifying the KPI target we have selected the following approach based on the central limit theorem.This chapter deals with the two latter issues and approaches these from a conceptual point of view. Starting from the historical situation. We recommend to apply 6 years for the long-term target and 3 years for the short-term target.1. a regional or international context. The short-term target can thus be interpreted as the period of time considered reasonable for the utility to improve up to the final target. The subsequent chapters 3 till 6 will deal with each of the four respective performance areas (generation. 2.

99. The standard deviation (σ) is defined as: σ = 1/N Σ (x I . This is known as the 68-95-99.7 rule or the empirical rule.μ)² √ Figure 2.7% lie within 3 standard deviations (μ ± 3σ).6745σ) second quartile (designated Q2) = median= cuts data set in half = 50th percentile third quartile (designated Q3) = upper quartile = cuts off highest 25% of data.1 Overview of normal distributions It is common to define the following quartiles:    first quartile (designated Q1) = lower quartile = cuts off lowest 25% of data = 25th percentile ( μ – 0. or lowest 75% = 75th percentile (μ + 0.6745 σ) Targets & Incentives Report 22 May 2009 8 Development of KPI’s for the Saudi Electricity Sector .

There are three main methods which such incentives can be provided namely. On the other hand. These three methods are now described in more detail. A pragmatic approach is to focus on the so-called peer group which is defined as the companies that are located two quartiles around the mean outside the standard deviation (σ) as basis for setting the target. median Standard Methodology Peer Group Quartile (25%) Quartile (25%) Performance Indicator Data Base Statistical Analysis Figure 3. The principle is given in the following figure. Information about performance of the sample is used as a reference to set the target.For deriving the benchmark target. (1) performance publication.2 REGULATORY INCENTIVE MECHANISMS Once the KPI targets have been identified. the next step is to consider the methods that can be used to encourage the utility to achieve these targets. We should note however that the process of setting the target is not a mechanic one and will involve utilization of the consultant’s experience and knowledge. Performance Publication Targets & Incentives Report 22 May 2009 9 Development of KPI’s for the Saudi Electricity Sector . and (3) penalty/reward schemes. this is generally problematic as sometimes this can be driven by data issues or the best utility simply being an outlier. international data samples have been used. Even though one could opt for the best performing utility in the sample. performance better than the mean should also be considered. the mean generally provides a more realistic indication of the target but at the same time. (2) minimum standards. This approach provides more robust information about the range where the target should be located.2 Flow scheme of statistical analysis of Key Performance Indicators 2.

Performance publication is relatively simple to implement and does not require the regulator to develop a view on what should be an appropriate performance target. that customer becomes entitled to a financial compensation. Each performance level results in a financial incentive. Here. the incentive is a financial penalty. a minimum target level is specified by the regulator and consequently each customer is expected to be served according to this target. or on the company’s or regulator’s website. Even through there are no financial incentives. for example. This financial incentive is proportional to the gap between the actual and targeted performance. which varies with the gap between actual performance level and some predefined target level. However. Overviews of the company’s performance are reported to the regulator and published. In case the company performs below the target.Performance publication is when the regulator requires the company to disclose information about (trends in) its performance to the regulator and/or the general public. Such an approach can be useful in the case where the formulation of a meaningful target is difficult. Guaranteed Standards A guaranteed standard relates to the level of performance as experienced by the individual customer. Penalty/Reward Schemes Under a penalty/reward scheme. in the company’s annual reports. the utility is generally not exposed to any financial penalties in case of not meeting the targets. while if the company exceeds the target the incentive comes in the form of a financial reward. the fact that the company is exposed by making public its performance already creates incentives to maintain a high level of performance. in dedicated regulatory publications. Here. In the case that a particular customer is served at a sub-standard level. Targets & Incentives Report 22 May 2009 10 Development of KPI’s for the Saudi Electricity Sector . The idea of the overall standard is that the specification of a target level provides the utility with a tangible objective to achieve that is in line with regulatory expectations. Overall Standards An overall standard relates to the performance of the utility averaged over all customers being served. a minimum target level to be achieved is specified for a certain performance indicator. a more continuous relation is imposed between price and performance.

In the second example – the continuous scheme – there is a continuous relation between price and performance. there is a corresponding penalty or reward which is proportional to the gap between actual and target performance. a fixed penalty is imposed. Price and performance can be mapped continuously or in a discrete fashion. after reaching a certain performance level. performance levels exceeding the maximum level would not generate any additional rewards to the firm. etc. The reason for this is to prevent shocks in the level Development of KPI’s for the Saudi Electricity Sector    Targets & Incentives Report 22 May 2009 11 . Continuous 3. This is essentially an ordinary minimum standard.  Under the first scheme (minimum standard). Dead Band Quality Level (q) Low High Penalty 1. For each level of performance. dead bands may be applied. outside this band.2. Financial Incentive (Φ ) Reward 2. Capped 4. Similarly. The horizontal axis represents the actual performance.2: Examples of penalty/reward schemes. Essentially then. the penalty paid by the company does not increase further. Minimum Standard Figure 2. the vertical axis the financial incentive.Different types of penalty/reward schemes exist. If performance decreases beyond some minimum level. the level of the penalty or reward can be capped. the scheme is only linear within a predefined band. performance variations within this band do not lead to financial consequences. The third scheme is similar to the second but now with a cap on the level of penalty and reward. the scheme is similar to a minimum standard and has similar problems. The fourth scheme has a dead band. Some examples are provided in Figure 2.

Thus. and finally penalty/reward schemes. It is envisaged that once the KPI system has been implemented.3 SELECTION OF INCENTIVE MECHANISMS When comparing the different incentive mechanisms.of the financial incentive due to stochastic variations in performance. the degree of complexity involved and the implementation costs and risks also increase. it is unclear as to Targets & Incentives Report 22 May 2009 12 Development of KPI’s for the Saudi Electricity Sector . Table 2. Costs Weak None Low Average No No No Overall Standard Guaranteed Standard Penalty/Reward Scheme Average Yes No No Individual Customer Yes Yes No Average Yes Yes Yes Moderate None Low Strong Yes High Very Strong Yes High Performance publication is the least complex option and in the context of this project. 2. can be considered the default mechanism that will be applied to all KPIs. then minimum standards. even though information about performance is available. we can note that the strength of the incentive is progressively increased when moving from performance publication to overall standards. An important limitation of performance publication is that there are no regulatory targets defined. In the implementation of performance incentive mechanism a trade-off should thus be made between the effectiveness of the mechanism and its costs and risks. Stochastic effects can lead to performance fluctuations and consequently also a fluctuation in the level of penalties and rewards. At the same time however.2: Comparisons of the design and risks and costs of the different incentive mechanisms Performance Publication Scheme characteristics Performance Scope Target involved Penalty Involved Reward Involved Incentives and Risks Incentives Financial Risks Implement. ECRA will collect performance data of the companies on a regular basis and make this information available to the general public.

For example. The question however is whether it is desirable to move further into the direction of guaranteed standards and then further to penalty/reward schemes. Such a situation may occur if the standard level is set at too high a level or if performance levels have a stochastic nature with large fluctuations around the average performance over time. In case of not meeting that target. As mentioned. An important question is the type of incentive mechanism ECRA should adopt for each of the selected KPI’s. Clearly. An important characteristic of guaranteed standards thus is that they provide direct benefits to customers who experience low performance levels. Doing so would introduce an element of risk to the utility and also lead to a higher regulatory burden. under rate-of-return systems where the utility is assured of a sufficiently high remuneration. no penalties are however involved in general and thus the utility is not financially exposed. the penalty/reward scheme imposes a more direct link between performance and financial outcome as well as the possibility of symmetric incentives. In such circumstances. the overall standard can be applied which does clearly promulgate the desired target level. If the latter two mechanisms would be expected to provide sufficient assurance on their own in that performance will be high. the company is not able to meet the target levels. there is no natural incentive to cut costs on performance. To overcome this limitation. this can trigger high penalties and could cause financial trouble. This however also involves higher administrative costs. If. the introduction of financial risks would need to be justified by the expected benefits from implementing more intrusive schemes as opposed to only performance publication or overall standards. as these are more difficult to implement and administer and also they introduce an element of financial risk for the utility. the use of stricter Targets & Incentives Report 22 May 2009 13 Development of KPI’s for the Saudi Electricity Sector . In particular if the existing pricecontrol regime is not very focused on cost reductions. it is probably not worth opting for more complex schemes.which target performance this should be compared with. under so-called cap regulation there are very strong incentives to cut costs and some of this can come at the expense of performance degradation. In contrast. That is both inferior as superior performance lead to financial incentives in the form of penalties or rewards respectively. for some reason. Finally. this can be extended into overall standards. regulators generally have no real concern that performance will be low. performance publication can be considered the default approach and where targets can be clearly specified. Guaranteed standards are one step further and do expose the utility financially as they involve penalties to be paid to customers in the form of compensation payments.

in the following respective chapters. In this report. we have taken into consideration the existing and future state of affairs regarding the regulation of the Saudi power sector. regulators are more willing to take the risks of introducing more complex and intrusive mechanisms if there are sufficient concerns that the utility will not improve performance on its own or that performance may even be reduced.effective means of regulatory incentive mechanisms can then be justified. Targets & Incentives Report 22 May 2009 14 Development of KPI’s for the Saudi Electricity Sector . Simply stated. In doing so. recommendations have been developed on the most appropriate incentive mechanism to be applied for each of the selected KPIs. This information has been combined with our experience from other countries and is used to formulate what we believe is an appropriate and balanced choice of incentive mechanisms for the different KPI’s under consideration.

Steam Cycle. Generation KPI G1 Availability Factor (AF) Unit % Target Yes Level Freq. It therefore becomes more important and relevant to include certain indicators that would not be considered so important in liberalized markets. Note however that at this point in time. Diesel Generator (DG) and Cogeneration) and for each administrative region. In developing our recommendations. For instance the design capacity. Table 3. The following table provides an overview of our recommended KPI’s. Combined Cycle (CCGT). All KPI’s are to be measured on an annual basis and reported. It should also be noted that the targets are not projected to be applied for cogeneration plants where steam and water production rather than electricity production is leading. We believe these are relevant for ECRA to include in its KPI measurement framework. we have taken into account the fact that the generation market in Saudi Arabia is currently not liberalized. G2 Forced Outage Factor (FOF) G3 Scheduled Outage Factor (SOF) % % Yes No Per Admin Region and Annual G4 Equivalent Forced Outage Rate (EFOR) % G5 Starting Reliability (SR) % Yes Yes per Technology G6 Gross Capacity Factor (GCF) G7 Net Capacity Factor (NCF) % % No No In the table it is also indicated for which KPI’s it will be practical to apply a target and for which it is not. by each relevant utility. the data received from the utilities is not available at administrative region level but only by operational area.1 Recommended KPI’s for Generation.1 KPI OVERVIEW Based on discussions with the different stakeholders of the electricity sector in Saudi Arabia a list of KPI’s for the generation sub-sector was selected. on an aggregated basis per technology (Simple Cycle (SC).3 GENERATION 3. location and operation of Saudi Aramco and SWCC plants are determined based on the steam requirements for hydrocarbon facilities Targets & Incentives Report 22 May 2009 15 Development of KPI’s for the Saudi Electricity Sector .

Table 3. Data Service Factor (SF) Unit % Target No No No Level Freq. Forced Outage Factor (FOF). These are shown in the following table. In order to assure comparability. similar capacity ranges and similar fuel types as in Saudi Arabia. Gross Maximum Capacity (GMC) MW Net Maximum Capacity (NMC) MW Per Admin Region and per Annual Gross Actual Generation (GAG) Net Actual Generation (NAG) Gross Annual Heat Rate (GAHR) MWh MWh No No Technology BTU/kWh No 3. there is some supporting information that would need to be collected for the purpose of cross-checking. Targets & Incentives Report 22 May 2009 16 Development of KPI’s for the Saudi Electricity Sector . Thus power generation and dispatching criteria for these cogeneration units will not be subject to any form of dispatching and scheduling instructions by the system operator.1 DEVELOPMENT OF TARGETS International Comparisons The KPI’s for which a target is projected will be based on the comparison with international peer groups. Equivalent Forced Outage Rate (EFOR).and desalination facilities. Starting Reliability (SR). In addition to the above KPI list.2.2 Supporting information to be collected for Generation.2 3. the peer group was selected for different subgroups. The following KPI’s was investigated and compared with international values of peer groups:     Availability Factor (AF). consisting of units of similar technologies.

Table 3.Targets of these KPI’s will be derived for the long term and short term based on comparisons with the values of the peer groups and utilization of the consultant’s experience and knowledge. Simple cycles are normally used as peaking units. Targets & Incentives Report 22 May 2009 17 Development of KPI’s for the Saudi Electricity Sector . high efficiency (low fuel costs) and a high operating reliability. This NERC–GADS reporting system. A comparison is made in the following table.3 Characteristics of peaking. The NERC-GADS system is using clearly defined indicators according to the IEEE-762 definitions and is fully in line with the definitions used in the KPI-Report. Peaking units will have other operational characteristics and requirements than base load units. Peaking units will have a low capacity factor. Peaking units require a high starting reliability because these units must ramp-up very quickly. initiated by the electric utility industry in 1982. maintains complete operating histories on more than 5000 generating units representing 72% of the installed generating capacity in the United States supplemented by other units in Canada and in other parts of the world. The data base of NERC-GADS (Generation Availability Data System) was used to carry out the statistical analysis of key performance indicators of the different peer groups. Peaking units will have low operational hours. This implies a high availability factor and low forced outages. cycling and base load units Peaking Starting reliability Running reliability Thermal efficiency O&M costs High Low Low High Cycling High Medium Medium Medium Base load Low Very High Very high Low Base load units require low O&M costs. Before selecting the different peer groups it is important to compare the dispatch of different units of the peer group of the NERC-GADS and the units in Saudi Arabia. which implies that the efficiency of these units is less important.

