Distribution utility´s trade-off decisions in obtaining sources of electricity

The unbundling of the power industry and the development of efficient pricing mean that the cost and availability of wholesale power purchases will be influenced by market forces and geographical location of the load. An important issue facing electrical distribution utilities is to decide whether to continue to purchase from a main grid or generate locally, partially or totally. The complex nature of the problem requires careful formulation and effective solution methodology which can handle nontangible issues such as customer perception and quality of service. This paper describes the results of a major seven-year project in which a general framework and meaningful solution methodologies were developed to assist the distribution utility management in assessing the feasibility and merits of building nonutility generation (NUG)