Electrokit | IADB

Regulatory framework Performance standards

Performance standards

Refers to the level of quality a company (or a group of companies) is expected and/or required to provide. The definition of performance standards must take into account conditions that are inhe rent to each system ( i.e., topology, weather phenomena, etc. ) and can sough to be achieved gradually over time.

Even though quality indicators and performance standards are most commonly reported and tracked at an aggregate or average level (i.e. , annual SAIDI of a company, average SAIDI in a country, etc.), they can also be specified for groups of end users depending on their importance or prioritization. For example, a SAIDI indicator or 30 hour s for a distributor means , that on average, a client will experience 30 hours of electricity supply interruptions within a year, however, the average value most probably conceals the fact that there are a set of customers that experience supply interruptions totaling way over 30 hours in the year . The previous example reveals that even though a distributor can on average improve its quality indicators, it is not necessarily making improvements for the users experiencing the worst service quality within the network.

To cope with th is issue , the concept s of individual quality and worst - served customer (customers whose service quality is below a certain threshold relative to the average service quality ), may be used . P erformance standards can therefore be set a t an individual level or for a group of customers. Service quality monitoring and analyses must consequently be done at a much lower disaggregation level (i.e. , circuit level)

Lastly, there is a need to establish quality committee

Maintain a quality committee with regular meetings that has the function of monitoring the performance of the electricity supply and product quality indicators, in addition to following the action plans established by the business areas. This committee should encourage and ensure that quality indicators are presented or weekly to employees at hierarchical levels (from managers to electricians). Meetings and panels are used to discuss the evolution of these indicators.

Technical Support and dedicated department

An operation center and maintenance crews should be available 24/7 to manage contingencies in distribution systems. The operation center must be available 100% of the time since the maintenance crews must respond when necessary. Specific crews should also be available to perform inspections in difficult to access zones. For all regions, there must be maintenance crews to cover the entire population served, and for areas with a higher population density. A department within the distribution company with the task of analyzing the performance of continuity and quality indicators should be functioning. This department must provide reports to executives and help other departments to direct their actions to improve these indicators. This department should have a control methodology for calculating quality indicators with certification recognized as ISO 9000. Within the scope of this area, analyses must be carried out to identify zones at risk of not complying with electricity supply and distribution service, and, if this is the case, appropriate actions must be taken. Trends in continuity of supply and (when applicable) the economic results (periodic evaluation and revision of the continuity practices are suggested) are analyzed. Lastly, the utility should engage the regulator to discuss how investments in monitoring voltage control are recognized by the authorities on the capital investment and operational costs.

Maintenance and operation standards

The utility must have protocol s and standards to perform corrective and preventive maintenance in the power substations and networks. There are safety plans for contingencies regarding the quality of the supply and distribution of electrical energy. It is also recommended that a verifi cation of the operational status of supply and distribution system elements ( for which visual inspection or operational test is possible ) to be carried out at least once every 3 years , and for the strategic systems, every year.

Baseline and masterplan

It is essential to develop quality improvement or control plan, based on a diagnosis that identifies the baseline (current state of service quality according to the selected and standardized indicators), the specific factors that cause major supply interruptions, the location where supply quality is deficient (region, circuit, customer), the definition of quality objectives and goals, the definition of strategies to address each field of action, the formulation of projects, the definition of an implementati on schedule, the assignment of responsibilities in the organization, the criteria for evaluating the plan, and the economic and financial evaluation of the plan.

Integration of Distributed Energy Resources

The use of new distributed energy technologies (PV systems, fuel cells, energy storage, and electric vehicles) connected to the grid requires improvements in all interconnection standards to define the requirements that these technologies must need for safe and reliable integration with utility electrical networks. These standards address issues such as power quality and voltage limits and maximum power to be connected. For example, in many countries, local regulations will provide for these procedures, however when this does not occur, countries can use IEEE references such as IEEE 1366 and IEEE 1547 and technical studies

Electricity grid resilience facing natural events

Natural events can lead to outages with prolonged load interruptions. Although such events are characterized by a high level of unpredictability, utilities have ways of reducing and mitigating their consequences. Some practices for each type of event can be used:

Structural capacity to verify that electricity distribution is adequate and there is redundancy.

