Reliability and rationing cost in a power system

The present paper attempts to analyse the implications of the relationship between reliability and rationing cost involved in a power supply system in the framework of the standard inventory analysis, instead of the conventional marginalist approach of welfare economics. The study is substantiated by fitting a normal distribution to the daily internal maximum demand of the Kerala power system during 1995-96, and also by estimating, based on the techno-economic parameters of different types of power plants, the rationing costs implied in different reliability target criteria. JEL Classification: C44; L94; Q41. Key words: Reliability, rationing cost, maximum demand, normal distribution, power supply.