Introduction

A power system serves one function only and that is to supply customers, both large and small, with electrical energy as economically and as reliably as possible. Modern society, because of its pattern of social and working habits, has come to expect the supply to be continuously available on demand. This is not physically possible in reality due to random system failures which are generally outside the control of power system engineers. The probability of customers’ being disconnected can be reduced by increased investment during either the planning phase, operating phase or both. Over-investment can lead to excessive operating costs which must be reflected in the tariff structure. Consequently, the economic constraint can become violated although the system may be very reliable. On the other hand, under-investment leads to the opposite situation. It is evident therefore that the economic and reliability constraints can be competitive, and this can lead to difficult managerial decisions at both the planning and operating phases.