Economic Criteria for Optimizing Power System Reliability Levels

The standards of reliability of electricity supply have previously been determined on a rule-of-thumb basis. This paper presents a generalized simulation model for optimizing the reliability level by comparing the social benefits and costs of changes in power system reliability. The supply side costs of increasing system reliability can be determined from straightforward engineering considerations. On the demand side, the benefits to electricity users consist of cost savings from averted power failures or outages which may be measured by the disruption of the output streams owing to idle input factors and spoilage. The theory is applied to the case study of Cascavel, Brazil to determine a range of optimum reliability levels for long-range electric power distribution system planning. The principal outage costs are incurred by industrial and residential consumers.