IEEE Power & Energy Magazine - May/June 2020 - 37

Policy makers are pushing regulators to include
more sophisticated objectives in remuneration
and tariff regimes.

price caps have been limited to relatively small values, lowering costs significantly in comparison with other developed countries. However, as illustrated in Figure 3, lower
costs have an impact on service quality because of tradeoffs
between network performance and expenses. In general,
low-cost networks tend to be less reliable. Understanding
this cost-performance balance is critical in developing countries because higher reliability levels might require funding
increased levels of network investment and, hence, higher
electricity bills.
After nearly 40 years of distribution network rate making in Latin America, the quality of service is becoming
more critical. In addition, policy makers are pushing regulators to include more sophisticated objectives in remuneration and tariff regimes (apart from the historical ones focusing mainly on cost reductions). The goals include
✔✔ quality of service, even beyond reliability and voltage
quality, including resiliency against hazards and customer satisfaction
✔✔ equity and fairness in tariffs and quality

✔✔ innovation and network modernization, evolving to-

ward the smart grid
✔✔ decarbonization and renewables.
These objectives were initially de-emphasized by regulators to
prioritize electrification, coverage, and access at a reasonable
cost (notice that access is still a problem in countries such as
Bolivia, Nicaragua, and Honduras, as indicated in Figure 2).
Remuneration should evolve, in our opinion, to enable distribution networks to innovate and become more active, such
as by operating with smart grid technologies. This would
improve the optimization of CAPEX and OPEX in network
companies, driving new operational measures and nonwire
solutions to deliver reliability and other services more effectively. With the increasing penetration of DERs, price signals will become more relevant for them to be adequately
deployed and operated, potentially providing services to
distribution and transmission networks. Increased levels of
coordination will be needed at the interface between transmission and distribution systems. It is envisioned that network operators will be able to trade various security and

Electricity Bill (Distribution Network Cost) (US$/kWh)

0.09
LU PT
DE
SE

0.08
0.07
0.06

NL
UK
DK AT

ES

0.05

IE

FR

CZ

SI

EE

HU

0.04
0.03

IT

GR

LT

HR
LV

CL
RO

MT
0.02
0.01
0

0

100

200
300
400
SAIDI Distribution Network (min)

500

600

AT
CL
CZ
DE
DK
EE
ES
FR
GR
HR
HU
IE
IT
LT
LU
LV
MT
NL
PT
RO
SE
SI
UK

Austria
Chile
Czech Republic
Germany
Denmark
Estonia
Spain
France
Greece
Croatia
Hungary
Ireland
Italy
Lithuania
Luxembourg
Latvia
Malta
The Netherlands
Portugal
Romania
Sweden
Slovenia
United Kingdom

figure 3. Distribution network costs in capital cities versus SAIDI in all distribution networks. Due to the lower voltage
levels in Chile's distribution networks (up to 23 kV), we have considered part of the subtransmission systems (which cover
up to 110 kV) as distribution networks to properly compare values among countries.
may/june 2020	

ieee power & energy magazine 	

37



IEEE Power & Energy Magazine - May/June 2020

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - May/June 2020

Contents
IEEE Power & Energy Magazine - May/June 2020 - Cover1
IEEE Power & Energy Magazine - May/June 2020 - Cover2
IEEE Power & Energy Magazine - May/June 2020 - Contents
IEEE Power & Energy Magazine - May/June 2020 - 2
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IEEE Power & Energy Magazine - May/June 2020 - Cover3
IEEE Power & Energy Magazine - May/June 2020 - Cover4
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