A Government Report Review and Summary

“A Framework and Review of Customer Outage Costs; Integration and Analysis of Electric Utility Outage Cost Surveys”

In 2003 the Office of Electric Transmission and Distribution under the umbrella of the U.S. Department of Energy funded a study to analyze 24 previously taken surveys on the subject of power outage costs. In the course of the study numerous interesting conclusions were made and a model to predict the cost of an outage based on significant variables was developed. This study is free and available on the internet.

The authors take the position early in the paper that the major cost of an outage is not experienced by the utility directly, but by the utility’s customers. This means in other words that customer satisfaction is at risk during an outage. In fact the report refers to the model developed to predict the outage cost as the Customer Damage Function. This speaks volumes regarding the effect of an outage on the end customer.

On page 21 of the report. The first output of the Customer Damage Function is displayed. This model predicts the cost of an outage to a large Commercial-Industrial customer with 375 employees and a 17.5 million kWh annual consumption as a function of time of day and season. Note the strong function of time of day. An outage during a summer day verses a summer morning or night is 5 times higher.
On page 25 of the report, the authors state that based on the data they analyzed that an unplanned outage cost 50% more than a planned outage. Other fundamental variables relating to the customer cost of an outage are:
  1. Time of Day
  2. Day of Week
  3. Season
  4. Type of Enterprise
  5. Duration of outage
  6. Location of Enterprise
  7. Customers dependence on electrical power.

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Again using the same model, but this time varying the type of enterprise, it can be seen that mining and construction enterprises suffer significant damage in an outage.Another very interesting analysis was the cost to Residential Customers. This number comes from surveys asking the customers how much they are willing to pay.The report is a must-read for anyone involved in asset management and its effect on the bottom line and customer satisfaction.