Market-based Estimation of Average Electricity Outage Costs in the United States

Chi Keung Woo; A. Tishler; Kang Hua Cao; Han Qi; Raymond Li; Jay Zarnikau

doi:10.46557/001c.90927

Market-based Estimation of Average Electricity Outage Costs in the United States

Chi Keung Woo, A. Tishler, Kang Hua Cao, Han Qi, Raymond Li, Jay Zarnikau

Canberra School of Politics, Economics and Society

Research output: Contribution to journal › Review article › peer-review

Abstract

Electricity outage cost (EOC) estimates ($ per kWh unserved) are essential input data for optimal reliability planning and efficient pricing of electricity services. Based on the 2019-2020 market data published by two US government agencies for the lower 48 states, this paper’s EOC estimates by census region and year are median values of $1.39 to $2.93 per kWh unserved, well below the estimate of $9 per kWh unserved adopted by Texas for optimal reliability planning. The policy implications of adopting our lower EOC estimate are (a) a reduction in an electric grid’s optimal planning reserve to improve the grid’s cost efficiency; and (b) a decline in the grid’s marginal cost-based retail price to encourage welfare-enhancing end-use consumption.

Original language	English
Pages (from-to)	1-5
Number of pages	5
Journal	Energy Research Letters
Volume	5
Issue number	2
DOIs	https://doi.org/10.46557/001c.90927
Publication status	Published - May 2024

Access to Document

10.46557/001c.90927

Cite this

@article{ae3db59ace804115a3e15db41e90f961,

title = "Market-based Estimation of Average Electricity Outage Costs in the United States",

abstract = "Electricity outage cost (EOC) estimates ($ per kWh unserved) are essential input data for optimal reliability planning and efficient pricing of electricity services. Based on the 2019-2020 market data published by two US government agencies for the lower 48 states, this paper{\textquoteright}s EOC estimates by census region and year are median values of $1.39 to $2.93 per kWh unserved, well below the estimate of $9 per kWh unserved adopted by Texas for optimal reliability planning. The policy implications of adopting our lower EOC estimate are (a) a reduction in an electric grid{\textquoteright}s optimal planning reserve to improve the grid{\textquoteright}s cost efficiency; and (b) a decline in the grid{\textquoteright}s marginal cost-based retail price to encourage welfare-enhancing end-use consumption.",

keywords = "Electricity outage costs, Market-based estimation, United States",

author = "Woo, {Chi Keung} and A. Tishler and Cao, {Kang Hua} and Han Qi and Raymond Li and Jay Zarnikau",

note = "Funding Information: This study was partially funded by the Ford Foundation (#134371 and #139746) and the Research Matching Grant Scheme of the Research Grant Council of the HKSAR Government, and supported by Shenzhen Humanities & Social Sciences Key Research Bases. Publisher Copyright: {\textcopyright} 2024, Asia-Pacific Applied Economics Association. All rights reserved.",

year = "2024",

month = may,

doi = "10.46557/001c.90927",

language = "English",

volume = "5",

pages = "1--5",

journal = "Energy Research Letters",

issn = "2652-6433",

number = "2",

}

TY - JOUR

T1 - Market-based Estimation of Average Electricity Outage Costs in the United States

AU - Woo, Chi Keung

AU - Tishler, A.

AU - Cao, Kang Hua

AU - Qi, Han

AU - Li, Raymond

AU - Zarnikau, Jay

N1 - Funding Information: This study was partially funded by the Ford Foundation (#134371 and #139746) and the Research Matching Grant Scheme of the Research Grant Council of the HKSAR Government, and supported by Shenzhen Humanities & Social Sciences Key Research Bases. Publisher Copyright: © 2024, Asia-Pacific Applied Economics Association. All rights reserved.

PY - 2024/5

Y1 - 2024/5

N2 - Electricity outage cost (EOC) estimates ($ per kWh unserved) are essential input data for optimal reliability planning and efficient pricing of electricity services. Based on the 2019-2020 market data published by two US government agencies for the lower 48 states, this paper’s EOC estimates by census region and year are median values of $1.39 to $2.93 per kWh unserved, well below the estimate of $9 per kWh unserved adopted by Texas for optimal reliability planning. The policy implications of adopting our lower EOC estimate are (a) a reduction in an electric grid’s optimal planning reserve to improve the grid’s cost efficiency; and (b) a decline in the grid’s marginal cost-based retail price to encourage welfare-enhancing end-use consumption.

AB - Electricity outage cost (EOC) estimates ($ per kWh unserved) are essential input data for optimal reliability planning and efficient pricing of electricity services. Based on the 2019-2020 market data published by two US government agencies for the lower 48 states, this paper’s EOC estimates by census region and year are median values of $1.39 to $2.93 per kWh unserved, well below the estimate of $9 per kWh unserved adopted by Texas for optimal reliability planning. The policy implications of adopting our lower EOC estimate are (a) a reduction in an electric grid’s optimal planning reserve to improve the grid’s cost efficiency; and (b) a decline in the grid’s marginal cost-based retail price to encourage welfare-enhancing end-use consumption.

KW - Electricity outage costs

KW - Market-based estimation

KW - United States

UR - http://www.scopus.com/inward/record.url?scp=85195553688&partnerID=8YFLogxK

U2 - 10.46557/001c.90927

DO - 10.46557/001c.90927

M3 - Review article

AN - SCOPUS:85195553688

SN - 2652-6433

VL - 5

SP - 1

EP - 5

JO - Energy Research Letters

JF - Energy Research Letters

IS - 2

ER -

Market-based Estimation of Average Electricity Outage Costs in the United States

Abstract

Access to Document

Other files and links

Fingerprint

Cite this