For the first time, this paper proposes a novel distributionnetwork pricing model to reflect two key reliability cost drivers:i) the nodal unreliability tolerance mandated by securitystandards, which is linked to the customer size at the node and ii)the stochastic nature of component reliability that reflectsdiffering failure rates of network components. By combining thetwo factors, the new reliability based pricing model is able torecognize the impact on network investment from networkcomponents’ reliability in addition to their distance and thedegree of utilization. The concept is firstly demonstrated on threesmall networks: a single circuit system, a parallel-circuit systemand a meshed system. The applicability of the new pricingapproach to practical systems is then illustrated on a practicaldistribution network in the UK system.
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