Managing power supply interruptions: a bottom-up spatial (frontier) model with an application to a Spanish electricity network

Pablo Argüelles and Luis Orea
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Pablo Argüelles: EDP España and University of Oviedo

Empirical Economics, 2021, vol. 60, issue 6, No 8, 2867-2896

Abstract: Abstract In December 2013, a new electricity law was approved in Spain as part of an electricity market reform including a new remuneration scheme for distribution companies. This remuneration scheme was updated in December 2019, and the new regulatory framework introduced a series of relevant modifications that aim to encourage regulated firms to reduce their power supply interruptions using a benchmarking approach. While some managerial decisions can prevent electricity power supply interruptions, other managerial decisions are more oriented toward mitigating the consequences of these interruptions. This paper examines the second type of decision using a unique dataset referring to the power supply interruptions of a Spanish distribution company network between 2013 and 2019. We focus our analysis on the effect which grid automatization has on restoration times, the relative efficiency of the maintenance staff, and the importance of its location. We estimate a bottom-up spatial model and a stochastic frontier model to examine both external and internal power supply interruptions at municipal level. While our frontier model is standard, our spatial model differs from a conventional one in that it is developed from scratch using the information of each individual power supply interruption.

Keywords: Electricity distribution; Power supply interruptions; Spatial econometrics; Frontier models (search for similar items in EconPapers)
Date: 2021
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Working Paper: Managing Power Supply Interruptions: A Bottom-Up Spatial (Frontier) Model with an Application to a Spanish Electricity Network (2020)
Working Paper: Managing power supply interruptions: a bottom-up spatial (frontier) model with an application to a Spanish electricity network (2020)
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DOI: 10.1007/s00181-020-01968-3

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