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Unbundling of operation and network development activities in electricity distribution

Unbundling of operation and network development activities in electricity distribution Purpose – Based on literature and an empirical case, the purpose of this paper is to present a framework for decision‐making in utilities where unbundling considerations are taking place. The paper analyses the implications of splitting long‐term network planning activity from the organization responsible for short‐term network operation activities. Design/methodology/approach – The proposed framework includes an analysis of impacts of external forces, set‐up of common targets and performance models, and alignment of responsibilities in the new organization. The empirical results and validation of the proposed framework is performed by an electric utility, where legal unbundling of activities has taken place; the study includes expert interviews and theoretical analysis. Findings – Colliding interests in the new business model can be avoided if economic and technical targets are mainly set by the regulator for both network development and operation activities. Research limitations/implications – The results are based on internal re‐organization; a complementary study on re‐organizing network business activities to an external service provider could give information about the generalizability of the findings. Practical implications – Application of the proposed framework for decision‐making and lessons learned can support electric utilities when planning for unbundling and strategic target‐setting in the unbundled business model. Originality/value – The study presents experiences of re‐organized network business activities in a pioneering market area with a long experience of outsourcing. The detailed analysis of internal re‐organization within one electric utility can facilitate further restructuring phases. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Energy Sector Management Emerald Publishing

Unbundling of operation and network development activities in electricity distribution

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Publisher
Emerald Publishing
Copyright
Copyright © 2009 Emerald Group Publishing Limited. All rights reserved.
ISSN
1750-6220
DOI
10.1108/17506220911005759
Publisher site
See Article on Publisher Site

Abstract

Purpose – Based on literature and an empirical case, the purpose of this paper is to present a framework for decision‐making in utilities where unbundling considerations are taking place. The paper analyses the implications of splitting long‐term network planning activity from the organization responsible for short‐term network operation activities. Design/methodology/approach – The proposed framework includes an analysis of impacts of external forces, set‐up of common targets and performance models, and alignment of responsibilities in the new organization. The empirical results and validation of the proposed framework is performed by an electric utility, where legal unbundling of activities has taken place; the study includes expert interviews and theoretical analysis. Findings – Colliding interests in the new business model can be avoided if economic and technical targets are mainly set by the regulator for both network development and operation activities. Research limitations/implications – The results are based on internal re‐organization; a complementary study on re‐organizing network business activities to an external service provider could give information about the generalizability of the findings. Practical implications – Application of the proposed framework for decision‐making and lessons learned can support electric utilities when planning for unbundling and strategic target‐setting in the unbundled business model. Originality/value – The study presents experiences of re‐organized network business activities in a pioneering market area with a long experience of outsourcing. The detailed analysis of internal re‐organization within one electric utility can facilitate further restructuring phases.

Journal

International Journal of Energy Sector ManagementEmerald Publishing

Published: Nov 20, 2009

Keywords: Electricity industry; Network operating systems; Long‐term planning; Outsourcing; Performance measures

References