Special Regulations of the Deregulated Market

Nuno Domingues(1), Tiago Gomes(2), Dieter Metz(3), Victor Mendes(4)

(1)
ISEL, Instituto Superior de Engenharia de Lisboa, Portugal
Av. Conselheiro Emídio Navarro, 1, 1950-062 Lisboa; ndomingues@deea.isel.ipl.pt
(2)
ISEL, Instituto Superior de Engenharia de Lisboa, Portugal
Av. Conselheiro Emídio Navarro, 1, 1950-062 Lisboa; tiago_jgomes@hotmail.com
(3)
F:D, Fachhochschule Darmstadt, Germany
Hardtring, 100, Darmstadt; dmetz@fbe.fbe.fh-darmstadt.de
(4)
ISEL, Instituto Superior de Engenharia de Lisboa. CEEL-IST, Centro de Energia Eléctrica da
UTL, Portugal
Av. Rovisco Pais, 1, Lisboa; vfmendes@deea.isel.ipl.pt
Abstract
Usually power system engineers are trained to take care of the technical part of the
power system, but now with the liberalization process taking place all over the world,
new decision tools to improve technical skills are needed to face this process.
Liberalization imposes a new philosophy, i.e., forces to reduce costs, to save money by
increasing productivity so staff members and technical investments have been
seriously reduced. Due to this philosophy a strong pressure to lower the staff labour
costs came out. Obviously, power system engineers are responsible for decisions that
can influence all power system investments and strongly affect the availability and
security of the electrical power supply.
If failures or even emergency situations occur, they directly influence quality of power
system supply. Hence, they influence the customers’ feelings. Therefore, new tools are
needed to overcame booth a reduction in staff labour and situations that influence
customers feelings. We studied regulation’s penalties in different countries to keep
good quality of the energy supply. We developed an application to compute the
Compensation for Energy Not Supply to present economical indicators in a SCADA
system. We present a case study using our application, showing how to improve
technical skills based on economic indicators.

Keywords: Liberalization, Regulation, CENS (Compensation for Energy Not Supply).

1. Introduction

Electrical energy use is connected to economic conditions. Growth of the groos national
product is related to the growth of the electrical energy consumption. Due to conservation
the ratio of the growth national product to energy tends to decrease in industrialized
countries, but it tends to increase in developing countries. Hence, the growth of the electric
power demand shows the importance of electricity to develop a country, not only at the
economical level but also at the social welfare. Therefore the quality of the electric supplied
has been an important issue for regulators to impose actions on power system companies,
private and public owned, to take it in account.
To avoid inferior quality of electrical supply, most of the regulators settle penalties
payments in order to avoid failures that will result in inferior quality supply to the
consumers. In the case of energy supply interruptions, in some countries, the company
must, in some cases automatically, pay the “damage” to the customer. This penalty is called
Compensation for Energy Not Supplied, CENS. In what follows we explored the effects of
the liberalisation process in Europe and outside countries. We studied regulation’s penalties
in different countries to keep good quality of the energy supply to present an application to
compute the Compensation for Energy Not Supply, using Excel and Visual Basic, giving
economical indicators in a SCADA system. This application is an important tool for power
system engineers to face the nowadays liberalization process.

2. Quality of electric supplying

The level of quality of electrical supplying depends on the amount of money applied to
power systems. Hence, quality can be regarded as an economical issue with major influence
in technical issues.

2.1 Economical issues

To attain near-perfect power quality, a utility could spend vast amounts of money,
accommodating electrical equipment with high power quality, well-trained staff and
scheduled maintenance in order to avoid economical compensation to customers. On the
other hand, a utility could invest as little money as possible and economically compensate
customers for the resulting power quality problems. So the economical staff from the
supply companies has one more variable to deal with: the Compensation for Energy Not
Supplied, CENS, as a tool to attain quality of power supply.

Each item means:

(a) CENS costs
(b) Investments costs
(c) Maintenance costs
(d) Operation and management costs
(e) Electrical losses costs
(f) Total cost

Fig. 1- Costs in function of reliability.

We can see in figure 1 all the costs that influence the economical staff decisions in what
regards the reliability level. With the new curve, the CENS costs, the minimal point value
of the total cost curve is shifted to right, which means a higher reliability level. Also, we
can note that the minimum is neither the two extreme situations exposed before.

2.2 Technical issues

Power quality concerns, as technical issues, are becoming more frequent with the
proliferation of sensitive electronic equipment and automated processes. The most common
power quality problems can be divided into many categories such as: Interruption, sag,
swell, transient (spike), noise, flicker, harmonic distortion, and frequency variation.

Fig 2: Most common power quality problems.

These power quality problems are illustrated in Fig.2 and described in detail in [2].

3. Continuity of supply

Reliability is primarily concerned with customer interruptions and is, therefore, a subject of
power quality. Although there is general agreement that power quality includes reliability,
the boundary that separates the two is not well defined. That is, for example: Sustained
interruptions have always been categorised as a reliability issue. While, momentary
interruptions sometimes have been classified only as a power quality issue. The reasons are
(1) momentary interruptions are normally the result of intentional operating practices, (2)
they did not generate a large number of customer complaints, and (3) they are difficult to
measure.

