Interruption costs and time dependencies in quality of supply regulation

Customer interruption costs depend not only on customer characteristics and interruption duration, but also on the time of interruption. Time-dependent costs are incorporated in the Norwegian quality of supply regulation. New cost data are proposed from 2015. This paper demonstrates the importance of taking the time dependencies in the interruption cost and the time-dependent correlation with other parameters into account. Ignoring these time dependencies may lead to wrong cost signals in the quality of supply regulation. A time-varying reliability model is used to investigate the influence of time dependencies and the impact of changing the cost data for a small example network with different customer sectors. It is shown that ignoring the time-dependent correlation leads to underestimation of the expected annual interruption costs.