Targets & Incentives Report 22 May 2009 18 Development of KPI’s for the Saudi Electricity Sector . unapplied time etc. Maintainability for the General Electric 7H gas turbine. The gas turbine industry is focused on the FOF (Forced Outage Factor) instead of EFOR.) are counted. Availability.It should be noted that the NERC-GADS sample for simple cycle units represents low service factors and low net capacity factors and this implies that the NERC-GADS data base for simple cycle units is a group of peaking units. holidays. According to General Electric1 it turns out that using FOR (Forced Outage Rate) and EFOR (Equivalent Forced Outage Rate) creates an unrealistic. misleading measurement for simple cycle units used as peak load units. weekends. Predicted Reliability. A high capacity factor implies that the unit is used as base load unit while a low capacity factor indicates that a unit is used as peak load unit. For this reason the service factor and the net capacity factor was investigated from the NERC-GADS data base and this was compared with the units of SEC. The main reason is that there is no credit for available standby reserve time. and worse. Table 3. in very simple terms it shows the extent to which the generator is used. The capacity factor is related to the dispatch of the unit. The simple cycle units of SEC have a service factor and a capacity factor that is comparable with base load units and this means that EFOR and FOR data of the simple cycle units in the NERC-GADS data base (peaking 1 GE Power Systems.4 Net Capacity Factor (NCF) and weighted Service Factor (SF) of different technologies in Saudi Arabia compared to peer group Technology NCF of SEC units in 2007 NCF (median of peer group Weighted SF of SEC units in 2007 58 78 71 35 SF (median peer group) Simple cycle Steam cycle Combined cycle Diesel Generator 38 72 57 17 2 19 24 6 2 50 35 9 From this table it can be concluded that the simple cycle units of SEC in Saudi Arabia are used as base load units and probably also as peaking units. optically poor. all forced outage hours (nights.

9 Q3 95.8 Table 3. Combined cycles in the range of (50-125 MW) are corresponding to gas turbines in the range of 30-90 MW.2 93. NERC separates simple cycle plants from combined cycle plants and does not separate out the gas turbine portion of the combined cycle plants.5 (100-500 4.6 Overview of quartile spread of weighted forced outage factor of different peer groups Weighted Forced Outage Factor (%) Technology-Peer group Simple cycle (10-125 MW) Steam plant (100-700 MW Combined MW) cycle Q1 5.4 Median 91. As a first conservative approach we propose to use the equivalent forced outage rate of the peer group of combined cycles for simple cycle units that are used as base load and cycling units.0 2.9 95.0 99.units) cannot be compared with the data of simple cycle units (base load units) in Saudi Arabia.2 1.4 90. It is well known that gas turbines contribute significantly to forced outages in combined cycles due to the complicated technology that is sensitive to forced outages.6 79.6 Q3 0. Unfortunately.5 98.4 90.4 4.4 Median 2.5 Overview of quartile spread of weighted availability factor of different peer groups Weighted Availability factor (%) Technology-Peer group Simple cycle (10-125 MW) Steam plant (100-700 MW Combined cycle (100-500 MW) Diesel generator (2-35 MW) Q1 83.2 0. For instance 2/3 of the capacity of combined cycles is contributed by gas turbines.4 86.8 1.2 86. The results of the statistical analysis of the different peer groups are given in next tables Table 3.3 Targets & Incentives Report 22 May 2009 19 Development of KPI’s for the Saudi Electricity Sector .

7 Overview of quartile spread of starting reliability of different peer groups Starting Reliability (%) Technology-Peer group Simple cycle (10-125 MW) Q1 93. Table 3.1 0. The equivalent outage factor refers to the conversion of partial outages including capacity constraints to equivalent full outages. Simple cycle units are often used as peaking units and therefore the statistical analysis of starting reliability will be only carried out for simple cycle units. The disadvantage is that the equivalent forced outage rate is more difficult to calculate and this may lead to misunderstandings if the definitions are not correctly applied or if some data are not available. The next table presents the median value of the equivalent forced outage rate of different peer groups.5 Median 98.8 Overview of quartile spread of weighted equivalent forced outage rate of different peer groups Weighted Equivalent Forced Outage Rate Technology-Peer group Q1 Median Q3 Targets & Incentives Report 22 May 2009 20 Development of KPI’s for the Saudi Electricity Sector . If a unit has many starting problems this may also lead to frequency and voltage changes in the system.Diesel generator (2-35 MW) 0. It is very common for a unit to be partially derated due to technical problems.5 0. For this reason the equivalent forced outage rate is defined. Table 3.4 Q3 100 Units can be derated due to forced or planned outage.01 The starting reliability is much more important for peaking units than for base load units because peak load have to ramp up very quickly in case of forced outages of the units.

2.8 The presented equivalent forced outage rate of the peer group for simple cycles (4. 3.1 3. Data of SEC were obtained per operating area:     Central Operational Area (COA) Eastern Operational Area (EOA) Southern Operational Area (SOA) Western Operational Area (WOA) Note that in future.0 1. Diesel Generator (DG) and Cogeneration (COGEN). Saudi Aramco and SWCC.Simple cycle (10-125 MW) Peer group of NERC-GADS Combined cycle (50-125 MW) Steam plant (100-700 MW Combined cycle (100-500 MW) Diesel generator (2-35 MW) 14. Steam Cycle (ST). ISO New England.4 9. Combined Cycle (CCGT).0) is in line with the weighted EFOR as reported by ISO New England for gas turbines23. Key performance indicators per unit and per group of units were received from the different companies were compared with the statistical values of the KPI’s of the different peer groups Simple Cycle (SC).0 1. 22 Interim Review of Resource Adequacy.5 5.4 12.9 6.0 6.2 Comparisons of power generation in Saudi Arabia versus International The key performance indicators were investigated based the information received from SEC. 2005 Targets & Incentives Report 22 May 2009 21 Development of KPI’s for the Saudi Electricity Sector . data will need to be reported per administrative region.4 2. From the statistical analysis it can be concluded that the availability factors and forced outage factors of simple cycles and combined cycles do not differ substantially.5 4. Marafiq. The main reason is that the gas turbine in combined cycles is the most advanced and complicated equipment and therefore sensitive to forced outages.0 15.

0 2005 2006 Year 2007 2008 Figure 3. The weighted availability factor of simple cycle units in EOA and in SOA were almost equal to median value of the peer group.0 50. The weighted availability factors of the simple cycle units in WOA and COA were lower than the median value of the peer group.3 3.2.2.0 70.3.1 Power Generation of SEC Availability factor The weighted availability factors of the generation units in different areas of SEC were compared with the median values of the peer group.1 Weighted availability factor of simple cycle units of SEC compared to a peer group The weighted availability factor of steam cycles in WOA was lower than the median value of the peer group and the weighted availability factor in EOA was equal to the median value (See Figure 3. Weighted Availability Factor.3. Targets & Incentives Report 22 May 2009 22 Development of KPI’s for the Saudi Electricity Sector .0 90.0 60.SC median value of peer group 100.2).0 WAF (%) WOA COA EOA SOA 80.

CCGT median value of peer group 100. Weighted Availability Factor.0 60.0 50.0 2005 2006 Year 2007 2008 WOA COA Figure 3.3 Weighted availability factor of combined cycle units of SEC compared to a peer group Targets & Incentives Report 22 May 2009 23 Development of KPI’s for the Saudi Electricity Sector .2 Weighted availability factor of steam cycle units of SEC compared to a peer group The weighted availability factors of the combined cycles operating in COA and WOA were low compared to the median value of the peer group (see Figure 3.Steam Cycle median value of peer group 100.0 90.3).0 WAF (%) 80.0 90.0 70.0 WAF (%) 80.0 2005 2006 Year 2007 2008 WOA EOA Figure 3.0 70.0 50.0 60.Weighted Availability Factor.

4 it can be concluded that the weighted availability factor of diesel generators in SOA was lower than the median value of the peer group and in EOA equal to the median value of the peer group.2.DG median value of peer group 100.0 8.0 2005 2006 Year 2007 2008 EOA SOA Figure 3.2 Forced outage factor The weighted forced outage factors of the generation units of SEC were compared with the median values of the peer group.8) Weighted Forced Outage Factor.5 Weighted forced outage factor of simple cycle units of SEC compared to a peer group Targets & Incentives Report 22 May 2009 24 Development of KPI’s for the Saudi Electricity Sector .5-3.0 50.0 2.0 2005 2006 Year 2007 2008 Figure 3.0 90.0 WAF (%) 80.0 0.3.4 Weighted availability factor of diesel generators of SEC compared to a peer group From Figure 3.0 4. (See Figures 3.SC median value of peer group 10.0 60.0 70.0 WFOF (%) WOA COA EOA SOA 6. 3.Weighted Availability Factor.

0 2005 2006 Year 2007 2008 WOA EOA Figure 3.0 1.Steam Cycle median value of peer group 5.0 4.0 1.0 2.0 2005 2006 Year WOA COA 2007 2008 Figure 3.7 Weighted forced outage factor of combined cycle units of SEC compared to a peer group Targets & Incentives Report 22 May 2009 25 Development of KPI’s for the Saudi Electricity Sector .0 2.6 Weighted forced outage factor of steam cycle units of SEC compared to a peer group Weighted Forced Outage Factor.0 0.0 WFOF (%) 3.Weighted Forced Outage Factor.0 WFOF (%) 4.0 5.0 3.0 0.CCGT median value of peer group 6.

Steam cycles in all relevant operating area’s have a lower weighted forced outage factor than the median value of the peer group.DG median value of peer group 5.Weighted Forced Outage Factor. The starting reliability of all other units is close to the median value of the peer group. Diesel generators in EOA and SOA have a higher weighted forced outage factor than median value of the peer group. Targets & Incentives Report 22 May 2009 26 Development of KPI’s for the Saudi Electricity Sector .0 2.0 0. Starting reliability    3.0 WFOF (%) 3. From Figure 3.2.0 4.9 it can be concluded that the starting reliability of the simple cycle units in SOA is substantially lower than in other regions. The weighted forced outage factor for simple cycles and combined cycles in WOA were lower than the median values of the peer group.3 The starting reliability of peaking units was compared to the values of the peer group.0 2005 2006 Year 2007 2008 EOA SOA Figure 3.8 Weighted forced outage factor of diesel generators of SEC compared to a peer group From these figures it can be concluded that:  The weighted forced outage factors for simple cycles and combined cycles in COA were higher than the median value of the peer group.0 1.3.

0 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Quarter of Year 2008 WOA COA EOA Figure 3.SC median value of peer group 100. It should be noted that the south operating area (SOA) was not able to submit data on equivalent forced outage rate on simple cycles and diesel generators at this moment.0 70.0 50.SC median value of peer group 25.0 20.0 2005 2006 Year 2007 2008 Figure 3.0 10.3.Starting Reliability.0 0.0 60.0 WEFOR (%) 15.0 90. Weighted Equivalent Forced Outage Rate.0 5.2.9 Starting reliability of simple cycle units of SEC compared to a peer group 3.10 Weighted equivalent forced outage rate of simple cycle units of SEC compared to a peer group Targets & Incentives Report 22 May 2009 27 Development of KPI’s for the Saudi Electricity Sector . The equivalent forced outage rate of the peer group was compared for the different technologies in the year 2008.4 Equivalent forced outage rate Equivalent forced outage rates were recently implemented by SEC and for that reason SEC could only provide data of each quarter of the year 2008.0 WOA COA EOA SOA SR (%) 80.

0 WEFOR (%) 6.0 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Quarter of year 2008 WOA EOA Figure 3.0 2.0 4.11 Weighted equivalent forced outage rate of steam cycle units of SEC compared to a peer group Weighted Equivalent Forced Outage Rate-CCGT median value of peer group 10.0 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Quarter of year 2008 WOA COA Figure 3.0 8.12 Weighted equivalent forced outage rate of combined cycle units of SEC compared to a peer group Targets & Incentives Report 22 May 2009 28 Development of KPI’s for the Saudi Electricity Sector .Weighted Equivalent Forced Outage Rate.0 0.Steam Cycle mean value of peer group 10.0 4.0 8.0 2.0 0.0 WEFOR (%) 6.

The weighted equivalent forced outage rates of simple cycles of SEC in WOA were considerable lower than the median values of the peer group.1 Availability factor Gas turbines were considered as simple cycle units and the weighted availability factor of the gas turbines units were compared with the median value of the peer group. maintenance.0 10. the weighted equivalent forced outage rates were much lower than the median values of the peer group. From figure Targets & Incentives Report 22 May 2009 29 Development of KPI’s for the Saudi Electricity Sector .4.0 0.0 30.0 1Q-2008 2Q-2008 3Q-2008 4Q-2008 Quarter of year 2008 EOA Figure 3. 3.2. For combined cycles and steam cycles.0 WEFOR (%) 40. commercial and residential customers in the industrial cities of Jubail and Yanbu.2.DG mean value of peer group 50. 3. management.0 20. The power generation units are consisting of steam cycles fuelled with HFO and of gas turbines provided with heat recovery steam generators to produce steam for desalination plants. Each heat recovery steam generator can receive exhaust gases from only one gas turbine while the other gas turbine is either operating in simple cycle mode or on standby. expansion and construction of power and water systems to provide essential utility services to industrial.4 Power Generation of Marafiq Marafiq’s core business is the operation.13 Weighted equivalent forced outage rate of diesel generator units of SEC compared to a peer group From these figures it can be concluded that the weighted equivalent forced outage rates of simple cycles of SEC in COA and EOA and diesel generators of SEC in EOA were higher than the median vales of the peer group.Weighted Equivalent Forced Outage Rate. It was agreed that the gas turbines have to be considered as simple cycles and not as cogeneration units.

Weighted Availability Factor-Steam Cycle median value of peer group 100.0 60.0 2005 2006 Year 2007 Figure 3.0 90.0 Marafiq 70.14 Weighted availability factor of simple cycle units of Marafiq compared to a peer group The weighted availability factor of steam cycles of Marafiq is lower than the median value of the peer group.0 60.0 50.0 WAF (%) 80.0 2005 2006 Year 2007 Figure 3.0 50.14 it can be seen that the weighted availability factor of simple cycle units is equal to median value of the peer group.15 Weighted availability factor of steam cycle units of Marafiq compared to a peer group Targets & Incentives Report 22 May 2009 30 Development of KPI’s for the Saudi Electricity Sector . Weighted Availability factor-SC median value of peer group 100.3.0 90.0 Marafiq 70.0 WAF (%) 80.

From these figures it can be concluded that the forced outage factors of simple cycles and of steam cycles are lower than the median value of the peer group.0 Marafiq 2.4.0 WFOF (%) 3.0 1.0 2005 2006 Year 2007 Figure 3.3.0 1.0 2005 2006 Year 2007 Figure 3. (See Figure 3.2 Forced outage factor The forced outage factor of the units of Marafiq was compared to the median value of the peer group.0 4.0 WFOF (%) 3.0 4.16 Weighted forced outage factor of simple cycles of Marafiq compared to a peer group. Targets & Incentives Report 22 May 2009 31 Development of KPI’s for the Saudi Electricity Sector . Weighted Forced Outage Factor-Steam Cycle median value of peer group 5.2.0 Marafiq 2.16 and Figure 3.17) Weighted Forced Outage Factor-SC median value of peer group 5.17 Weighted forced outage factor of steam cycle units of Marafiq compared a peer group.

