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Long-Term Versus Short-Term Costs of Electricity Supply Interruptions: A Cautionary Note

Increasing attention has been given in recent years to the valuation of reliability in the supply of electricity. It is peculiar in the use of the terms that the value of reliability is equivalent to the cost of unreliability. In attempting to identify and measure this cost, researchers have drawn a distinction between different types of cost, particularly short- and long-term costs. In this paper, we examine this distinction to clarify what may be a source of confusion.

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Energy Specializations: Electricity – Policy and Regulation

JEL Codes: L95: Gas Utilities; Pipelines; Water Utilities, L94: Electric Utilities, Q41: Energy: Demand and Supply; Prices, Q42: Alternative Energy Sources, D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity, D11: Consumer Economics: Theory

Keywords: Electricity supply interruptions, Reliability, Outage costs, Electric utilities

DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No2-13

Published in Volume 7, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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