Putting a Value on Reliability: Iberdrola USA’s Distribution Automation Cost Benefit Analysis with Laney Brown

Traditional reliability investments such as poles and transformers have history and experience to show value; however non-traditional investments, such as Smart Grid need a way to articulate value to key internal and external stakeholders and compete in the allocation of internal funding. There was a need to place both traditional and non-traditional investments on a level playing field to make the best overall decisions for reliability.

Using the US Department of Energy Value of Service Model as a starting place because of its standardized valuation of reliability, Iberdrola developed a tool to further articulate and compare the value of reliability investments. By determining the cost of outages and identifying the time new technologies could save, value of reliability investments can be calculated.

Simplified example:
Outage Cost= number of outage minutes X number of customer (by customer type) X value of the cost of the outage
Reliability investment value= number of outage minutes ‘saved’ based on reliability investments X number of customer (by customer type) X value of the cost of the outage

To showcase Iberdrola’s tool, Brown shares two case studies in this webinar. The first case study: CMP’s Rate Case, focuses on articulating the benefit $30M in distribution automation investments. In this study, the model calculated 15 minutes saved per outage event with distribution automation investments, allowing a specific benefit to articulate to customers.

The second case study focused on prioritization of investments. Following Super Storm Sandy Iberdrola began to develop a Hardening Investment Plan for two companies; however, the recommendations exceeded budget. Using the reliability model, Iberdrola was able to create a value for an outage hour, which supports translation from investment cost to reliability contribution. With this value, all investments both traditional and non-traditional can be prioritized.

Overall, this webinar focuses on the importance of putting a value on reliability. By creating an explicit value, all investment opportunities can be compared, allowing for better decision-making. Iberdrola’s model provides decision-makers with a tool to see the value of reliability investments.