Recent Findings from Carnegie Mellon University Advance Knowledge in Risk Management (Assessing the Cost of Large-Scale Power Outages to Residential…

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Recent Findings from Carnegie Mellon University Advance Knowledge in Risk Management (Assessing the Cost of Large-Scale Power Outages to Residential Customers)

By a News Reporter-Staff News Editor at Insurance Weekly News -- Current study results on Risk Management have been published. According to news originating from Pittsburgh, Pennsylvania, by VerticalNews correspondents, research stated, "Residents in developed economies depend heavily on electric services. While distributed resources and a variety of new smart technologies can increase the reliability of that service, adopting them involves costs, necessitating tradeoffs between cost and reliability."

Funders for this research include National Science Foundation, Carnegie Mellon University.

Our news journalists obtained a quote from the research from Carnegie Mellon University, "An important input to making such tradeoffs is an estimate of the value customers place on reliable electric services. We develop an elicitation framework that helps individuals think systematically about the value they attach to reliable electric service. Our approach employs a detailed and realistic blackout scenario, full or partial (20 A) backup service, questions about willingness to pay (WTP) using a multiple bounded discrete choice method, information regarding inconveniences and economic losses, and checks for bias and consistency. We applied this method to a convenience sample of residents in Allegheny County, Pennsylvania, finding that respondents valued a kWh for backup services they assessed to be high priority more than services that were seen as low priority ($0.75/kWh vs. $0.51/kWh). As more information about the consequences of a blackout was provided, this difference increased ($1.2/kWh vs. $0.35/kWh), and respondents' uncertainty about the backup services decreased (Full: $11 to $9.0, Partial: $13 to $11). There was no evidence that the respondents were anchored by their previous WTP statements, but they demonstrated only weak scope sensitivity."

According to the news editors, the research concluded: "In sum, the consumer surplus associated with providing a partial electric backup service during a blackout may justify the costs of such service, but measurement of that surplus depends on the public having accurate information about blackouts and their consequences."

For more information on this research see: Assessing the Cost of Large-Scale Power Outages to Residential Customers. Risk Analysis, 2017;():. (Wiley-Blackwell - www.wiley.com/; Risk Analysis - onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6924)

The news correspondents report that additional information may be obtained from S. Baik, Dept. of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA, United States. Additional authors for this research include A.L. Davis and M.G Morgan.

Keywords for this news article include: Pittsburgh, Pennsylvania, United States, Risk Management, North and Central America.