Formal requirements for utility and value functions for security‐related decisions

Abstract

One of the important decision problems for a power system operator is to choose the appropriate operation point when possible contingencies must be considered. The operator may decide to do nothing or to take some actions that change the operating point and decrease the negative impact (cost) of some or all the contingencies. The purpose of this paper is to investigate the applicability of utility and value functions to this decision problem, since the large range of consequences raises some doubts about the fulfillment of the theoretical conditions imposed by Decision Theory. Although not essential to this discussion, some alternatives to prescriptive methodologies are presented and discussed, mostly regarding the definition of risk attributes and other determinist equivalents, suitable for multicriteria analysis.