Fig. 3- Hierarchy of Power Quality

Nevertheless, today momentary interruptions are an important customer issue due to the
increasing number of electrical appliances, which are sensitive devices, requiring high level
of power continuous supply. Availability is defined as the percentage of time that a voltage
source is uninterrupted, and is classified as a subset of reliability. Fig.3 illustrates the
hierarchy of Power Quality [2].

4. Classification of Interruptions

Continuity of supply is a complex issue. It’s typical to classify the interruption in two
parameters: Type (Planned and Unplanned) and Duration (Transient, Short and Long).
Different users have different sensitivities to each kind of interruption, but regulators have
to select which aspects of continuity to focus on [4]. Customer satisfaction surveys have
highlighted that users appreciate adequate notice of planned interruptions. Planned
interruptions which are not notified to customers should be recorded as unplanned
interruptions. The European technical standard EN 50160 defines interruptions that last
more than 3 minutes as "long interruptions", and the others as "short interruptions". In some
countries, very short interruptions, due to automatic reclosure systems that operate in less
than a few seconds are referred to as "transient interruptions" [3], [4].

5. Continuity indicators

Most electrical appliances can accommodate slight disturbances in power quality, with
some being much more sensitive than others. The cumulative yearly duration of
interruptions per customer, generally referred to as Customer Minutes Lost (CML) or
System Average Interruption Duration Index (SAIDI), indicates how long in one year
energy is not supplied in average per customer. The number of outages per customer in one
year, termed customer interruptions (CI) or (SAIFI), System Average Interruption
Frequency Index, indicates how many times in one year energy is not supplied. Some users
are more sensitive to the cumulative duration, whilst other users are more sensitive to the
frequency of outages. Energy not supplied (ENS) is linked to CML [2], [3], [4].

6. Compensation for Energy Not Supply

The most common way to give customers quality of supply is to impose penalty payments
to the utilities when standards, imposed by regulators, are not met. The penalty payment
associated with interruptions is called [4] Compensation for Energy Not Supply, i.e.,
CENS.
Only experienced and well-trained personnel can achieve a reliable optimum under
consideration of all economic and technical constraints. A dynamic training on a simulator
provides a risk free training to follow CENS effects, giving experience and well-trained
personnel to utilities.
We developed an application to compute CENS, coded in Excel and supported by Visual
Basic language. It’s dynamically linked with the RESY-SCADA system [1], developed by
Repas AEG Company. The goals are: (1) the possibility to decide who are the priority
customers (based on CENS) in an electrical network, and (2) compare the CENS strategies
in different countries. The first goal is achieved by disconnecting households or industrial
customers and comparing the CENS/min (CENS per minute), looking just in one network.
The second goal is achieved by disconnecting a load and looking the CENS/min based on
different regulations philosophies adopted by different Countries.

7. Case Study

In this case study we compare the CENS strategies in different countries, disconnecting an
industrial customer and looking the CENS/min based on regulations philosophies adopted
by Norway and Netherlands. In Norway, regulation philosophy considers only Long
Interruptions, more than 3 minutes, to be compensated and the penalty payment for a
notified-interruption for a Industrial customer is 4,94 €/min [5]. In Netherlands, regulations
philosophies consider all Interruptions longer than 4 hours and the penalty payment for an
Industrial customer is 0,35€/min at a maximum of 90 000€ [6].

Fig. 4- Upper border for Short Interruption

We can see in Fig.4 several types of customers. This case study has the industrial
«Stadtwerk A» customer has the experienced. It’s without energy for almost 3 minutes. In
Norway there isn’t yet CENS application, but in The Netherlands the utility has to pay 5
269€ to the customer.
In Fig. 5 we see that after 3 hours 30 minutes and 30 seconds without energy the utility has
to pay 915 720€ in the Norwegian case and 113 513€ in the Netherlands case.
In the present time, if the utility re-feed the customer, Netherlands won’t have to pay any
CENS because the Interruption takes less than 4 hours. Meanwhile, Norway has to pay 915
720€.

Fig. 5- Lower time border for Netherlanders no-compensation

7. Conclusions

CENS obligates utilities to increase reliability, availability and quality of service in order to
avoid punishments and consequently lack of profits leading to bankruptcy reflecting in
serious problems to customers. So to avoid these problems companies now must train their
operators not only in the technical part but also in the economical issue. So a permanent
increase in the quality of supply, i.e. a reduction in the actual CENS amount, will result in
increased revenues, i.e. increased tariffs. And vice versa. The CENS is a question of
common sense and shows that with simplicity it’s possible to guarantee and even demand
more quality.

References

[1] http://www.repas-aeg.de/
[2] Brown, Richard, Electric Power Distribution Reliability, Book, Dekker Inc., USA March 2002
[3] http://www.conf-aim.skynet.be/cired/docs/CIGRE_Prague_ARO.doc
[4] www.autorita.energia.it/
[5] http://www.energy.sintef.no/prosjekt/KILE/engelsk/compensation_gkj.pdf
[6] http://www.nma-dte.nl/en/default.htm