Market Liberalisation and Quality of Supply in Ireland Una Brady Commission For Energy Regulation (CER)
Quality of Supply Regulation Quality of Supply • Customer Service (Commercial Quality) • Voltage Quality • Continuity of Supply Key Regulatory Instruments • Licences, Codes etc. • Performance Criteria • Economic incentive in DSO allowed revenue formula
Commercial Quality Key Regulatory Instruments: • Performance Standards • Mix of Licences, Codes, Agreements that contain commercial quality elements Performance Standards: • Guaranteed Standards (GS): Service levels that must be met in individual cases. Otherwise - penalty payment. • Overall Standards (OS): where customers in general have a right to expect pre-determined levels of service. No penalty.
Performance Standards • Separate charters for PES and the DSO • Expanded Networks Customer Charter – 12 GS (some tightened, some new, increases in penalties) • Expanded PES Customer Charter - 7 GS with automatic penalty payment • Overall Standards for PES and DSO (e.g. 75% of phonecalls to be answered in contact centres within 20 secs)
Regulatory Instruments to improve Commercial Quality • Guaranteed and Overall Standards –number of standards, level of service and penalty payments are high compared to other EU countries. • Licence conditions to report annually on performance criteria. • Other - Independent Complaints Arbitrator, 24 hour contact centres, Disconnection Code of Practice
Voltage Quality • While Irl. has adopted CENELEC standards, its voltage quality standard is not met for a significant proportion of rural customers. • High number of voltage complaints • Approx. 60% (year 2000 estimate) of rural customers have short circuit level < 100 kVA
Voltage Complaints-Key Instruments CER approved capex specifically for voltage complaints but required the no. of complaints to be halved by 2005 Guaranteed Standards (GS): • Voltage complaint GS –contact complainant within 10 working days, further 10 for investigation - €35 penalty • Voltage Problem Resolution GS- within 12 weeks (except significant reinforcement required) - €50 penalty DSO Performance Report –report no. of complaints (2736 in year 2001)
Continuity Indicators Big differences across urban and rural High proportion of CMLs are due to planned outages
Network Characteristics • High lenght of network per customer • Low proportion of underground cable - 10% • Need for significant additional network capacity • Network age and condition is a concern Note–major Network Renewal Project currently underway
Continuity –Key Instruments (1) Economic Incentive in DSO Revenue Formula (2) Guaranteed Standards (GS): • Planned Outage GS -min. 2 days notice, penalty - €35 domestic • Main FuseGS – call out within 3 hours, penalty - €35 (3) Overall Standard: 95% of all faults are to be restored within 4 hours (and DSO to report on same) (4) Licence Condition to report annually on Continuity performance (including actual versus target, worst-performing feeders)
Continuity and DSO Price Control • DSO - Incentive based regulation for improving efficiency and continuity performance • Current 5 year Price Control Period (2001-2005) • CPI – X framework with CMLtargets set by CER which are linked to incentive/penalty • Forecast Expenditure for Continuity was allowed but CER set more stringent continuity targets for 2005: Urban CML (50), Rural CML (350), Overall (275)
Continuity Incentive/Penalty Regime • Revenue Formula includes incentive/penalty per CML (above/below forecast CMLt) of €215,855 (in year 2000 prices)based on value of lost kWh of €7.2 and 1.6m customers using 17.7TWh in year 2000. • Cap incentive (penalty) at +/- 2% of allowed revenue in a given year for net combined incentives (penalties) for Losses and CMLs • Storms are excluded (days for which CML is > two standard deviations from the mean) • Incentive/Penalty regime to be based on Annual reporting of Continuity - must be robust and auditable
Continuity – Target v Actual CMLs Incentive/penalty in regulatory price control formula of €215,855 (in year 2000 prices) per CML above/below forecast CMLt for beating/missing the target
Issues currently under Review Given significant refurbishment programme, should penalty/incentive apply to Total CMLs (planned and faults) or should some allowance be made for the number of CMLs due to planned outages under the Network Renewal Project ?
For Further Information View CER website www.cer.ie In particular see: • Determination of Distribution Allowed Revenues (CER/01/128) • Distribution Performance Report 2001 (CER/02/219) For Networks Customer Charter and PES Customer Charter see www.esb.iewebsite. Contact: email@example.com