Starting Reliability-SC median value of peer group 100.3.0 90. The design capacity. Targets & Incentives Report 22 May 2009 32 Development of KPI’s for the Saudi Electricity Sector . Data were received from Saudi Aramco and SWCC. It should be noted that a complete set of data was only available of the year 2007.0 Marafiq 70.3 Starting reliability The starting reliability is important for the simple cycle units because these units are acting as peaking units.0 60.18 Starting reliability of simple cycle units of Marafiq compared to a peer group.2. 3.2.0 50. Moreover.4.0 SR (%) 80. In these types of units the production of steam and water is leading and electricity is considered as by-product. Data of previous years were not complete.5 Power Generation of Saudi Aramco and SWCC The power generation units of Saudi Aramco and SWCC are cogeneration units producing besides steam for the hydrocarbon facilities and desalination facilities also electricity. The dispatching criteria for these cogeneration units are not subject to any form of dispatching and scheduling instructions by the system operator.0 2005 2006 Year 2007 Figure 3. data of Yanbu and Riyadh refinery of Saudi Aramco were not available and were not incorporated in the figures below. The starting reliability of the simple cycles is lower than the median value of the peer group. location and operation of these plants are based on the steam requirements. The reason for this low starting reliability is the decreasing quality of the fuel and the fluctuating quality of the fuel.

The availability factor and forced outage factor was investigated based on the data received and the results are plotted in next figures.

Weighted Availability Factor
100.0 95.0

WAF (%)

90.0 85.0 80.0 75.0

Saudi Aramco SWCC

Figure 3.19

Weighted availability factors of cogeneration units of Saudi Aramco and SWCC in Saudi Arabia

Weighted Forced Outage Factor
12.0 10.0

WFOF (%)

8.0 6.0 4.0 2.0 Saudi Aramco SWCC

Figure 3.20

Weighted forced outage factor of cogeneration units of Saudi Aramco and SWCC in Saudi Arabia

Targets & Incentives Report 22 May 2009 33

Development of KPI’s for the Saudi Electricity Sector

3.2.6

Summary of KPI Targets

Targets for cogeneration units (Saudi Aramco, SWCC) cannot be applied because steam production for hydrocarbon facilities and desalination facilities are business driving factors instead of electricity. For this reason we will focus the targets on those units where electricity is the main product. Based on the results the following targets for the short term can be determined for the different technologies.
Table 3.9 Short term targets for KPIs in generation.

KPI (Weighted)

Simple Steam Combined Diesel cycle cycle cycle generator (SC) (ST) (CCGT) (DG) > 85% < 4% >90% <6% > 85% <3% <6% > 85% <3% <6% >93% < 3% <6%

Weighted Availability Factor (WAF) Weighted Forced Outage Factor (WFOF) Starting Reliability (SR) Weighted Equivalent Forced Outage Rate (WEFOR)

In fully liberalized markets there are no targets for availability, forced outages and starting reliability. The present short term targets are somewhat below the realized values on availabilities, forced outages in other countries such as Texas, California, and Australia4. Countries like Malaysia and Jordan5 which also apply a single buyer model have applied some targets for availability factor, forced outage factor and starting reliability. These targets are similar to the short term targets presented in above table but the simple cycle units have a target of > 90% for the availability factor.6 It appeared that the simple cycle units and diesel generators in Saudi Arabia are aged and therefore have a lower availability and higher forced outage factor than peer groups. This must be increased for the long term and this would require investments.

4

Confidential KEMA Report, Electricity Supply Industry in Malaysia, 2006 Performance and Statistical Information, Energy Commission, Government of South Australia, Annual Report of Technical Regulator, 20042005 and Office of the Tasmanian Regulator, Tasmanian Energy Supply Industry Performance Report, 20052006
5 6

Electricity Regulatory Commission of Jordan , Generation Performance Code , 2007 VGB, Analysis of unavailability of thermal power plants 1997-2006
Development of KPI’s for the Saudi Electricity Sector

Targets & Incentives Report 22 May 2009 34

Long term targets which are based on the median values of the different peer groups. It should be noted that the peer groups will also improve the operational aspects such as availability and forced outages in the coming years as a result of investments in efficient technologies and reducing operational & maintenance costs. This implies that long term targets have to change as a result of a continuous improvement of the availability and decrease of the forced outage of power generation plants.
Table 3.10 Long term targets for KPI's in generation.

KPI (Weighted)
Weighted Availability Factor (WAF) Weighted Forced Outage Factor (WFOF) Starting Reliability (SR) Weighted Equivalent Forced Outage Rate (WEFOR)

Simple Steam Combined Diesel cycle cycle cycle generator (SC) (ST) (CCGT) (DG) > 90% <3 % >95% <4% > 85% <2 % <5% > 90% <2% <5% >95% < 2% <5%

3.3

INCENTIVE MECHANISMS

The KPIs for generation are mainly related to the availability and reliability of generating units. Connected to this is the issue of reserve capacity (generation adequacy). Generally speaking, a sufficient level of reserve capacity combined with a proper availability performance will result in a reliable power supply from generation point of view. Generation adequacy is typically a long term aspect and is determined as LOLE (Loss of Load Expectation). The LOLE is a measure of how long on average the available capacity is likely to fall short of the demand. LOLE is a statistical measure of the likelihood of failure and does not quantify the extent to which supply fails to meet demand. The use of LOLE to assess generation adequacy is internationally accepted. Adequacy levels are compared to a standard to assess the adequacy of the system. A vey small LOLE value is indicative of a system with excess capacity in terms of meeting the adequacy standard. Normally the LOLE is determined in energy planning studies and forecasting studies.7 Under normal circumstances there is sufficient reserve margin to overcome the problems of forced outages and non-perfect availability of the generation units. Therefore, regulators will

7

See for example: Updated generation planning for SEC, Centre for Engineering Research, Safar 1427H, March 2006, www.ecra.gov.sa
Targets & Incentives Report 22 May 2009 35 Development of KPI’s for the Saudi Electricity Sector

not apply penalties or awards in fully liberalized markets for generators. Rather, the incentives for high performance are inherently present and/or are contained in Power Purchasing Agreements (PPAs). In Saudi Arabia, a Single Buyer system is envisaged to be implemented in the near future which will also be accompanied by a (updated) set of PPAs. The basic information contained in a Power Purchase Agreement includes the following items:           Definitions Purchase and Sale of Contracted Capacity and Energy (such as steam, hot water and/or chilled water in the case of cogeneration and trigeneration plants Operation of the Power Plant Guarantees of Performance Penalties Payments Force Majeure Default and Early Termination Liquidated damages Miscellaneous

The PPAs also prescribe the performance targets to be met by the generator and the penalties applicable in case of under-performance. In this light, the application of regulatory penalties will be less desirable. Nevertheless, the targets for the various KPIs formulated here can act as a useful reference. Furthermore there is often performance standards (unit availability) tied to rewards or penalties for meeting the availability criteria. In PPA’s sometimes penalties are applied for de-rating due to the difference, if any, between the dependable capacity, as measured by a test (being either an acceptance test or a dependable capacity test, as the case may be), and contract capacity, such difference is defined as deficit capacity. The penalty mechanism in PPA’s is typically used as tools to safeguard the availability of power plants. Penalties are depending on the requirements of buyer of the electricity. The buyer may require a high availability and low forced outages. High requirements of the buyer regarding availability and forced outages will result in the higher operational and maintenance costs and thus in higher tariffs.
Targets & Incentives Report 22 May 2009 36 Development of KPI’s for the Saudi Electricity Sector

As an example the Power and Water Purchase Agreement for a 2,600 MW and 55 MIGD in Ras Laffan C in Qatar is given. In this PPA, there are stringent values for forced outages and availability. For instance penalties will be applied if capacity is reduced in a given period with be more than 4%. These penalties will depend on the period of a year. Penalties in summer time will be higher than in winter time in the Middle East. In conclusion, for generation, our recommendation is not to apply any penalty regimes but rather limit regulatory incentives to the publication of performance as compared to the targets. These targets can be formulated in terms of overall standards that indicate the desired minimum level of performance however without imposing any penalties in case of sub-standard performance.

3.4

RECOMMENDATIONS GENERATION

We summarize the recommendations with respect to the targets and incentive mechanisms for generation in the following table.

Targets & Incentives Report 22 May 2009 37

Development of KPI’s for the Saudi Electricity Sector

11. No penalty None None Targets & Incentives Report 22 May 2009 38 Development of KPI’s for the Saudi Electricity Sector . ST=Steam Cycle. KPI (Weighted) SC G1: Weighted Availability Factor (WAF) Short-Term Targets ST CCGT DG SC Long-Term Targets ST CCGT DG Overall Standard. SC=Simple Cycle. DG= Diesel Generator. No penalty G5: Starting Reliability (SR) G6: Gross Capacity Factor (GCF) G7: Net Capacity Factor (NCF) >90 % >95% Overall Standard.Table 3. No penalty <6% <6% <6% <6% <4% <5% <5% <5% Overall Standard. Summary of recommendations regarding targets and incentive mechanisms for Generation. CCGT=Combined Cycle. No penalty Incentive Mechanism > 85% > 85% > 85% >93% > 90% > 85% > 90% >95% G2: Weighted Forced Outage Factor (WFOF) G3: Weighted Scheduled Outage Factor (WSOF) G4: Weighted Equivalent Forced Outage Rate (WEFOR) < 4% <3% <3% < 3% <3% <2% <2% < 2% Overall Standard.

< 69 kV Type: Planned. Transmission KPI T1 T2 T3 T4 T5 Energy Not Supplied (ENS) Unit Target Yes No No Unplanned. 115 kV. 110 kV. No Generation.1 Recommended KPI’s for Transmission. Table 4. namely 69 kV. 230kV. 380 kV. Force Majeure Total. Affecting load Voltage Level: Freq.1 KPI OVERVIEW Based on discussions with the different stakeholders of the electricity sector in Saudi Arabia a list of KPI’s for the Transmission sub-sector was selected that we believe is relevant for ECRA to include in its KPI measurement framework. MAIFI-T Out100km Int/year Outages/ye No ar per 100 km No Nr/year Annual T6 Voltage Dips T7 Network Losses % No System Targets & Incentives Report 22 May 2009 39 Development of KPI’s for the Saudi Electricity Sector . % Min/year Int/year SAIDI-T SAIFI-T ≥ 69 kV. Since SEC Transmission supplies at voltage levels down to 13. by each relevant utility.4 TRANSMISSION 4. All KPI’s are measured on an annual basis and reported. the KPI’s related to interruptions are limited to the voltage levels above 50 kV. The following table provides an overview of the recommended KPI’s for transmission.8 kV and the peer group consist of transmission utilities (voltages above 50 kV).

Table 4. In case of tie-lines between two utilities. the behaviour has been out of control of the transmission company and should be classified as Force Majeure. the main breaker in transmission trips. frequency and energy lost) related to the tie-line to be divided by two and share among the companies. if a fault occurs at distribution. Generation. the Consultant suggests that the contribution to the KPI (that is the duration. These are shown in the following table. causing a large interruption to many customers (this consist in a human error). Unplanned.2 Supporting information to be collected for Transmission Data Energy Injected Energy Supplied Peak Power Unit GWh GWh MW Level Frequency Two classes of voltage levels: Annual 69…380 kV and < 69 kV Two classes of voltage levels: Annual 69…380 kV and < 69 kV Global (delivered to transmission network) Global the Annual Annual Date and time of the Date.The KPI’s related to interruptions and voltage dips should also be broken down into four types: Planned. Force Majeure8. it may be the case that the distribution operator closes the breaker that tripped while the fault is still there and as a consequence. Targets & Incentives Report 22 May 2009 40 Development of KPI’s for the Saudi Electricity Sector . there is some supporting information that would need to be collected for the purpose of cross-checking or for calculation of other indices. In addition to the above KPI list. time peak power Length of networks km Two classes of voltage levels: Annual 380 kV and below 380 kV Two classes of voltage levels: Annual 69…380 kV and < 69 kV Two classes of voltage levels: Annual 69…380 kV and < 69 kV Number of Delivery Nr Points Nb of Voltage Dips Nr That Reduced Load 8 For SEC T. In that case.

On the opposite.85 Q3 0.09 6.8 0. Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 41 .4. The following tables consist of data from the most recent years of availability9.00015% 0. KPI T1: ENS T2: SAIDI-T (min) T3: SAIFI-T T4: MAIFI-T (values for T&D) Q1 0.3 Overview of quartile spread of Transmission KPIS of different countries (for later comparison with Saudi Arabia values). when focusing on those countries having set up a regulatory process for improving the continuity performance.6 0.0 9 As a consequence. Consequently there is remains little harmony in the monitoring of continuity performance around the world. notably in Europe with the Council of European Energy Regulators (CEER) and European Regulators' Group for Electricity and Gas (ERGEG). Note that only ENS will be provided a target.04 0. a target can be set higher or lower. depending on the societal cost of the non-continuity (often expressed by the value of the Energy Not Supplied.2.1 0.0005% 2. Comparing does not mean that all values are expected to be equal: this is why even a long term target is not proposed to be at the level of the best continuity performance but rather at the level of an average continuity performance.0012% 2. some data may refer to different years. there is more ground for launching a comparison process.06 0. Also.2 4. When comparing globally all countries. in currency per kWh).07 Median 0.1 DEVELOPMENT OF TARGETS International Comparisons The regulatory request for monitoring the continuity performance is relatively recent for both transmission and distribution activities. the diversity of the transmission contexts and their supply continuity results makes the drafting of a conclusion a delicate process. This regulatory process started out by using the data collected by the utilities with their own criteria and rules for measurement and calculation. Some efforts for progressive harmonization are however ongoing. Table 4.

