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

Chi Keung Woo, A. Tishler, Kang Hua Cao, Han Qi, Raymond Li and Jay Zarnikau ()

Energy RESEARCH LETTERS, 2024, vol. 5, issue 2, 1-5

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.

Keywords: Electricity outage costs; Market-based estimation; United States (search for similar items in EconPapers)
JEL-codes: D12 Q41 Q48 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ayb:jrnerl:103

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