In this paper we first review criteria and methods for reliability assessment and provision underlying current industry practices. The basic conclusion is that these approaches do not directly provide quality of service requested by the regulators on behalf of the consumers. Reasons for this situation are complex, and are results of both regulatory and technical limitations. In this paper we use simple examples to illustrate rationale for this claim and its implications. A particular stress is on the criteria (standards) and tools used by a system operator. We illustrate on a small power system example what one can and cannot expect from specific approaches.
These startling findings are critical as we attempt to assess and provide reliable service under competition primarily because the current practices for ensuring reliability are often implied as the technical basis while encouraging competitive power supply.
In the later part of this paper we suggest possible changes in criteria and methods fundamental for avoiding the broken links between the provider(s) of reliable service and its users. We suggest that this is doable under any industry structure currently under consideration. However, the regulatory incentives for reliable service differ drastically depending on the industry structure. This indicates that a new paradigm appears to be necessary, in which reliability responsibilities are clearly decomposed into reliability provision by suppliers and wire companies, with understanding of verifiable reliability- related products seen by the customer. We furthermore conjecture that this framework can only be implemented in a regulatory setup which nurtures performance incentives in one form or the other. We again illustrate this paradigm on the same small example.