0. 77 2.0 10 The countries included in the sample are: Finland.85 0.T5: Outages100km T6: Nr Voltage Dips T7: Network losses (%) n.a.2.04 0. Spain.67 0. it is recommended that the above statistics are to be revised at regular time intervals (say.07 0. 146 4.4 Comparison of continuity performance for the Energy not Supplied (ENS) KPI SEC Trans Marafiq Trans n.: not available n. Lithuania.8% n.1 0. Targets & Incentives Report 22 May 2009 42 Development of KPI’s for the Saudi Electricity Sector . The annexes contain the raw data and their country of origin. every two to four years). n. Table 4.a. United Kingdom.a. Canada.09 6.a. Netherlands.00015% 0.a.a.068 n. Italy.0005% 2. Denmark.2 Comparisons Saudi versus International The following table compares the values from SAUDI ARABIA to those found for the international peer group. The international statistics on this KPI come from a set of statistics issued by the CEER 3rd Benchmarking report dealing with transmission only for 9 countries. Australia.6 0. 4. Norway. 257 6. n.85% Targets for transmission KPI’s will only apply to ENS.a. Portugal.8 0.9% n.10 Since the data availability is increasing during the years and the number of countries participating in benchmarking studies is increasing as well.00081% 3. The list of other KPI’s (without target) has been prepared from a set of 7 countries (for SAIFI-T and MAIFI-T) and 11 countries (for SAIDI-T). France.0012% 2. Hungary. n.06 0. Q1 Median Q3 T1: ENS T2: SAIDI-T (min) T3: SAIFI-T T4: MAIFI-T (T&D) 0.a.a.

Italy.068) and of Marafiq (0.06) but SEC-Transmission is below the international Q3 (0. Portugal.T5: Outages100km T6: Nr Voltage Dips T7: Losses (%) n. The transmission losses (2. n. n.8% n.471 GWh in 2007) a figure of 0. The SAIDI-T of SEC-Transmission (3.953 MW) for the whole country: an ENS value of 1.00081% can be derived for the ENS of SEC Transmission in 2007. This figure is higher than the international median (0. 2.a.a.9% n.a. 11 Namely Norway.0012 %).85% The ENS value of SEC for 2007 has been derived from the SIMLI (Total energy lost divided by system peak. Force Majeure and Generation failures) have been excluded from all above statistics. n.e.a.a. Hungary.67minutes) appears to be above the median and the Q3 of international values (2. 77 2. Comparisons would only make sense at a later stage of the benchmarking process.497 MWh is then found for the SEC Transmission System. 257 6.66%) seem to be a good performance when compared to international data. considering the Energy Supplied by the Transmission network (185.a. Australia Queensland. This is probably linked to the fact that in Saudi Arabia generators are relatively close to consumption centers.0005%) but less than the international Q3 (0.09).a.66% n. Then. The comparisons provided here indicate possible improvements of the performance in Saudi Arabia since: exceptional events (i. reaching 2. From Saudi Arabia no value has been submitted (yet) by the companies. The SAIFI-T value of SEC-Transmission (0. 146 4. The number of voltage dips is reported by seven countries11 out of the data collected and the diversity of the values is higher than for the others KPI’s values collected (see Annex). n.a.57 minutes in 2007) and the peak of 2007 (34. the Netherlands.6 minutes). France Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 43 .81) are also above the international median found (0.

Long-term here can be interpreted as a period of 10 years.0005% of the Energy Supplied. The long term target is proposed to be the median value of the peer group. the above set of continuity data presents some homogeneity and presents a reasonable basis for a regulatory authority to set targets for continuity of supply. generation. and force majeure are not subject to a target. which takes into account the high capital intensity of the transmission business and the long lead times necessary to implement structural improvements. The short term target is a value well above the long term target. Events associated with planned. The continuity KPI’s that are without targets like SAIDI-T and SAIFI-T confirm the position of the Transmission continuity of supply relatively in Saudi Arabia to the international median. The only transmission KPI to be subject to a target scheme in Transmission is the Energy Not Supplied (ENS).00031%. which represents an improvement expectation of 0.00065%. which is 0. the intermediate target is based on half this improvement (0. For long term target. Other KPI’s like voltage dips are more difficult to compare since this is not measured by most countries.00065%. Losses of SEC Transmission appear to indicate a good performance for a country as large as Saudi Arabia.2. As a consequence.00015%) is deemed to be a reasonable milestone for setting a short term target of 0. This allows sufficient time for the transmission companies of Saudi Arabia to adapt their means in order to meet the long term target: The short term target is proposed here at 0.- the TSO of the compared countries are supposed to adapt their network to the context they face in terms of non-exceptional events. On the short run. and therefore no comparison will be presented here on this issue. indicating that some improvements are needed if the international median level is to be met. while progressing towards the long-run target. Note that the target for ENS only applies to the unplanned interruptions category. the time scope for defining the “short term” can be negotiated taking into account the implementation delays of the actions that are felt necessary to reach the short term target. the median value of the ENS parameters is proposed.3 Conclusions The median of the international ENS performance (0.0005%) is proposed as a long term target. 4. To much extent. Targets & Incentives Report 22 May 2009 44 Development of KPI’s for the Saudi Electricity Sector .

in context of a “pr ice-cap” regulation.00065% Long Term 0. in the future ECRA may wish to adopt stricter incentive mechanisms if a change towards a stricter form of price control is adopted.0005% The targets are set here for the ENS computed from unplanned interruptions of the voltage range 69 to 380 kV so that the performance can be compared to transmission networks consisting HV and EHV levels. there is usually no immediate need for incentives scheme on quality of service because the companies are not limited in their investments by a “cap” on their revenues and consequently on their costs. in the context of a “cost plus” regulation. On the contrary. which is the context of Saudi Arabia in 2009. 4.1 INCENTIVE MECHANISMS Selection of Incentive Mechanism As discussed in Chapter 2. it may however be worthwhile to investigate here the specifications of a penalty/reward scheme to be applied at that point in time. some control of the quality supply is to be implemented.3. two main schemes are usually considered: the minimum standard and the penalty/reward system.00081% Short Term 0. Nevertheless. In terms of setting a penalty/incentive scheme for ENS. the target should be set at the historical average of SEC Transmission (3 last years). international data not being available on this specific component and voltage levels. For the ENS computed from interruptions originating below 69 kV (hence concerning HV/MV transformers of SEC Transmission).Table 4. Anticipating such a transition in future.5 Short and long term targets for KPIs in Transmission KPI T1: ENS Present 0. the use of an overall standard seems to be the most appropriate approach at this point in time. The drawbacks and advantages of both are summarized in the table below: Advantages Minimum Standard Scheme All customers benefit from a same Guaranteed Service Level (GSL) Disadvantages The verification that the GSL is met at each customer location implies a the Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 45 . In this light.3 4.

However. the following characteristics are proposed for the scheme to be implemented in Saudi Arabia: 1. no penalty and no reward is applied if the performance observed is within the dead-band. The cap on the reward and on the penalty to be at 1% of the company turnover 3.presence of a meter able to count the interruptions Penalty/Reward Scheme Is compatible with the classic Customers are treated as type of meters the “average customer” Tends to avoid that the utility enjoying an “average continuity of supply” profits from too low investment in reliability Since the two schemes do not counter each other out. a cap is applied to the penalty and to the reward for the reporting period (the year. The penalty/reward schemes are all based on the following principle: the allowed revenues of the TSO are modified upwards or downwards depending on the continuity performance achieved. 2. Italy. In order to limit the financial exposure of both the TSO and the public financing the scheme. This cap is usually between 1% and 2% of the turnover. normally).  Based on the above concepts. Smoothing the performance by using the average performance on 3 years for the incentive scheme 12 Great Britain. they can be implemented to complement each other. The experience of countries having set a penalty/reward system suggests two additional criteria:  in order to avoid every year a computation of financial transfers and their realization for performances that are in fact close to the target. Hungary. International experience has been gained in this field in several 12 countries. the penalty/reward scheme is in principle more desirable. The dead-band is proposed to be at levels 95 % and 105% of the target. Estonia Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 46 . as may be observed. a dead-band should be considered around the target: in that way.

cfm?folder=Profile-Economic%20Structure Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 47 . as indicated above. Also. the value CENS has been 8. economic theory suggests that this should be set equal to the societal costs of the “average interruption” CENS expressed by the value of the ENS (in Riyals per kWh not supplied). Basically. Within a country and from one type of customer to another.With respect to the level of the financial penalty/reward. This function is represented by the graphic below. airports.economist. As can be observed.3 billion SR14 or 374. so that estimates of the CENS can be developed. this value can be very high particularly if no back-up supply is implemented. At country level. However. An initial estimate is often proposed as the GDP divided by the gross electricity demand. 13 14 hospitals. For 2007. we should point out that this estimate is only indicative because by essence it includes the economic product of activities that are almost independent from the electricity consumption (in many countries. For specific customers with a high sensitivity to the electricity supply13. the agriculture does not depend on electricity but only on some types of fuel for the transportation). equivalent to 2. this value is usually between 1 USD/kWh and 10 USD/kWh and varies from one country to another.5% around the target level. while in fact the incurred costs vary a lot with the interruption duration. industries that may lose the daily batch production in case of an interruption… http://www.750 GWh and the GDP has been 1 401. the incentive scheme only translates into monetary terms the actual level of performance when it is outside the dead band of +/. where ENSt is the target level and TO is the turnover of the utility.255 SR/kWh. expressed in percent of the energy supplied to the delivery points). The financial transaction can then be represented as a function of the continuity performance (the average ENS on 3 years. Hence.2 billion USD. banks. The annex 5 proposes a basic questionnaire for a customer survey to assess the willingness to pay for avoiding interruptions.com/Countries/SaudiArabia/profile. the above estimate of CENS is the most practical value to start with in the frame of this project. the CENS concept assumes that all economic activities depend on the availability of electricity: the idea is that every kWh represents a fraction of the electricity consumption and makes possible the creation of economic activities on average up to the same fraction of the GDP. Furthermore. the level of the penalty or reward is capped at 1% of the turnover. As a whole and although imperfect. it hides the diversity of the consumers and their willingness to pay for an improved continuity. for Saudi Arabia in 2007. For this reason it should preferably be set on the basis of a customer survey. the cost of interruptions CENS varies even more. the energy sold to the customers in 2007 has been 169.203 USD/kWh. The CENS concept also ignores the difference between short and long interruptions.

and a base revenue allowance Ro independent from the quality performance.01*TO High Performance 0 0.01*TO Low Performance Penalty Figure 4.05*ENSt ENS (% of ES) 0.db) a reward G= (ENSs-ENS)* CENS > 0 is given.Reward 0. Ro  ( ENSs  ENS ) * CENS )  If ENS > ENSS*(1+ db) a penalty P= (ENS-ENSs)* CENS > 0 Targets & Incentives Report 22 May 2009 48 Development of KPI’s for the Saudi Electricity Sector . the revenue allowance R of each transmission company would then typically be adjusted by its quality performance by the following expression:  If ENS < ENSS*(1.95*ENSt ENSt 1. so that the total revenue of the utility becomes R  max( Ro * (1  Cap).1: Proposed incentive scheme for ENS in Saudi Arabia Having defined the cap and the dead band by “Cap” and “db”.

The cap on the reward and on the penalty is set at 1% of the turnover of the regulated company The slope of the reward and of the penalty should be equal to the value attributed to the ENS namely 8. there is no real need for an incentive scheme as far as the regulation regime remains as “cost plus”: A proposed incentive scheme is only recommended when another regulation regime (for example “price-cap”) is put in place. and the whole scheme can be summarized by the following three characteristics:  Smoothing by using the average performance on 3 years for the incentive scheme (but the yearly performance is to be reported) The dead-band is proposed to be at levels 95 % and 105% of the target. so that the total revenue of the utility becomes R  max( Ro * (1  Cap). This scheme is configured such that around the target. The incentive scheme described above will however only become important if “price-cap” regulation is introduced and where companies tend to be investing in too low amounts in the quality of supply. Under cost plus regulation. and the difference would be subject to the financial transaction as the end of the period. Therefore.2 Incentive Mechanism Conclusions In Saudi Arabia. the scheme can consider the filling of a so-called account where companies can record the financial sums i. beyond a certain “dead-band”. Targets & Incentives Report 22 May 2009 49 Development of KPI’s for the Saudi Electricity Sector . companies may introduce in their eligible costs for tariff setting all their investments costs plus an agreed rate of return: in such a context. These rewards and penalties are also limited by a cap.e. penalties/reward as a result of the incentive scheme over a certain period.e. there is no factor encouraging the utility to under invest for preserving the quality of supply. the regulation in place in 2009 is “cost plus” regulation. a reward proportional to the “excess of quality” is awarded to the company.is applied. i.255 SRD/kWh    In terms of implementation. In this way.3. the low quality in one year and its related penalty can be compensated by high quality of the next year and its related reward. while a penalty proportional to the “deficit of quality” is imposed to the company for any such deficit of quality. This could be done for example every three or four years. Ro  ( ENS  ENSs ) * CENS ) 4.

KPI ShortTerm Target LongTerm Target Incentive Mechanism Overall Standard (now) Penalty/Reward (in future) Unit Energy Not Supplied (ENS) T1 T2 T3 T4 SAIDI-T SAIFI-T MAIFI-T Out100km Voltage Dips Network Losses MWh/year 0.4 RECOMMENDATIONS TRANSMISSION We can now summary the recommendations with respect to the targets and incentive mechanisms for transmission in the following Table. 4. these characteristics proved to be successful and has to lead to the continuity of improvements while limiting the financial exposure of the company to the scheme. As already stated above.00065% 0. Table 4.As per the experience gained in countries that applied the scheme. this scheme could be applied from the moment when the regulation in place changes from the existing “cost plus” to a possible “price-cap” regulation regime.0005% Min/Year Int/Year Int/Year Outages/year per 100 km Nr/year % T5 T6 T7 Targets & Incentives Report 22 May 2009 50 Development of KPI’s for the Saudi Electricity Sector .6 Summary of recommendations regarding targets and incentive mechanisms for Transmission.

department Global Global Per SEC Distr. Force Majeure System Network Losses % In addition to the above KPI list. time Nr Level Per SEC Distr. All KPI’s are measured on an annual basis and reported. there is some supporting information that would need to be collected for the purpose of cross-checking or for calculation of other indices.1 KPI OVERVIEW Based on discussions with the different stakeholders of the electricity sector in Saudi Arabia a list of KPI’s for the distribution sub-sector was selected. Table 5. D2 SAIFI Int/year Yes Unplanned. by each relevant utility. The following table provides an overview of the recommended KPI’s for distribution.2 Supporting information to be collected for Distribution Data Energy Supplied to the area Peak Power delivered to the distribution network Date and time of the peak power Nr of Delivery Points (customers) Unit GWh MW Date.5 DISTRIBUTION 5. This list has been complied based on its relevancy for ECRA to include in its KPI measurement framework. These are: Table 5. Distribution KPI D1 SAIDI Unit Min/year Target Yes Level MV only Per Department Freq. Generation/Transmissi Annual D3 D4 MAIFI Int/year No No on.1 Recommended KPI’s for Distribution. department Frequency Annual Annual Annual Annual Targets & Incentives Report 22 May 2009 51 Development of KPI’s for the Saudi Electricity Sector . Type: Planned.

