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The reliability trade off: Is 100% worth it?

 

By Sean Mc Goldrick
Executive Manager, Asset Management

 

At Western Power, we aim to provide you with a safe, reliable and efficient power supply. These aren’t just hollow corporate key messages – we rely on the same power supply as you! Having a reliable power supply is just as important to us as it is to you because we live in your local community, whether that be in Geraldton, Perth, Southern Cross, Kalgoorlie, Margaret River, Albany, Katanning or Jerramungup. 

Pause for a minute and ask yourself, in percentage terms, how reliable is Western Power’s network? How often are your lights on? It’s probably only until they are off that you notice our service of delivering electricity to your home or business. 

On AVERAGE, the majority of customers are only without power for about three hours each year. This is around 99.93% across all of our million-plus customers.

Ask yourself another question. What should the reliability of Western Power’s network be? 100%? It could be, but attempting to deliver that level of reliability would waste a huge amount of money for the broader community. Getting that extra three hours of power outages back would mean we overcapitalise on the system. It’d be like you having an extra car in the garage just to ensure you could drive when your car is with the mechanic.

We can continue to pour money into reliability but we get less and less improvement for each dollar spent, yet every extra dollar we spend puts the same upwards pressure on electricity prices. Economists call this the law of diminishing returns.

So if the answer isn’t 100%, how are reliability standards set? Reliability service standards are set by our independent regulator, the Economic Regulation Authority (ERA).  The ERA measures us on 17 service standards, but as a consumer the two measures that matter to you are nicknamed SAIDI and SAIFI. 

SAIDI (or the System Average Interruption Duration Index) measures the total number of minutes, on average, you are without power in a year. SAIFI (or the System Average Interruption Frequency Index) measures the average number of times your electricity is interrupted per year. 

There are two things you should know about SAIDI and SAIFI. Firstly, they are measured on an average customer basis, not an individual basis. Secondly, reliability standards aren’t the same across the network.

Yes, you read that correctly, there are different reliability standards for customers based on the characteristics of the power line to which they are connected. There are four power cable categories: CBD with 5,000 customers, Urban with 750,000 customers, Rural Short with 270,000 customers and Rural Long with 95,000 customers. There are four categories of service because the regulatory framework that covers reliability standards recognises there are practical engineering challenges with supplying power to different parts of the State. For example, a customer at the end of a single long line in a small regional community is more prone to power outages caused by environmental factors, such as trees blowing onto wires or lightning strikes, than a customer connected to the meshed network in a metropolitan area.

The two tables below outline Western Power’s actual reliability performance versus the benchmark standard in 2015/16.

 

SAIFI 2015/2016

Average interruptions to power supply per year (lower is better)

 

Benchmark

Actual

 

CBD

0.26

0.10

 

Urban

2.12

0.91

 

Rural Short

2.61

1.75

 

Rural Long

4.51

3.99

 

 

SAIDI 2015/2016

Average minutes per year without power (lower is better)

 

Benchmark

Actual

 

CBD

39.9

22.6

 

Urban

183.0

91.3

 

Rural Short

227.8

168.4

 

Rural Long

724.8

582.6

 

 

Some of you might ask: “my reliability is worse than the standard, so what are you doing about it?” We already conduct ongoing maintenance and upgrade programs to get the most out of your local network and will continue to do so, but we have to look at the average of all customers, not just individuals, to ensure it delivers the best service possible at the lowest cost.

But that’s a good thing, especially for your back pocket. One of reasons reliability is measured on an average basis is to discourage over-investment or ‘gold plating’ of the network in individual pockets. Each year parts of the network can experience small deviations from the average. Up to 70% of network faults causing the deviation from the standard are transient environmental factors such as the weather or vegetation and animals coming into contact with the network.

We could build more network to improve the reliability in these pockets each year where the cost per minute of improved reliability could be upwards of $14,000. That kind of investment doesn’t make sense to most people and it probably doesn’t make sense to you either. Worse still, you would effectively be locked in to paying off this additional investment for the next 40 years, to fix what could have simply been a bad season. Western Power is incentivised to maintain the average level of reliability because that’s where, as a consumer, you are getting the best value for money in terms of the trade-off between price and reliability performance.

But if we are all paying the same price, shouldn’t we be getting the same level of service? There are also trade-offs in how you price network services.

Everyone can pay the same price but receive different levels of service, or alternatively everyone can receive the same level of service but pay different prices depending on where you live. You can never have both at the same time.

In reality the cost of purchasing, generating, distributing and retailing electricity to metro customers is much lower than the costs of providing the same service to regional customers. Under the current rules, mum and dad customers pay the same price regardless of where they live. This also means metro customers are subsidising the costs of supplying power to customers living in regional areas.

Western Power is exploring new ways to provide customers with a more reliable service. Part of that is advocating for changes to the existing rules so we can more easily invest in emerging technology solutions such as batteries to improve reliability in parts of the network which are vulnerable to power outages. Hopefully, we see those rules changed soon, but in the meantime, we’re running many trials to make sure the technology can work as well as possible, in the interests of our future – and current – customers!

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