The electric power distribution system must be able to supply all the electric power demand for the different load levels and improving system redundancy is an important enhancement to increase reliability. Electrical power supply and distribution infrastructure design is conceived to minimize impact due to contingencies, to comply with service standards(quality and continuity) and to renew supply and distribution system elements that take into account the risk of impact on service continuity. In this way, distribution network design criteria exist that considers the quality of the supply and distribution of electrical energy. Hence, planning and operation of the infrastructure adopts criteria to prevent risk of service interruption and unintended variations in quality (voltage, frequency, capacity, and others).

Quality indicators selection and standardization

Appropriate indicators that allow for a proper tracking and control of quality evolution over time must be defined. The commonly used indicators that have already been mentioned (SAIDI, SAIFI, etc.) serve as a reference . Even though the use of diverse quality indicators within distributors’ operation for management and planning purposes is a common practice and may already be in place , the definition of common and standardized indicators within a particular country or regulatory framework allows: (i) for benchmarking and performance comparison among peers; (ii) to incorporate specific criteria in the indicators’ calculation that may be relevant within a particular context ; (iii) to define mid to long term policy objectives; and (i v ) to calibrate and track performance for the application of financial incentives within a common regulatory framework.

Public database and end-user information

It is especially important that the regulatory or control authority establishes a periodic public information system , and the obligation to inform in the monthly billing the quality that is required , as well as the one that is being supplied. This incentivizes the distributor to im prove results , provide transparency and enable follow - up by consumers

Financial incentives

Distributors may receive a positive, or negative, incentive that adds, or subtracts, to their income depending on service performance. For example, performing abov e the required standard may allow for an increase in the distributor’s remuneration. I ncentives can be applied through the correct definition of quality indicators and performance standards, and the ir proper calibration ( i.e., positive and negative incentives must be aligned with the economic impact an increase or decrease in quality may represent).

Technology deployment

The implementation of new digital devices, communications and control systems can help utilities improve their quality of service. Utilities are deploying advanced technologies to plan, manage, and control electricity delivery to enable safe and reliable two-way flow of electricity and information, support growing numbers of distributed energy resources, and support customers participating in electricity markets as power suppliers and demand managers. These devices include for example phasor measurement units (PMU) and specific technology to track and record outages, such as eReliability Tracker Software or supervisory control and data acquisition ( SCADA ) . For example, PMU technology can detect low-frequency oscillations that were missed by SCADA systems, allowing operators to act and prevent widespread disturbances.

Investments to reduce SAIDI and SAIFI

In general, new investments in power systems seek primarily to meet the increased load of customers, however it is important to seek investments that are directed exclusively at reducing the outage duration and/or number of cus tomers affected for specific outages, such as:

Engineering

The engineering team, in addition to seeking innovations and new technologies, must also be constantly improving current processes, such as:

Accounting and Economic Analyses

Individual annual accounting analyses are carried out for operating and maintenance costs as a whole and for system. Also, individual monthly accounting analyses are carried out for main system facilities, these comprise, at the very least, the technical service units, customer service, units/crews of new investments and corrective maintenance. For these evaluations, individual and segregated accounting analyses are carried out for the main components of these operating costs.

Performance Contracts

The engineering team, in addition to seeking innovations and new technologies, must also be constantly improving current processes, such as:

Procurement

Procurement policies and procedures must be competitive, non-discriminatory and maintain high standards of transparency and technical quality. To this end, in general, companies tend to always choose the same providers, as this results in traditional economies of scale. However, it is important to have a mechanism that encourages the search for new suppliers, albeit on a smaller scale and with less capacity to meet the needs of the company, as a way of seeking solutions in the market. Some practices can help optimize operating and maintenance costs:

Performance-informed budgeting

It is important to promote the use of performance indicators in budgetary decision making, that is, the use of the estimated budget must be linked to technical and commercial indicators that measure the investment objectives and costs used.