5. Q2 is the median.25% As per the values presented in Annex (see further). When listing the various data available per company to form a “peer group”. this set of values indicates both the average and the dispersion of data around the average.2.49 0.43 5.90 2. some statistics can be drawn.3% Q3 198 2.01 5.78 4.1 DEVELOPMENT OF TARGETS International Comparisons The same methodology as the one applied for generation and transmission is applied here for finding the quartiles. This is possibly linked to a higher proportion of customers supplied Targets & Incentives Report 22 May 2009 52 Development of KPI’s for the Saudi Electricity Sector . When looking closer at the data. Provided that KPI’s in the electricity distribution sector follows normal distributions. Q2. where: Q1 is the value for which 25 % of the DSO’s have a KPI below Q1 and 75 % above Q1 Q2 is the value for which 50 % of the DSO’s have a KPI below Q2 and 50 % above Q2 Q3 is the value for which 75 % of the DSO’s have a KPI below Q3 and 25 % above Q3 From these definitions. there is a slight trend for large countries (like Australia and Canada) to have higher values for SAIDI and a lesser extent for SAIFI.3 Overview of quartile spread of Distribution KPIS of different countries (for later comparison with Saudi Arabia values) Distribution KPI’s KPI D1: SAIDI (minutes) D2: SAIFI (#/yr) D3: MAIFI (#/yr) D4: Network losses (%) Q1 96 1.65% Median 153 1. like the identification of the quartiles Q1. Q3. See in annex the values for each country and related list of countries that are compared. Table 5. the dispersion of distribution data is high but still much less than for transmission.40 6. For normal distributions. the median is equal to the average.2 5.

In terms of SAIFI. South.2 Comparisons Saudi versus International The following table summarizes the comparison that can be made from the data collected for distribution KPI’s.by aerial lines while other countries of the peer group may supply relatively more by underground cables.2 2.4 1. Targets & Incentives Report 22 May 2009 53 Development of KPI’s for the Saudi Electricity Sector .48% 214.19 67 0. East.9 2.4 Comparison of the 2007 situation in SAUDI ARABIA with median performance abroad. the South and the Centre regions did not reach in 2007 the median international level. except possibly for areas of that region.9 4.proposal for a national average target KPI SEC SEC SEC SEC Marafiq ST LT Median Intern’l West East Centre South D1: SAIDI (min. it proposes both a long term target (6 years) and a short term target (3 years).71 80. The regulation of SAIDI and SAIFI will be performed in two ways: publication of the local values of the KPI’s: values related to the departments computation of a company-wide average to be compared with the targets In terms of SAIDI.2.38% Target Target 150 2 120 2 153 1. Based on the historical data and on international median data.4 1.01 5. Centre.3% The term “region” will be used here for distinguishing the five gr oups of distribution systems in Saudi Arabia for which data are presently available: West.) D2: SAIFI (#/yr) D3: MAIFI (#/yr) D4: Losses (%) 38.09 8. and Marafiq. Table 5. 5.13 65. only the “South” region had a performance in 2007 below the median international performance: putting a long term target at the median international level will therefore not be very constraining.8 5.

a target set near the “median international level” seems to be a realistic objective for the long term for the national level: these targets can serve to develop local targets based on the local characteristics of each department in order to contribute to the identification of zones where there is a potential for improvements (see annex 4).3 Conclusions Setting a target at the level of median for each KPI brings the above comparison to indicate improvements to be made for SAIDI. The MAIFI being not yet collected. 5. However. For the SAIDI indicator. SAIFI and distribution losses indices. The loss performance15 is also globally better abroad when comparing international values to those of SEC Distribution. These areas would then also have to improve their performance. 15 Distribution losses have been evaluated for 2007 from the energy demanded to transmission networks (185 471 GWh) minus the energy sold (169 750 GWh). This is the case of the international data Targets & Incentives Report 22 May 2009 54 Development of KPI’s for the Saudi Electricity Sector . the areas of the south and centre regions will have to improve their performance (at least on average. The short term target is proposed to be at half distance between the present worst performance and the long term target.2. hence probably most of them). For the SAIFI indicator. this does not exclude the fact that some areas of other regions at present might not match the targets while the region to which they belong does. When compared to available data from other countries. two KPI’s have been proposed for being subject to a target and (as will be discussed) in future possibly to a penalty/reward scheme: these being SAIDI and SAIFI. For distribution. the difference (15 721 GWh) being called “distribution losses” includes both technical and non-technical losses. at least for some regions. no conclusion can be drawn for the moment regarding momentary interruptions. the results presented by companies active in the Distribution sector in Saudi Arabia indicate a pretty good performance on average. Therefore.For both SAIDI and SAIFI. the areas of the South region will have to improve their performance (also probably most of them).

there is a diversity of schemes applied. Nevertheless.5 Short and long term targets for KPI's in Distribution KPI Present worst KPI region(*) 214.3 5. Italy. Penalty/incentive regimes are in place in eight countries16 out of the 19 countries surveyed by the CEER. six others are considering implementing the scheme. Ireland. the following issues concern each area individually. ranging from overall and guaranteed standards to penalty/reward schemes. Portugal. Norway. The diversity of the schemes reflects specific industrial and 16 Estonia. These countries have all transitioned towards stricter forms of price-controls and therefore have found it necessary to also adopt stricter performance incentive mechanisms.8 5.19 Short Term Long Term D1: SAIDI D2: SAIFI 150 2 120 2 (*) The worst served region is SEC Distribution South In the future the regulated KPI’s for Distribution (SAIDI and SAIFI) will be monitored by a rea.1 INCENTIVE MECHANISMS Selection of Incentive Mechanism As for Transmission. we now consider the possible configuration of such schemes for the future. There is however a diversity in the schemes that are applied in the various countries having penalty/reward schemes. Sweden Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 55 . these also being of various types. the use of an Overall Standard seems to be the most appropriate approach. Great-Britain. the existing regulation is “cost plus” and therefore does not require a penalty/incentive scheme. at an international level. Therefore. in the future it may be necessary to adopt stricter incentive mechanisms. 5.Table 5. Hungary.3. As discussed in Chapter 2. For now.

some countries apply a smoothing on the quality performance to limit the volatility due to the (highly) variable weather conditions. because all schemes are not perfect (at least because of intrinsic limited accuracy of the data. nr. differentiating categories of customers and planned/unplanned interruptions. apart of the dead-band and the cap. In most countries. A feature common to all schemes is the presence of both penalties and rewards so that the company can make autonomous decisions about the quality level delivered to its customers. A total cost of interruptions is also calculated per company (in Euros). In terms of statistical treatment of the yearly KPI values. the process has to be limited in its financial impacts: this is why both penalties and rewards are usually limited by a “cap” value. As indicated for the case of transmission. an expectation of the ENS is calculated in kWh by a regression model that takes into account various parameters of the system (length of lines. Some examples are summarized below: Table 5. including the knowledge of the customer willingness to pay). of customers. weather that took place during the year…) and is based in historical data. a dead-band around the target is usually set in order to avoid each year a process of corrections for a small financial amount: this is to limit the administrative work of the regulator and reduce the intrusiveness of the regulation.institutional factors of the respective countries and appears to contribute to the effectiveness of the scheme. At the end of the year the regulator calculates the difference between the expected and the actual interruption costs. Also. If positive (excess Cap No any Smoothed No need because weather taken into account in the target Targets & Incentives Report 22 May 2009 56 Development of KPI’s for the Saudi Electricity Sector .5 Brief summary of reward/penalty schemes for Distribution in Europe Country Norway(NO) KPI ENS Description For each company. the relation between the reward and the excess of quality and the relation between the penalty and the lack of quality are both linear.

With a dead band of 0. SAIFI.04% in 2005).5% if any of the three indicators is between 5% and 10% worse than the Targets & Incentives Report 22 May 2009 57 12% Similar to the Portuguese scheme For penalties. Part of it can be recovered by the compensation allowance that determined by the actual number is of 5% 3 years regulatory periods “domestic” and “non-domestic” customers. the distribution tariff is reduced: 5% 3% On 3 years Rolling average Development of KPI’s for the Saudi Electricity Sector . losses by a=0. and the standard is then introduced with the SAIFI in a cost function separately for domestic and non domestic customers. and conversely if negative. the revenue cap for tariff setting in increased for the coming year.5 Eur/kWh. Portugal (PT) ENS/ES The target for ENS/ES is set every year (ex: at 0. The ENS is valued at 1.Country KPI Description of quality). Cap Smoothed The Netherlands (NL) SAIDI The standard (or target) SAIDI value is the average SAIDI of all regulated companies on a three years period. Norway is the only country in Europe to apply neither a dead band nor a cap to the rewards and penalties.12 times the target Italy (IT) Hungary SAIDI SAIDI. The difference for each company between its 3-years av. Two features: The total revenue depend on the change in quality performance between two periods For interruptions longer than 4 hours compensation is paid by the DSO to the customers. As a result the customers themselves at the end pay a tariff that varies (with a one year delay) with the experienced quality of supply.

c refer to the three indicators respectively).Country KPI Description target by a=1% if any of the three indicators is more than 10% worse than the target by a+b+c % if more than one indicator is more than 5% or 10% worse than the target: the penalties are added (a.1 Typical relations between the incentive and the distribution performance The financial transaction can then be represented as a function of the continuity as reported yearly to the regulator. Rewards are gained if at least one indicator is more than 10% better than the target without any of the other being worse than the target. b. Targets & Incentives Report 22 May 2009 58 Development of KPI’s for the Saudi Electricity Sector . Cap Smoothed Reward High performance Low Performance KPI Portugal Penalty Hungary Italy Figure 5.

the incentive scheme is only recommended if the regulation in the Saudi electricity distribution sector changes from the existing “cost plus” regulation to a “price-cap” regulation. The following scheme is therefore not to be applied immediately. a value CENS can be found or assumed for each sector ”i”: Development of KPI’s for the Saudi Electricity Sector o Targets & Incentives Report 22 May 2009 59 .In many countries. a thorough customer survey should be carried out in order to accurately tune the whole process to the cost of interruptions the customers face in Saudi Arabia. Therefore some cost functions have to be associated to deviations from the target. As far as SAIDI and SAIFI have been selected for a scheme for a target. Therefore. often at the same time as the review of the distribution tariffs. From this list of say “n” sectors.3. an assumed average power interrupted is to be set for each sector “i”: PIi where i= 1 to n. 5.2 Incentive Mechanism Conclusions As already mentioned above. this target is without any real effectiveness without setting rewards and/or penalties. The scheme proposed for the future includes the following features: (a) a dead band of 5% around the target (b) a cap for rewards and penalties set at 1% of the company turnover (c) a smoothing on three years (“rolling smoothing” so that every year the KPI is calculated on the performance of the three last years) (d) a cost function for residential customers based on SAIDI and SAIFI and a cost function for industrial customers. installed power and costs of interruptions. A list of electricity consumption sectors should be defined by an agreement between ECRA and the stakeholders and should preferably define classes of customers likely to share similar consumption patterns. every few years. From customer surveys about the inconvenience caused related to one interruption. an assumed “Power Interrupted“ (PI) will be used for each class of customers. dead-band and caps are reviewed. In the long term. In the short term some simplification is inevitably necessary: o The best guess for the cost of interruptions is to set a scheme imitating the ENS estimates but without the evaluation of the true power that was effectively interrupted for each customer (since this value is not available because it is not metered). the scheme and the values of the target.

The coefficient is however lower than 1: on an average basis and for a given SAIDI (that is for a given total duration of the interruptions per customer). A coefficient of a= 0. This function has a positive slope with SAIFI (many short interruptions are more disturbing than one long interruption of the same total duration). the yearly inconvenience suffered by all customers can then be approximated by : CI   nci * PI i * CENS i ( SAIFI ) * i SAIDI 60 o For each regulated company. This puts an incentive to the companies to keep a SAIFI always at least just better than the SAIFI target so that they become eligible to the SAIDI reward function. the expected or target value of SAIDI and SAIFI lead then to a target value of CI: CIS.1 to the SAIDI and correspondingly a reward can be applied on the condition that SAIFI is better than the target and penalty applied to any SAIFI value. * SAIFI ) o If “nci” is the number of the customers of sector “i” and. The cost associated to one kilowatt-hour not supplied to an average customer of the sector “i” can be expressed as a function of SAIFI: CENSi (SAIFI).CENSi1 . one single interruption is supposed to have affected the considered average customer and the inconvenience he/she suffered is expressed by the cost of the Energy Not Supplied related to his sector. CI S   nci * PI i * CENS i ( SAIFI S ) * i SAIDIS S 60 o A proposal can be applied for an incentive function as per figure 5. For a given total duration of interruption.6 is proposed as a first assumption for starting the regulatory process (this is before the results of a customer survey are available): CENS i ( SAIFI )  CENS i1 * ((1  a)  a. Due to its simplicity. two short interruptions of duration “d” can not lead to a total inconvenience higher than twice the inconvenience of a longer interruption of duration “2 x d”. Targets & Incentives Report 22 May 2009 60 Development of KPI’s for the Saudi Electricity Sector . the inconvenience suffered by a customer can be assumed to be linear with respect to the frequency of interruptions (SAIFI). In case SAIFI is equal to one. the Consultant recommends to start the regulation by this system.

Ro  CIs  CI )  If SAIDI > SAIDIS*(1+ db) a penalty is applied. as per the targets set by the regulator. Ro  CIs  CI ) The proposed scheme combines the advantages:  a regulation based on both SAIDI (the average total duration of all interruptions faced by the average customer) and SAIFI (the average number of interruptions per customer per year) a smoothing on three years (“rolling smoothing” so that every year the KPI is calculated on the performance of the three last years) a dead-band for avoiding excessive administrative burden a cap of rewards and penalties for avoiding excessive intrusion in the tariff setting with a scheme still at its very beginning using parameters that are not yet accurate rewards and penalties set by using the cost of the Energy Not Supplied as expressed either from assumptions.4 RECOMMENDATIONS DISTRIBUTION A summary of the recommendations with respect to the targets and incentive mechanisms for distribution are presented in the following table: Targets & Incentives Report 22 May 2009 61 Development of KPI’s for the Saudi Electricity Sector . the revenue allowance R of each distribution company would then typically be adjusted by its quality performance by the following expression.o Having defined the cap and the dead band by “Cap” and “db” (see features (a) and (b) above). 5. the proposed scheme introduces a clear incentive towards continuity improvements where needed. and a base revenue allowance Ro independent from the quality performance.db) a reward is given. or from customer surveys     As a whole. where CI and CIS are applied to the customers and sectors of the regulated company:  If SAIDI < SAIDIS*(1. and CI > CIS R  max( Ro * (1  Cap). and CI<CIS R  max( Ro * (1  Cap).

