Measuring the Performance of Distribution Utilities A Top-Down/Bottom-Up Approach

In principle, expenditure decisions made by distribution utilities should he largely driven by the quality of service requirements imposed by the corresponding regulatory entity. For example, this paper shows that total annual expenditures (i.e., both capital, or CapEx, and operating and maintenance, or OpEx, outflows) are strongly correlated with system performance (in terms of quality of service). Regulatory entities should therefore be very cognizant of this strong correlation, especially when setting the electricity rates that the utilities can charge for providing service to their customers. Conversely, utilities should put together CapEx and OpEx budgets that are responsive to the established quality of service requirements. Here we present a top-down (i.e., benchmarking)/bottom-up (i.e., planning) approach that aids utilities in this process. Finally, we illustrate this approach by means of a specific case study from a country in Africa