Distribution System Reliability Options and Utility Liability

This paper proposes a possible approach to providing differentiated reliability options to customers in urban and suburban distribution networks. To offer different reliability options based on customer's preferences, a utility can deploy distributed generation (DG), sectionalizing switches (Normally Closed Switches: NCSs) and tie switches (Normally Open Switches: NOSs). During power outages, DG, as backup generation unit, is a means of providing higher reliability to customers who require it. Furthermore, a utility may need to reconfigure the networks such that NCSs and NOSs operate in an optimal way to deliver power to priority customers. The problem is formulated as an optimization problem with the objective of minimizing utility liability while assuring the supply of power to priority customers. The optimization is performed off-line and the optimal switch combinations are stored in a database for use by the utility in real time. The information about customer preferences for uninterrupted service is needed to provide investment signals for NCSs, NOSs, and DG to utilities. The paper also demonstrates that utilities would invest in providing differentiated reliability options as long as the cost of these investments is lower than the liability cost utilities must pay for failing to deliver service.