ICE Calculator Case Study: EPB Chattanooga Distribution Automation

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Case Study

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In 2009, the U.S. Department of Energy (DOE) under the American Recovery and Reinvestment Act (ARRA) awarded a grant to the EPB Chattanooga as part of the Smart Grid Investment Grant program. This funding award enabled EPB to expedite its original smart grid implementation schedule from an estimated 10-12 years to 2.5 years.

EPB installed 1,200 automated circuit switches and sensors on 171 circuits, improving reliability across its entire service territory of about 174,000 homes and businesses at a total cost of about $48.4 million. EPB’s initial analysis estimated that this improvement would result in a 40% decrease in total customer outage minutes. Comparison of actual reliability metrics under normal operations from before and after the automation did indeed show a substantial improvement, including reducing SAIDI4 by 45% (from 112 to 61.8 minutes/year) and reducing SAIFI5 by 51% (from 1.42 to 0.69 interruptions/year). This substantial reliability improvement saves customers about $26.8 million annually in the form of avoided customer interruption costs, as estimated using Version 1.0 of the DOE Interruption Cost Estimate (ICE) Calculator, which is a publicly-available online tool for estimating customer interruption costs.  he ICE Calculator has since been updated (Version 2.0) with survey data from more recent studies.

In addition to the avoided customer interruption costs under normal operations, distribution automation can significantly improve reliability and the speed of re-establishing service during severe storms, as demonstrated by a severe weather event in Chattanooga in July 2012. The ICE Calculator was again used to estimate and compare customer outage costs both with and without distribution automation. Customers who experienced automatic power restoration as a result of automation (e.g., outage durations below 5 minutes) would have had to wait an average of 16.8 hours without automation, resulting in an avoided customer interruption cost of $23 million during the severe July 2012 storm. 

EPB’s $48.4 million ($5.6 million annualized) distribution automation investment was quickly offset by the combined benefit of avoided customer outage costs for reliability improvements under normal conditions ($26.8 million annually) and under a severe weather event ($23 million). This investment will continue to yield outage cost savings for EPB customers throughout the expected 20-year lifetime of the investment.  

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