Cost Efficiency, transparency, and optimization

Characterization of all the processes necessary for the activity of electricity distribution, with description of the main activities of each one of them

Maintenance

The maintenance activity must be considered not only from technical aspects, but also the costs of realization and the costs of non-realization must be evaluated. Utilities can use a new methodology Reliability Centered Maintenance to optimize maintenance resources and to develop maintenance plan for distribution networks and substations. Some practices for utilities to have in place are:

National and State political support

Obtain political support with government authorities and promote awareness for the introduction of a program. Successful programs have usually been associated with a preponderant role of government authorities to tackle the challenge, where public utilities regularly report progress to senior government authorities.

Infrastructure plan

Establish a dedicated infrastructure investment plan in the distribution network and secure resources to reduce vulnerability and adulteration of equipment and connections. Provide modern meter facilities with monitoring facilities and an engineering sector in charge of technically analyzing the technical losses of the system and seeking new technical solutions

Commercial systems

Strengthen access to and functionality of the commercial systems. Experience has shown the importance of making regular checks of personnel that have access to the company’s business and billing systems, as well as performing analysis of the data stored in the Customer Management System (CMS). Access to the billing systems and database of customers should be limited as much as possible within the utility, which should carryout regular audits and verification of who has access to what part of the billing system.

Investment technologies

Prioritize investments in technology and smart metering technologies. Investments made to deploy technology tools such as Automated Metering Infrastructure (AMI) or Automated Metering Reading (AMR), supervisory control and data acquisition (SCADA), modern business systems, database management, user access authorization, and exception analysis should be prioritized.

Baseline and master plan

Establish a baseline and quantification of the losses as part of a diagnostic to be followed by specific study. Utilities need to develop a baseline distinguishing and calculating technical and non-technical losses and their evolution over time with a definition of “as is” – the present situation and starting point. The quantification would be expressed in technical and monetary terms.

Regulatory and normative aspects

Take into consideration regulatory aspects. Utilities can engage the regulatory authority to ensure the proper incentive mechanisms to unlock reductions in losses are in place. This includes the discussion with the regulators to identify impacts in the calculation of electricity rates in such a way as to allow affordability to the most vulnerable population. Also, it is important to review if supply or grid codes are incentivizing loss reduction.

Engagement with local authorities

Promote awareness and establish partnerships with local control authorities such as local police and law enforcement to take prompt action in the event of theft when amicable and commercial resolution is not possible. These actions are particularly important on commercial losses in the industrial and large commercial segments as a few clients can represent a large value of the losses.

Organization

Establish unit dedicated to losses within the utility. Most programs are accompanied by an activity to strengthen the organizational capacity of the utility, helping to structure a unit responsible for losses and providing the necessary skills and competences. The composition of the unit should be multidisciplinary, and it should have autonomy given by senior management with proper governance arrangements

New Technology

The engineering team should always look for new equipment and materials that, in addition to meeting the technical criteria, also minimize its operating and maintenance costs. The main elements and innovations available in power systems can be optimized from this perspective:

Community Engagement and Social Considerations

Social participation as part of a soft initiative with the impacted communities, their leaderships and population, with analysis and mitigation of social and affordability impacts. Building a positive engagement with the local community is a key ingredient to the sustainability of an electricity loss program. This engagement must be established with the official and non-official leaders of the community and addressing their concerns when implementing the program. In some cases, having the support from Non-Government Organizations (NGOs) can also deliver effective results as these organizations can have proximity to the communities.

Ecosystem of services and providers

Establish a training program and management of the contracted crews to observe their ethical behavior with monitoring of service providers. Eventually incentives or penalties for service providers can be considered. Carry out specific training for all professionals involved in the activity and draw up an annual plan to improve design of the training program and verify its effectiveness.

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