KPI Unit ShortTerm Target LongTerm Target Incentive Mechanism Overall Standard (now) Penalty/Reward (in future) Overall Standard (now) D1 SAIDI Min/Year 150 120 D2 SAIFI Int/Year 2 2 Penalty/Reward (in future) D3 D4 MAIFI Network Losses Int/Year % Targets & Incentives Report 22 May 2009 62 Development of KPI’s for the Saudi Electricity Sector .6 Summary of recommendations regarding targets and incentive mechanisms for Distribution.Table 5.

Customer Service KPI C1 C2 C3 C4 C5 Average Time to Supply – Existing Connections (ATSE) Average Time to Supply – New Connections (ATSN) Average Time to Reconnect After Payment (ATRAP) Unit Days Days Hours Days Target Level Yes Yes Yes Depart ment Freq. The following table provides an overview of the recommended KPI’s for Customer Service.6 CUSTOMER SERVICE 6.1 Recommended KPI’s for Distribution. Table 6. Notification of Interruption of Supply (NIS) Frequency of (FC) Frequency of Complaints (FC) Complaints Billing No Annual No Yes Yes Operati ng Area # # Days C6 C7 C8 Average Time to Resolve Billing Complaints (ATRBC) Average Waiting Time Call Center (AWTCC) Seconds Yes Targets & Incentives Report 22 May 2009 63 Development of KPI’s for the Saudi Electricity Sector . Certain KPIs are to be reported per department while others are to be reported per operating area.1 KPI OVERVIEW Based on discussions with the different stakeholders of the electricity sector in Saudi Arabia a list of KPI’s for the Customer Service sub-sector was selected. by each relevant utility. All KPI’s are measured on an annual basis and reported. This list has been compiled based on the information and we believe the proposed KPI’s are relevant for ECRA to include in its KPI measurement framework.

42 0. Singapore. Austria. The following Table shows the summary of the results for the international comparisons and the existing internal performance targets insofar adopted by SEC and Marafiq. Italy.15 15 30 24 9 0.6. Ireland. Latvia. Luxemburg. Czech Republic. Estonia. Poland.2 Comparison of existing performance or targets for SEC and Marafiq as compared to international median performance Unit C1 C2 C3 C4 C5 C6 C7 C8 Average Time to Supply – Existing Connections (ATSE) Average Time to Supply – New Connections (ATSN) Average Time to Reconnect After Payment (ATRAP) Notification of Interruption of Supply (NIS) Frequency of Complaints (FC) Frequency of Billing Complaints (FBC) Average Time to Resolve Billing Complaints (ATRBC) Average Waiting Time Call Center (AWTCC) SEC Marafiq Q1 9 Median 6 15 Q3 3 8 Days 55 Days Hours Days /100 cust /100 cust Days Seconds 30 30 5 5. Table 6.2 DEVELOPMENT OF TARGETS For customer service the same methodology as the one applied for the other power sector areas has been used.60 21 38 36 4 0. Hungary.33 0. Greece. UK. Lithuania. Belgium. Details of the data that has been used is contained in the Annexes.07 8 18 Targets & Incentives Report 22 May 2009 64 Development of KPI’s for the Saudi Electricity Sector .2 2 5 20 54 2 1. Spain.19 0. and USA. France. The comparisons have been done on the basis of the four quartiles and comparisons against the median where: Q1 is the value for which 25 % of the DSO’s have a KPI below Q1 and 75 % above Q1 Q2 is the value for which 50 % of the DSO’s have a KPI below Q2 and 50 % above Q2 Q3 is the value for which 75 % of the DSO’s have a KPI below Q3 and 25 % above Q3 International data for the comparisons have been obtained from regulatory publications from the following countries: Australia. Romania. Cyprus. Slovenia. Portugal.

C3: Average Time to Reconnect After Payment (ATRAP) The international performance for reconnecting after payment is 36 hours. This standard is lower than the international median of 6 days. which are more easily realized than new ones. C6:Frequency of Billing Complaints (FBC) Targets & Incentives Report 22 May 2009 65 Development of KPI’s for the Saudi Electricity Sector . no data was available. For SEC. the adopted 55 days seems to be very long compared to international practice of 15 days. This number is significantly lower than the reported figure of 5. For SEC. We should stress that these 15 days apply to the time required to realize the connection after the customer has fulfilled all obligations and made required payments. the target of 5 days by Marafiq seems to be preliminary applicable to existing connections. no distinction is made by the Saudi utilities between existing and new connections. Internationally. Nevertheless. We should note in general that the comparisons made here are limited only to the indicators that are currently being measured by the Saudi utilities.33 complaints per 100 customers. This suggests that the standard applied in Saudi Arabia is much more stringent than what would normally be expected.A number of observations can be made when comparing the international results with the existing standards applied by SEC and Marafiq.2 by Marafiq. This can be explained by the specific expectations and conditions in Saudi Arabia and in particular the high dependency on air-conditioning due to the relatively high temperature. C4:Notification of Interruption of Supply (NIS) The Distribution Code currently specifies a period of 5 days for advance notification of planned interruptions to customers. C1: Average Time to Supply – Existing Connections (ATSE) and C2: Average Time to Supply – New Connections (ATSN) These KPI’s measure the time required for the utility to connect the customer once that customer has fulfilled all its obligations including obtaining necessary permits and making payments to the utility. C5:Frequency of Complaints (FC) Internationally the frequency of complaints is 0. SEC currently applied a standard of 2 hours which is significantly shorter. In this regard the target of 5 days can be considered appropriate. Currently.

6. the risks of performance degradations are also considerably lower and less intrusive forms of performance incentives can be applied. as the utility can reduce its costs by reducing quality instead. targets but no penalties) which specify the expected performance level and monitor closely the performance of the utilities as compared to the targets. Such an approach is particularly relevant in the case where utilities are regulated on the basis of for example a price-cap approach. the regulator sets in place strong incentives to improve productivity and ultimately reduce its costs.15 complaints per 100 customers is applicable. This also limits the regulatory costs and lowers the financial exposure of the utilities. no data is currently available. C8:Average Waiting Time Call Center (AWTCC) Both international practice and the standard used by SEC are 30 seconds. This is shorter than the 30 days applied by SEC but longer than the 5 days that Marafiq applies. In the meantime however. This can however cause side-effects rather than increasing productivity. Anticipating unbundling in future it will be more appropriate to implement penalty schemes at that stage as these can then be more easily integrated into the price control schemes. Internationally the target of 0. ECRA could apply overall standards (i.e.3 INCENTIVE MECHANISMS In developing recommendations for the incentive mechanisms to be applied by ECRA for customer service KPI’s it is important to take into account the fact that currently no division is made between distribution and supply activities in terms of unbundling. guaranteed standards or penalty/reward schemes can be put in place to protect customers against undesired performance deteriorations. For Saudi Arabia. Internationally a period of 15 days is used. An option to consider is the introduction of guaranteed standards that would involve a compensation payment to the customer in case that particular customer does not receive a performance level in line with the target. Generally however. Under this form of price regulation. The target currently applied by SEC is thus fully in line with international practices. C7:Average Time to Resolve Billing Complaints (ATRBC) Connected to the previous KPI is the time required to solve billing related complaints. if no strict price control is applied. Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 66 .Complaints related to billing form half of the total complaints and is clearly an important aspect to customers. To avoid such effects.

3 Summary of recommendations regarding targets and incentive mechanisms for Customer Service. when a move to stricter price control forms is made. 6. ECRA will nevertheless be able to closely monitor the performance of the utilities and assess whether performance is satisfactorily.35 No Penalty Overall Standard No Penalty Overall Standard C6 /100cust 0. Table 6.15 Days 21 15 No Penalty Overall Standard No Penalty C8 Seconds 30 30 Targets & Incentives Report 22 May 2009 67 Development of KPI’s for the Saudi Electricity Sector .4 RECOMMENDATIONS CUSTOMER SERVICE We can now summarize the recommendations with respect to the targets and incentive mechanisms for customer service in the following table.40 0.60 0. the implementation of guaranteed standards and possibly penalty/reward schemes can be considered. Through the KPI system. KPI Average Time to Supply – Existing Connections (ATSE) Average Time to Supply – New Connections (ATSN) Average Time to Reconnect C3 After Payment (ATRAP) Notification of Interruption of Supply (NIS) Frequency of Complaints (FC) C5 Frequency of Billing Complaints (FBC) Average Time to Resolve C7 Billing Complaints (ATRBC) Average Waiting Time Call Center (AWTCC) ShortTerm Target LongTerm Target Incentive Mechanism Overall Standard No Penalty Overall Standard No Penalty Overall Standard Unit Days Days C1 3 20 2 15 C2 Hours 2 2 No Penalty Overall Standard No Penalty Overall Standard C4 Days 2 5 /100cust 1.Given the existing price control approach and absence of unbundling in Saudi Arabia it seems that for now at least overall standards are the most suitable incentive mechanism. There does not seem to be any strong need for stricter mechanisms in the absence of strong price control pressure. In the future.

2005 3. Fumagalli. CEER 4th benchmarking report on Quality of Supply. F.REFERENCES 1. CEER 3rd benchmarking report on Quality of Supply. Delestre – Springer 2007. 2009 Targets & Incentives Report 22 May 2009 68 Development of KPI’s for the Saudi Electricity Sector . Lo Schavio. Berlin 2. Service Quality Regulation in Electricity Distribution and Retail – E. L.

ANNEXES Targets & Incentives Report 22 May 2009 69 Development of KPI’s for the Saudi Electricity Sector .

59 Hungary Lithuania Canada .ANNEX 1: DATA FOR TRANSMISSION KPI’s The data collected is summarized in the table below.09 0.80% 3.2 2.60% 1.50% 7.Alberta India Russsia New Zealand US Oman Brasil Max/Min StdDev/Av 150 1.68 0.37 Nb Voltage Dips 40 114 146 156.00120% 0.08 0.00000% 0.00010% 0.7 358 1708 9089 Hungary UK Australia .5 0. StdDeviation/Average: this ratio ranges from 0.08 222 2.30% 12.1 3.00020% 0.NSW Australia . the dispersion expressed by this indicator is very high (values from 146 to 227).00% 7.01 3 0.07 0.89 1.20% 8.41 Losses (%) 1.00025% 0.NWS Finland Hungary UK France Estonia Italy Portugal Norway 0.57 2. To get an idea of the dispersion of the values around the average.5 3.00060% 0.00120% 0.2 1.93 6.Alberta SAIDI-T (min/year) 0.08 2.41 for SAIFI-T to 2.80% 2.5 2 6 6 Norway Netherlands Australia Queensland Italy Portugal Hungary France 146 2.07 0.04 0.Alberta Spain France Italy UK SAIFI-T (int/year) 0.37 for SAIDI-T ENS/ES (%) Australia .01460% Hungary Australia . two indicators are evaluated in last lines: Min/Max : the maximum value divided by the minimum value.6 7.1 Canada .NSW France Canada .04 0.09 - Targets & Incentives Report 22 May 2009 70 Development of KPI’s for the Saudi Electricity Sector .47 82.03 0.20% 6.00% 4. Except for the SAIFI-T where this ratio is 3.04 0.00050% 0.37 0.Victoria Italy Lithuania France Denmark UK Estonia EE except NSW : Max/Min StdDev/Av MAIFI-T&D (int/year) Canada Alberta Denmark Iceland UK Norway Italy Poland 0.0.18 227.70% 4.80% 5.

42 2. StdDeviation/Average: this ratio ranges from 0. two indicators are evaluated in the last lines of the table: Min/Max: the maximum value divided by the minimum value.3 1. that are values much less than for transmission (where values were from 146 to 227).8.95 4. Except for the SAIFI-T where this ratio is 3.83 10.Tasmania Portugal Int/Cust 0.69 1.978 5.2 1.31 19.93 which is also somewhat smaller than those of transmission (0.9 1.73 Lithuania UK Australia Victoria France Finland Italy Hungary Int/Cust 0.ANNEX 2: DATA FOR DISTRIBUTION KPI’s The data collected is summarised in the table below.South HU Australia .2 2.68 1. to get an idea of the dispersion of the values around the average.39 2.53 2.NWS Australia .8 0.37) SAIDI SAIFI MAIFI - Min/Year France Oman UK Italy USA Estonia Hungary Portugal Irelans Australia .73 to 1.03 1.6 4.94 2.NWS Australia Queensland Australia .02 1.Tasmania Canada Max/Min StdDev/Av 51 56 61 76 117 118 128 149 157 165 180 184 211 233 256 471 9.57 2.79 1.93 UK Oman USA France Ireland Australia .Victoria Norway Australia .2 2.3 and 19.South Australia .47 2.41 to 2.3 0.75 1.26 1.52 1.92 Targets & Incentives Report 22 May 2009 71 Development of KPI’s for the Saudi Electricity Sector . the dispersion expressed by this indicator is between 4.0.Queensland Italy Estonia Canada Australia .Victoria Norway Australia . As for transmission data.

5% 5.9% 7.0% 5.9% 8.3% 5.0% 8.1% For the losses.8% 3.19 and a StdDev/Av ratio of 0.2% 6.0% 2005 4.6% 7.2% 4.6% 4.22: these indicate a dispersion much smaller than the other KPI’s.1% 5.7% 4.5% 5.4% 4.5% 4.9% 4.5% 8.7% 4.6% 6.8% 6.2% 5.9% 8.9% 5. the dispersion of the 2007 values shows a Max/Min ratio of 2.1% 2006 4.5% 5.2% 7.5% 6.4% 5.3% 4.9% 4.1% 5.7% 3.3% 6.6% 5.9% 3.1% 4.6% 5.Distribution losses (%) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 UK EDFE EPN UK CN East UK CN West AU CitiPower AU United Energy UK Electricity North West AU Alinta UK CE NEDL UK WPD S Wales UK CE YEDL UK EDFE LPN UK EDFE SPN UK SP Distribution UK SEE Southern UK WPD S West UK SP Manweb AU PowerCor AU SP AusNet UK SEE Hydro 2007 3.3% 4.6% 6.8% 4. Targets & Incentives Report 22 May 2009 72 Development of KPI’s for the Saudi Electricity Sector .7% 4.8% 4.7% 5.7% 4.7% 4.4% 5.3% 5.3% 5.0% 3.0% 5.7% 3.4% 5.9% 6.5% 3.

