Assessment of performance-driven investment strategies of distribution systems using reference networks

Distribution systems are inherent monopolies and therefore they have generally been regulated to protect customers and to ensure cost-effective operation. In the UK this is one of the functions of the Office of Gas and Electricity Markets (OFGEM). Initially the regulation was based on the value of assets but there is now a trend towards performance-based regulation. To achieve this, a methodology is needed that enables the reliability performance associated with alternative investment strategies to be compared with the investment cost of these strategies. At present there is no accepted approach for such assessments. An approach based on the concept of reference networks is proposed. The essential idea is to analyse a small number of networks that represent the real feeders of the system being considered. The main stages are: to classify the real feeders into coherent clusters, to construct a representative network for each cluster, to assess the reliability of these representative networks and to re-aggregate the results to give those for the overall system. These representative networks are then analysed repetitively for different investment scenarios and the corresponding reference networks derived. The approach can be used to assess individual companies on an absolute basis or to compare the relative performance between companies. The approach, its implementation in conjunction with a number of distribution companies, and its effectiveness when approach using the underground part of a real system are described.