On deregulation, unit duty cycle and production costs
This paper highlights the importance of explicitly modeling operating considerations in the context of electric utility deregulation. Expected energy production costs are of interest to generation providers, regulatory authorities and consumers to assess the affects and advisability of deregulation. Accurate determination of plant output levels, duration of plant usage and hence the production cost, depend on knowledge of network characteristics, expected future demand and mix of generation in the system and the prevailing operating policies. Currently, generation owners assume fixed Forced Outage Rate (FOR) values, regardless of unit duty cycle, when performing studies. These FOR values may be based on industry averages for new plants or taken from past operation experience in the case of existing plants. Under deregulation, operating policies may undergo drastic change and unit duty cycles may changes accordingly. In such a situation, the continued usage of FORs based on a former, and now changed, unit duty cycle could result in erroneous energy production cost computations. Proper and accurate analysis of production costs requires that issues such as changes in generating unit duty cycles, and consequently in FORs be explicity considered and modeled. A study was carried out on the Electric Reliability Council of Texas (ERCOT) network to evaluate this concept. Expected production costs were computed using unit FORs computed both from pre- and post-deregulation unit duty cycles. Results show that significant errors in production costs may result if appropriate unit duty cycles and unit FORs are not used.
deregulation duty cycle production cost forced outage rate transmission constraint