| This dissertation deals with the subject of power outages and the appraisal of management strategies for addressing uncertainties in power supply. The dissertation takes the perspective of the customer rather than that of a utility. Case studies of three manufacturing enterprises in Nepal are used. Different methods of evaluating the power outage costs are discussed and the contribution method is selected as the suitable one since it captures the true opportunity cost. The data on power outages in Nepal for the past five years are analyzed. Two types of supply are studied---one, supply from a government owned substation and the other, supply from a captive substation. Numerical values of power outages are extracted for use in the analysis. The power outage are classified into two categories: (i) power failures, which take place without notice and (ii) load shedding, which is undertaken with prior announcement. To measure the cost of power outages, first, the contribution values are computed. Then, relationships between the duration of the power outage and the consequent production time lost are derived. After that, the losses suffered for each type of power outage are calculated. Two mitigating strategies are considered: (a) building a captive substation and, (b) installing captive generators. The strategy of building a substation is a unique option emerging from the analysis in the dissertation. After identifying and computing the costs and the benefits, cash flow statements are prepared. Net present values and internal rates of return are calculated. Different options are found feasible for different enterprises. Sensitive analyses are performed and several kinds of break-even values for power outage levels are calculated which justify or continue to justify the investments. Policy implications of the analysis in the dissertation are explained. Opportunity cost of power supply for outage prevention, opportunity cost of uninterrupted power supply and differential cost of self-generation are calculated. Various aspects of the captive substation are discussed. Privatization of the substation as another option is explained and the benefits resulting from it are described. |