69 0.12 17 27 100 8 11 2.05 0.27 0.135 6.6 0.38 3.152 0.2 0.8 21 8 5 30 5 10 104 24 30 2 5 8 20 8 1 2 2 0.007 3 Targets & Incentives Report 22 May 2009 73 Development of KPI’s for the Saudi Electricity Sector .16 15 21 14 15 3 28 15 30 40 5 2 8 3 5 10 6 5 11 5 15 15 30 24 24 168 24 24 24 48 24 72 48 72 24 24 72 48 15 2 2 5 10 5 0.6 3.ANNEX 3: DATA FOR CUSTOMER SERVICE KPI’s C1 Average Time to Supply – Existing Connect ions (ATSE) C2 Average Time to Supply – New Connectio ns (ATSN) C3 C4 C5 C5 C7 Average Time to Resolve Billing Complai nts (ATRBC) C8 Average Time to Reconnec t After Payment (ATRAP) Notifica tion of Interrup tion of Supply (NIS) Frequen cy of Complai nts (FC) Frequen cy of Billing Complai nts (FBC) Average Waiting Time Call Center (AWTCC) days Singapore Austria Belgium Czech Republic Cyprus Estonia France Greece Hungary Ireland Italy Latvia Lithuania Luxemburg Poland Portugal Spain Slovenia UK Romania Australia USA 3 14 3 days 10 14 15 hours 24 days 2 5 15 20 2 #/100 cust #/100 cust days 7 sec 30 0.

East…). NbCusti: the number of customers of zone “i” OHnetwlengthi: the total length (in km) of overhead MV lines of zone “i” UGnetwlengthi: the total length (in km) of underground MV circuits of zone “i” C : coefficient for incorporating the underground network as an equivalent of overhead network in terms of exposure to interruptions (C depends from one system to another. a first guess is proposed to be C= 0.ANNEX 4: PROCESS FOR SETTING LOCAL TARGETS Local targets can be developed using the characteristics of the various zones considered in a KPI evaluation process (a zone is generic term used to mean either departments or regions like South.2) EQnetwlength: the equivalent length (in km) of overhead lines where both the overhead lines and the underground cables are represented CustDensity : the equivalent density of customer per km of circuit A4.2 Density of Customers and Length Per Customer We define for each zone “i” (i = 1 to z): EQnetwleng thi  OHnetwlengthi  C *UGnetwlengthi CustDensity i  NbCusti EQnetwleng th i Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 74 . Centre.1 Definitions Suppose the following i: an indice designating the zone “i” among the z zones of the system. A4. West.

whose average target is “Tk”.. the higher the density. the ak coefficient would be positive. Then the local targets are defined from the national target T by using a DTi (or target deviation) defined using the local value of CustDensity as follow: Tki  Tk  (CustDensityi  AvCustDensity ) * ak Targets & Incentives Report 22 May 2009 75 Development of KPI’s for the Saudi Electricity Sector . Usually. there is a global (or national target) Tk for each KPI “k”. the slope of the KPI with respect to CustDensity is the value ak . a linear regression is to be done for each KPI. an average customer density and an average length per customer.3 Linear Regression using the density of customers From all the z zones. hence ak is negative. z  LengthCust z A4. the lower the KPI result and conversely. defined by : AvCustDensity  i 1.. The regression function leads to an estimate of the KPIk named EstKPIk function of the CustDensity variable: EstKPI k (CustDensity )  ak * CustDensity  bk For each KPI “k”. If another variable like the “average length per customer” was used instead of the customer density. z CustDensity z i i AvLengthCust  i 1.And the average circuit length per 1000 customers is the 1000th of the inverse of it: LengthCusti  EQnetwleng thi ( NbCusti / 1000) At national level.

we can define zones as being departments (there are z=17 departments): KPI1 = SAIDI with long term target T1 = 150 KPI2= SAIFI with long term target T2 = 2 And find the 17 local targets T1i and the 17 local target T2i as per the above formula once the ak are found by the regression (a1 being for SAIDI and a2 for SAIFI). the CEER has published the results of a regression for SAIDI made in Great Britain in 2005 based on data of 2004. SAIDI Targets & Incentives Report 22 May 2009 76 Development of KPI’s for the Saudi Electricity Sector . EstKPI k ( LengthCust )  ck * LengthCust  d k For example. In this project. A4. the linear regression is provided by the function TREND (see the help if needed).Where “ak” is the coefficient observed in the linear regression.4 Linear Regression using the circuit length per customer In a similar way as above. a regression can be made with the length of MV circuit per customer as variable. In Excel. that led to the following graphic and formula.

3722 (for SAIDI) C2 = 0.SAIFI Tki  Tk  ( LengthCusti  AvLengthCust) * ck Here. C1= 2.0228 (for SAIFI) Targets & Incentives Report 22 May 2009 77 Development of KPI’s for the Saudi Electricity Sector .

the consumer surplus losses – which are equivalent to the households’ willingness-to-pay to avoid a total interruption in that hour – are larger. Telson 1975). Loss of production has also been applied to households (Gilmer and Mack 1983). Indirect . The ratio of Gross National Product (GNP) to the electricity consumed forms roughly the upper bound for the interruption costs (Shipley et al. Delft. respectively. The consumer surplus losses minus the bill savings provide a measure of the interruption costs (Sanghvi 1982). Bental and Ravid (1982) suggest that a profit maximising firm will invest in backup power until the expected gain from the marginal self-generated kWh is also 17 This annex is taken from: Ajodhia. some common techniques are discussed in this section. the wage rate has been used as a measure of the foregone leisure in case of an interruption (Munasinghe 1980) or the value of lost production for a firm during an interruption (Munasinghe 1981).Consumer Surplus Methods Consumer surplus methods derive interruption costs information from electricity demand curves. Indirect . When elasticity is low. 1972.ANNEX 5: DETERMINATION OF THE COST OF INTERRUPTIONS17 Overview of methodologies The literature presents a large number of techniques to measure interruption costs. In recent decades a couple of proxies have been developed. “Regulation beyond price. The idea is that the willingness-to-pay for electricity depends on the degree to which the consumption of each unit can be deferred to another hour. Integrated price -quality regulation for electricity distribution networks”. (2005). The ratio of the electricity bill and the energy consumption then provides the lower bound. Targets & Incentives Report 22 May 2009 78 Development of KPI’s for the Saudi Electricity Sector . Delft University of Technology. Survey methods acquire interruption cost information directly from consumers while indirect methods use other information sources for this purpose.Costs of Backup Power Consumers may take preparatory actions to prevent the costs that arise from interruptions by installing backup power. Indirect . Surveys are again divided into ex post and ex ante surveys. V. A distinction is made between indirect methods and direct or survey methods.Proxies Proxy methods use indirect data to derive information on interruption costs. which refer to requesting consumer information about actual and hypothetical interruptions. For residential consumers.S.

Here consumers are requested to rank in order of preference different mutually exclusive combinations of price and reliability levels – the price range is determined ex ante by the researcher. Steetskamp and Van Wijk (1994) and CEC (1997). Under the contingency ranking method. Targets & Incentives Report 22 May 2009 79 Development of KPI’s for the Saudi Electricity Sector . For industrial and commercial consumers these may be lost sales or production. Examples of blackout studies include SCI (1978). Next to quantifying costs. Firstly.Econometric Two main econometric methods exist. damage. or willingness-to-accept (WTA) lower reliability levels. consumers are asked to value reliability as if there were a market for it.Direct Costs Direct cost surveys request interruption costs directly from consumers. Interruption costs are then obtained by summing up all the individual costs. The marginal cost of generating its own power may then serve as an estimate for the marginal interruption costs. Conjoint analysis is similar to contingency valuation with the difference that the WTA and WTP figures are derived indirectly.the expected loss of the marginal kWh that is not supplied to that firm. Optionally. This method is usually applied in case of large-scale interruptions. environmental damage etc. Ex ante Surveys . consumers are requested to identify the different costs categories in case of an interruption. spoilage. blackout studies often also study the societal impact and preparedness for large interruptions such as police and fire responsiveness. a hypothetical market is created where consumers are asked to indicate their willingness-to-pay (WTP) for higher reliability. a list of possible measures and associated costs can be provided and consumers are asked to indicate which measure they would employ for different interruption scenarios. Thus.Blackout Studies Blackout studies collect information about interruption costs from actual interruptions. The second step is to attach an economic value to each cost category. Ex ante Surveys . Ex post Surveys . etc.

the results are not likely to be very accurate and only give highly aggregated information. The cost of backup power method seems to provide a good balance between costs and accuracy. Electricity Bill Backup Power Household Income Consumer Surplus Conjoint Analysis Figure 6-1. indirect methods score better. Secondly. this method is primarily relevant for larger consumers as only these are likely to install backup power. when measuring system interruption costs. The advantage of this method is that information is revealed from actual consumer behaviour. and (3) the amount of information that can be acquired. These assumptions do not always hold in practice. With respect to costs. (2) accuracy of results.Interruption Cost Measurement Indirect Proxies Direct (Survey) Ex Post: Blackout Studies Ex Ante: Direct Cost Ex Ante: Econometric Contingency Ranking GNP. Evaluation To compare the different interruption cost measurement techniques. Overview of interruption cost measurement techniques. Installed generators often have joint applications while it may well be that installed backup power is equal or higher than peak load due to indivisibility of capacity or low prices of backup power (e. A disadvantage of this approach is that it is based on the assumptions that firms install generators for backup purposes only and that the installed capacity is below normal peak demand. In practice. Consumer surplus methods require substantial more data than proxy methods although the results may not be proportionally more accurate. UPS technology has improved significantly over the years). There are two fundamental reasons for this: Firstly. this is hardly ever the case (Munasinghe 1981). Targets & Incentives Report 22 May 2009 80 Development of KPI’s for the Saudi Electricity Sector .g. the following criteria can be used: (1) Costs. this method assumes that load shedding takes place according to some predetermined order. the observed willingnessto-pay for planned electricity consumption is not an accurate indicator of what one would be willing-to-pay to avoid an unplanned interruption. However. Especially proxy methods require very little and easily obtainable data and thus form an excellent tool to estimate the upper and lower bounds of interruption costs. Furthermore.

In practice however. Under the former. A brief summary now follows. The main problem of ex ante surveys is their hypothetical character. can be planned well ahead in time and can provide substantial amounts of information. Beenstock et al. The asymmetry effect (or loss aversion) leads to a difference between WTP and WTA as consumers value prospective service improvements by some fraction of their value of deterioration. The advantage is that the different aspects that impact interruption costs can be studied such as interruption or consumer characteristics. the WTP and WTA values that are derived should be the same (Willig 1976). These factors have been extensively studied in the interruption costs literature – most notably with the use of survey methods. it is found that obtained WTP figures are usually equal to zero or otherwise orders-of-magnitudes smaller than WTA figures. Surveys are more expensive to carry out but can deliver quite detailed information about the different factors that influence interruption costs.With respect to information. Ex ante surveys on the other hand. The problem with blackout studies is that they can only be applied in case of an actual interruption. Blackout studies for example can be used to evaluate the vulnerability of society with regard to an interruption and identify preparatory actions. Duration Targets & Incentives Report 22 May 2009 81 Development of KPI’s for the Saudi Electricity Sector . In theory. Table 6-4. the consumer has a resistance to prospective change per se irrespective whether the service is improved or deteriorated. (1998) argue that the explanation for this can be found in status quo and asymmetry effects. Costs of the Method Proxies Consumer surplus Blackout Direct Costing Ex surveys ante Cheap Costly Costly Costly Costly Accuracy Results Very low Low of Information Acquired None None Reasonable High High Reasonable Some bias may exist Some bias may exist Cost Influence Factors The costs of an interruption are driven by a number of factors. Evaluation of different interruption cost methods. indirect measures score poorly compared to survey methods. This effect can lead to some bias in the survey results.

which show large inconsistencies between different studies. the amount of costs is closely related to the level of firm output. government and farm consumers. Also.e. the higher the reliability level. dependency on electricity may not be as high as in Western countries thus leading the relative impact of interruptions to be limited. A study in Nepal showed that 38 percent of residential consumers considered the number of interruptions to be “low” or “very low” although the average number of interruptions was four per week (Pandey and Billinton 1999). day of the week and time of the day. Gates et al. the timing of interruptions tends to have little effect. 1999). For the industrial sector. (1990) analyse the rate at which these costs increase by comparing results from different studies. interruption costs increase. Gates et al. Caves et al. 2001. Generally. An interesting result reported is that for retail and commercial consumers. 2001). winter interruptions lead to higher costs than in the summer while morning or afternoon interruptions are less costly than evening ones (Woo and Pupps 1992). Similar results were found in a Brazilian study where more than half of the residential consumers interviewed valued the quality of service provided as “good” although half of these consumers had experienced at least one interruption per month (Gastaldo et al. Billinton et al. For residential consumers. This suggests that there is a large initial fixed cost component and a variable component that decreases with duration. Perceived Reliability Level Another factor that influences the level of costs of an interruption is the reliability level at which the consumer is being supplied. this reflects the constant output delivered in these industries (Dialynas et al. For large industrial consumers. A possible explanation for this is that as the frequency of interruptions increases. per hour of interruption) decrease with duration. Advance Notice Targets & Incentives Report 22 May 2009 82 Development of KPI’s for the Saudi Electricity Sector .As an interruption prolongs. 1999). Timing Interruption costs vary with the time of the year. consumers can make a better trade-off between expected interruption costs and the adaptive response costs thus minimising total interruption costs. office building. such interruption frequencies would most likely not have produced such high consumer satisfaction ratings. they find that normalised costs (i. For non-residential consumers. Similar comparisons were made for residential. least costs are incurred during lunchtime (Pandey and Billinton 1999. (1982) find that for retail consumers in Canada the interruption costs during the Christmas season and on Saturdays are significantly higher. retail. For example. In most Western countries. the more severe the impact of an interruption will be.

there are different techniques available to measure interruption costs. Some studies normalise interruption costs by the peak load of consumers while others define costs as a function of frequency and duration of the interruption and make a distinction between the fixed and variable costs of the interruption. Interruption costs themselves may also be presented in different forms. 2001). advanced notice may be provided to consumers about the occurrence or duration of the interruption. Some consumers may be more dependent than others e.g. 1999. normalisation can take place in different ways. Furthermore. its duration. the time it occurs. Similarly. Most common is to Targets & Incentives Report 22 May 2009 83 Development of KPI’s for the Saudi Electricity Sector . 1982. the type of consumers affected by the interruption will influence the level of costs. Note that this is in line with the previous observation that consumers experiencing frequent interruptions exhibit lower costs due to increased preparedness. Ideally. it is helpful to normalise costs. Consumers’ dependency also increases over time: Sullivan and Sheehan (2000) report a doubling in the real economic quantification of reliability by households in the US over a period of 10 years. This observation complicates a cross-comparison of interruption cost studies. Consumer Dependency The degree of consumer dependence on a reliable electricity supply also influences the level of interruption costs. hospitals are much more vulnerable for an interruption than a residential consumer. Such actions tend to decrease interruption costs as consumers may take preventive actions or reschedule their original planning. etc. Andersson and Taylor (1986) report an increase in the real interruption costs from 1969 till 1980 in Sweden. These factors may not all be captured (uniformly) by the different interruption cost studies. For practical purposes. the level of these costs tends to vary as a function of different factors. Canada and Nepal with reductions varying between 20 and 50 percent (Billinton et al. in case of energy shortages or maintenance activities. No interruption is the same. (1988) find – perhaps not unexpectedly – a strong correlation between the presence of electric equipment in a household and the level of interruption costs.g. Doane et al. Dialynas et al.If an interruption is planned e. Similar results have been reported in other countries including the US. Similarly. Cross-Comparison of Interruption Cost Studies As has been discussed. Gates et al. these factors should not be considered in isolation as it is more likely a combination of factors that determine the costs that a certain consumer experiences during an interruption. it may differ with respect to its scale. A Scandinavian study reports that planned interruptions can significantly reduce instantaneous interruption costs (Lehtonen and Lehstrom 1995).

