una brady_ie_beta2-6b barcelona 12-15 may 2003 1 market liberalisation and quality of supply in...

1Una BRADY_IE_BETA2-6b

Barcelona 12-15 May 2003

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

CMLs 2000 2001

Fault 255 197

Planned 172 188

Total 427 385

• Big differences across urban and rural

• High proportion of CMLs are due to planned outages

Int./yr/

Cust.

2000 2001

Fault 1.54 1.38

Planned 0.44 0.51

Total 1.98 1.86



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 Fuse GS – 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 CML targets 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 yearfor 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 CMLsIncentive/penalty in regulatory price control formula of

€215,855 (in year 2000 prices) per CML above/below

forecast CMLt for beating/missing the target

Forecast Total CML Actual Total CML

2001 400 385

2002 370 463 (current estimate)

2003 340

2004 310

2005 275



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 CustomerCharter see www.esb.ie website.

Contact: [email protected]

una brady_ie_beta2-6b barcelona 12-15 may 2003 1 market liberalisation and quality of supply in...

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