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

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

1 Citation (Scopus)

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

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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",

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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

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JO - Energy Research Letters

JF - Energy Research Letters

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ER -

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

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