The Total Cost of Reliable Electricity Distribution

Clean transition increases the demand for reliable electricity distribution, but while the capacity can be improved through investments, responding to the demand increases costs for the customers. This study presents a methodological improvement to the assessment of the reasonability of pricing, by comprehensively analyzing pricing regulation data to define the total cost of electricity distribution by clustering. A novel systematic view on the volume and distribution of economic steering shows that according to the regulation data in Finland, the total annual cost of distribution for the present level of reliability varies from EUR 490/a in an urban environment to EUR 1220/a per customer in sparsely populated areas. The majority of the total costs of distribution stem from actual utility expenses. The approach and results may be used for implementing TOTEX models for future pricing regulation.