The importance of incorporating reliability of supply criteria in a regulatory system of electricity distribution: An empirical analysis for Austria |
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Authors: | Johannes Reichl Andrea Kollmann Robert Tichler Friedrich Schneider |
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Affiliation: | 1. Energy Institute at the Johannes Kepler University Linz, Altenbergerstr. 69, 4040 Linz, Austria;2. Department of Economics, Johannes Kepler Universität Linz, Altenbergerstr. 69, 4040 Linz, Austria |
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Abstract: | Grid tariffs are the main source of income for distribution system operators (DSOs). Reductions of tariffs increase the cost pressure on DSOs; assuming they work efficiently, tariff reductions potentially lead to a decrease of the electricity system's quality if no reliability of supply criteria are incorporated in the regulatory system. Our statistical analysis shows that the correlation between grid tariffs and electricity supply interruptions in a regulatory regime neglecting this incorporation is significant and that furthermore decreasing tariffs harm the reliability of supply even in the short run. Our econometric analysis of the influence of tariffs on reliability of supply shows a significant correlation between the grid tariffs and the duration of power outages in the Austrian electricity grid; an annual average interruption duration per installed capacity of a specific grid increases ceteris paribus by 1.36 min if the grid tariff of this specific grid is decreased in the previous year by 1€/MWh. |
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Keywords: | Regulation Grid tariffs Security of supply |
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