Designing a new procedure for reward and penalty scheme in performance-based regulation of electricity distribution companies

This paper introduces a new fuzzy-based design procedure for more efficient application of reward-penalty schemes in distribution sector. To achieve a fair as well as applicable regulation scheme, the fuzzy C-means clustering algorithm is employed to efficiently determine the similarity among distribution companies. As setting procedure of the reward-penalty scheme parameters can significantly affect the income of different companies, a new procedure based on the membership degrees obtained from the fuzzy C-means algorithm is proposed to fairly determine these parameters for each electricity distribution company. Some numerical studies are performed on the Iranian electricity distribution companies.