Optimal Network Development Criteria: Maximizing Efficiency and Minimizing Costs

1. Answer to Question 5.27 LA Jorge, E Quaresma, F Mira 1 LAFM Ferreira, PMS Carvalho 2 SNC Grave, FFC Silva 3 LMF Barruncho 4 1 EDP Distribução Energia S.A. 2 Instituto Superior Técnico 3 Instituto de Optimização Aplicada 4 ITGeo, Grupo Edinfor S.A. Portugal

2. Results New regulation criteria changes optimal network development New criteria makes the interruption penalties decrease (as it should) As a result, ENS, SAIDI, and SAIFI often decrease Those decreases come together with Larger investment costs Other investment decisions (other, not just more)

3. Benefits vs Risks of Meeting New Criteria New regulation criteria: Aims at the homogenization of customer quality of service Does not aim at the improvement of the system quality of service. Meeting the new criteria: Most often improves the system (average) quality of service, Sometimes does not. Depends on the criteria (penalty costs), network cable failure rates, investment possibilities, operation constraints, etc.

4. Business Perspective Minimize overall costs Investment costs Operation costs such as energy loss costs ENS costs penalty costs Network development should be optimal

5. How it works You: Set possibilities Investment possibilities Operation possibilities To make it possible to overcome penalties Software (DPlan): Creates all network possibilities Evaluates each one thoroughly -- investment, losses, reliability Finds the optimal network w.r.t. overall costs You: Study the optimal network Need more possibilities? Are the criteria correctly set?

6. Authors Perspective Robust network development depends much on well-designed adequate criteria Question: Do the criteria implement what the regulator intends? Task: Design adequate criteria to enforce intended policy How: Much knowledge and insight can be gained through optimization