Adequate interruption cost assessment in a quality based regulation regime

Balancing cost-effectiveness and quality of service is one of the most important tasks for network companies in the deregulated environment. It is widely recognized that interruption costs is a relevant expression for the inconvenience customers feel when service is interrupted and that adequate assessment of such costs is crucial when they are used quantitatively in cost-benefit analyses. In this paper we demonstrate by a distribution system example that typical time variations of component failure rate, repair time, load and specific interruption costs can have a significant impact on the estimated annual interruption cost for delivery points in the system. This observation is possible by a model that can handle such time variations including correlation between the parameters. An interesting application of this model is to quantify the consequence of for example moving planned maintenance to periods when the load and the interruption cost is low.