23 0.26 2. All costs are normalised per kWh non-delivered energy and are expressed in 2004 US dollars. there are differences in the interruption cost studies themselves in terms of the technique that is being used and the scope of the study i. the quality incentive (and therefore the quality scheme) would need to be set for each consumer individually on the basis of the costs incurred by this specific consumer.e. There are different explanations for these large differences. In the theoretical best case. the comparison may not be fully compatible due to the fact that numbers had to be converted into a common denominator. As may be observed there are substantial variations in the results obtained by different studies. Another explanation is the fact that costs may differ by level of economic development. Although such simplifications would possibly distort the incentives. It would be more practical for the regulator to set the incentive level based on some average measure. (2003) KEMA (2003) Young (1987) Turner (1977) Survey Survey Survey GDP Survey Survey Proxy 1996 1988 1995 2003 2003 1987 1977 India India Iran The Netherlands The Netherlands New Zealand New Zealand 0. The wide variation in results suggests that care should be taken in using the results of interruption cost studies for designing the quality incentive.25 1. Table 6-5.35 22.83 Year Country i USD / kWh Targets & Incentives Report 22 May 2009 84 Development of KPI’s for the Saudi Electricity Sector . This approach has also been followed in Table 4-4. they have the advantage of being relatively simple to apply and easy to comprehend by the firm as well as consumers.express interruption costs per kWh of non-delivered energy. the regulator should recognise that the quality incentive would need to be set on some average notion of interruption costs. Methodology Residential Upadhyay (1996) Sarkar and Shreshta (1996) Tavanir (1995) De Nooij et al. which may differ both by country or region as well as over time. Cross-comparison of interruption cost studies. the cost-driving factors that have been considered. Firstly.60 19. Capturing all possible interruption cost drivers and doing so for each individual consumer is likely to be a too costly undertaking. Furthermore. possibly differentiated by consumer group. however. which shows the result of a cross-comparison of a number of interruption cost studies. In practice. Ideally.99 5. the quality incentive should capture as much as possible the different factors that drive interruption costs and distinguish between different types of consumers.

79 3.10 65.18 2.34 6.91 4.Methodology Trengereid (2003) Shalaan (1989) Andersson and Taylor (1986) Lolander (1948) Swedish Joint Commission (1969) UNIPEDE (1972) Sheppard (1967) UNIPEDE (1972) Burns and Gross (1990) Krohm (1978) Faucett et al.29 4.98 9. (1994) Hsu et al.19 5.04 18.10 48.33 1. (1979) Sanghvi (1982) Commercial Sarkar and Shreshta (1996) Tavanir (1995) De Nooij et al.15 5.30 2.57 58.15 11.88 0.48 1.38 31.56 10. (1994) Taiwan Power Co (1980) Sheppard (1967) UNIPEDE (1972) Jackson and Salvage (1974) Burns and Gross (1990) Survey Survey Survey Proxy Survey N/A Survey Survey GDP Survey Proxy Proxy Proxy Survey Survey Survey Survey GDP Survey Survey Survey Survey Survey Survey Survey Survey N/A Direct Survey Proxy Proxy Survey Black Out Black Out Survey Year 2003 1988 1980 1948 1969 1970 1965 1970 1988 1978 1979 1980 1988 1995 2003 1987 2003 1991 1980 1988 1988 1995 1987 1977 1980 1948 1969 1970 1991 1991 1975 1965 1970 1970 1988 Country Norway Saudi Arabia Sweden Sweden Sweden Sweden UK UK USA USA USA USA India Iran The Netherlands New Zealand Norway Saudi Arabia Sweden USA India Iran New Zealand New Zealand Sweden Sweden Sweden Sweden Taiwan Taiwan Taiwan UK UK UK USA USD / kWh 0.70 2.67 9. (2003) Young (1987) Trengereid (2003) Shalaan (1989) Andersson and Taylor (1986) Burns and Gross (1990) Industrial Sarkar and Shreshta (1996) Tavanir (1995) Young (1987) Turner (1977) Andersson and Taylor (1986) Lolander (1948) Swedish Joint Committee (1969) UNIPEDE (1972) Hsu et al.13 0.22 Targets & Incentives Report 22 May 2009 85 Development of KPI’s for the Saudi Electricity Sector .48 7.12 3.25 4.25 6.25 5.81 8.22 8.38 9.99 4.37 1.75 10.25 5.

Voluntary or mandatory.09 Example of survey questions The following is an example of a questionnaire that could be used in future for the determination of interruption costs.lbl. http://certs. The day of the week (weekend versus a week day). Start time.20 5. (2003) Wijayatunga and Jayalath (2004) Hsu et al. (2003) Kahn (1997) Andersson and Taylor (1986) Burns and Gross (1990) Whole Economy De Nooij et al. The example is taken from: Lawton et al (2003).21 0.20 0. the survey describes hypothetical outage “scenarios” that have different characteristics.84 10.07 0. Complete or partial loss of service (voltage sag or black-out).Methodology Grosfeld-Nir and Tishler (1993) Modern Manufacturing (1969) SCI (1978) Agricultural De Nooij et al. Amount of advance warning.19 5. Targets & Incentives Report 22 May 2009 86 Development of KPI’s for the Saudi Electricity Sector . (1994) Aiyar (1995) Parikh et al. Each outage scenario describes a specific combination of characteristics making up one outage event. A Framework and Review of Customer Outage Costs: Integration and Analysis ofElectric Utility Outage Cost Surveys. if any.30 4. (1995) GDP GDP GDP Proxy Proxy GDP Survey Survey Survey Proxy Survey Black Out Year 1987 1969 1977 2003 1997 1980 1988 2003 2001 1991 1995 1994 Country USA USA USA The Netherlands Australia Sweden USA The Netherlands Sri Lanka Taiwan India India USD / kWh 17.gov/pdf/54365.61 0.04 7. Characteristics that are varied include: • • • • • • • The season in which it occurs (summer and winter).11 1. Duration. Berkely National Laboratory.pdf We should note that a survey applied to the Saudi situation would need to be customized taking into account the specific environment and conditions.80 13. With the direct measurement approach.

However. there are typically several versions with a questionnaire. the survey describes hypothetical outage “scenarios” that have different characteristics. which is typically the case for residential customers. You don’t know how long this power outage will last when it occurs. each having three to five scenarios. because the utility often wants to explore more scenarios that respondents can reasonably expect to have time or patience to answer. savings accrued from each outage.Respondents will usually receive several scenarios. An example of such a scenario is: At 1:00 PM on a summer weekday. Then the commercial and industrial customers are asked to estimate the costs. or how much the customer would have to be compensated to be indifferent to the outage. As with the direct cost approach. damages. Because not all surveys used the WTA measure. and if relevant. estimate costs from: Damage to equipment: Damage to materials: Other costs: Lost sales (or production): Total sales lost: Less: Wages saved: Energy costs saved: Other savings: Total Costs: $________ $________ $________ $________ $________ $________ $________ $________ $________ Wages paid without production: $________ Percentage of sales to be recouped: % x Sales lost $ _______ Willingness to pay and willingness to accept credit (WTP and WTA) approaches instead ask the customer what they would pay to avoid the outage occurrence. They are given a worksheet to fill out which would look something like this: For this outage. After one hour your power comes back on. the meta-analysis employed only WTP. The imputed approaches are especially useful in situations where intangible costs are present that are difficult to estimate using the direct worth approach. the electric power serving your business stops without warning. Targets & Incentives Report 22 May 2009 87 Development of KPI’s for the Saudi Electricity Sector .

you would not have to make any adjustments to the outage since your electricity would not go off. If you were charged a fee for this service only when you decided to use it (by using an on-off switch in your home).50 $1 $2 $3 $4 $5 $6 $8 $10 $12 $15 $20 $25 $30 $40 $50 Other: $_____ Willingness to Pay Imputation: Suppose a back-up service was available to handle all of your household’s electrical needs during this power outage. You would be billed by the supplier only for when and for how long the back-up service provided you with electricity.00 for this service? [IF NO]: Would you pay $5. a power outage occurs at 3:00 PM without any warning.00 for this service? Targets & Incentives Report 22 May 2009 88 Development of KPI’s for the Saudi Electricity Sector .10 $. Would you pay $10.The example below is from a mail survey.25 $. but after 1 hour your household’s electricity is fully restored. You do not know how long the power outage will last. Case #1: On a summer weekday.10 $. whether or not you were home (LL!?).25 $. With this service. What would be the least amount that you would consider a fair payment for each time this outage occurred in your home? (Circle or enter a number) $0 $. Willingness to Accept Credit Imputation: Suppose your Utility could provide you with a credit on your bill each time your home experienced this outage. what is the most you would be willing to pay for this service each time you used it to avoid this power outage? (Circle or enter number) $0 $.00 for this service to avoid the outage? (YES or NO) [IF YES]: Would you pay $20.50 $1 $2 $3 $4 $5 $6 $8 $10 $12 $15 $20 $25 $30 $40 $50 Other: $_____ An alternate version of a WTP question when fielded by telephone is: Suppose an electrical service was available to you during the power outage.

C. C. Argonne National Laboratory. New Zealand Electricity. The Economics of Alternative Levels of Reliability for Electric Power Generation Systems. Burns. IL. Evaluation of cost efficiency in Finnish Electricity Distribution. December. Netherlands. A. Manufacturing. Modern             Sanghvi. and R. ESAA/RSDC Project No. UNIPEDE report No 60/D1. A stochastic model for the measurement of electricity outage costs. P. UNIPEDE (1972). Working paper. The demand for supply security. IEEE Transactions on Power Systems. Memorandum concerning estimation of the cost of the national economy in the event of a loss of supply. Shrestha (1996). and L. Chen (1994). A. D. Upadhyay. February. Turner. Telson. G. Swedish Joint Commission (1969). A. Argonne. Hsu. Krohm.. Kahn. (1977). US and Foreign Experience. Economic Costs of Electricity Supply Interruptions. Power Planning Bureau. Korhonen.. Stockholm. Wensstromen. System Control Inc (SCI). Arlington VA. and M. 1 January. Determination of worth of reliability for better system planning and uses of system resources. Final report. Modern Manufacturing (1969). (1975). Lolander. Integrated analysis of customer value of generation system reliability in India. The costs to consumers of interruptions to the electricity supply. ANL/EES-TM-29 and 30. SCI (1978). A. Paris. KEMA (2003). G.J. Electricity interruption cost in Iran. (1996). 121:1575-1576. September. Tavanir (1995). June. Vattenfall. Shalaan. (1948). 4:180–98. Ministry of Energy. (1997). Rapport aan het Ministerie van Economische Zaken in het kader van PREGO. (1982). Jackson. Electr Cigre 127. De Nooij. July.References           Andersson. Syrjänen (2002). 14:157-174. A survey of disruption and consumer costs resulting from major residential power outage. Impact assessment of the 1977 New York City Blackout. (1978). The Hague. M. and B. Helsinki School of Economics. USA. Chang. Arnhem. 18:569–83. 22:69-74. mimeo. Development of KPI’s for the Saudi Electricity Sector Targets & Incentives Report 22 May 2009 89 . Value of service reliability. Taylor (1986). Various methods for estimating power outage costs: Some implications and results in Taiwan. P. Proceedings of the IEEE. A. and G. Costs of electricity supply interruptions to industrial consumers (summary). M. I. and A. Grosfeld-Nir. September. Energy Policy. 5:825-34.M. Bijvoer. E. May.K. Energy Journal. Electric service interruptions impact and cost estimation. Research Symposium European Electricity Markets. Cost of the interruption in Electricity Supply. Power at any price. and T. Gross (1990). Report no. Koopmans (2003). The Economic Times. (1989). The social cost of unsupplied energy. G. Energy Sources. 8:139-46.F. PN2420/95008. A. Bell Journal of Economics 6 : 679-94. Energy Economics. Tishler (1993).M. Tavanir company. July 1969. Volume 2-6. Energy Economics. Power survey problems and progress. A. and C. Quality of service from the consumer's point of view. Salvage (1974). Sarkar.

Targets & Incentives Report 22 May 2009 90 Development of KPI’s for the Saudi Electricity Sector . inflation data were obtained from the IMF. In case the year of the study was not available. Assessment of economic impact of electricity supply interruptions in the Sri Lanka industrial sector. A. Report to electricity distribution division. the year of the publication has been assumed to be the year of the study.imf. Jayalath (2004). January. These are available at respectively www. (1987). Young. Wijayatunga.  i Amounts in local currency have first been inflated to 2004 levels.gov and www. New Zealand Ministry of Energy. 45:23547. and M.cia. P. Exchange rates were obtained from the CIA World Factbook. and then converted to US Dollars using the average exchange rate for 2004. The value of electricity reliability.org. Energy Conversion and Management.

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