Differentiated Reliability Pricing Model for Customers of Distribution Grids

  • Arturas Klementavicius
  • Virginijus Radziukynas
Part of the Energy Systems book series (ENERGY)


The paper addresses the idea of reliability differentiation for peer electricity customers willing to choose a standardized reliability level of electricity supply for the respective tariff.

The authors suggest the reliability differentiation concept based on standardized reliability levels (categories). As a partial prototype, the existing 3-grade reliability differentiation system in Lithuania is referred to. According to the concept, customers with higher reliability category pay a higher distribution reliability tariff, in proportion to the incurred grid operation, management and amortization cost.

The operator provides a contracted higher category mainly through the parallel supply path in the grid, i.e. by the switch-over of customer’s load to the 2nd independent supply point after the failure of electrical path from the 1st independent supply point. Accordingly, the supply notion is split to major, joint and reserving supply where major supply for a customer is provided in normal operation situations (i.e. from the 1st independent supply point), reserving supply – in unusual situations (from 2nd independent supply point) while joint supply denotes situation when the same electrical path serves as both a major supply route for one customer and a reserve supply route for another.

The suggested concept is supported by a new mathematical reliability pricing model for 2-grade reliability system. The model is cost-reflective and applicable to the distribution grid area controlled by one operator. Its rationale is fair allocation of grid cost between customer groups with different reliability categories, and subsequent derivation of distribution tariffs for reliability categories. The grid cost is split to the components related to four types of grid equipment – distribution transformers, medium voltage lines, local transformers and low voltage lines. These cost components are allocated between customer classes with different reliability categories and connection-to-grid voltages. An allocation criterion is the scope of usage of grid equipment type.

The applicability of the presented model is illustrated by numerical setup for the sample grid.


Customers Distribution grid Pricing model Reliability Supply 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • Arturas Klementavicius
    • 1
  • Virginijus Radziukynas
    • 1
  1. 1.Lithuanian Energy InstituteKaunasLithuania

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