Research on Decision-making Method of Distribution Network
Project Operation and Maintenance Investment Considering
Regional Rigid Needs and Benefits
Yongjie Li, Hongqi Yang, Xinju Guo, Xiaojuan Xi and Xin Niu
State Grid Henan Electric Power Company Economic and Technical Research Institute, Henan, Zhengzhou, China
Keywords: Distribution Network Engineering, Operation and Maintenance Investment, Decision Optimization.
Abstract: With the continuous advancement of the power system reform, strengthening the lean management of
operation and maintenance investment has become one of the key points to ensure the sustainable operation
and development of power grid enterprises. Therefore, combined with the current situation of power grid
operation and maintenance investment distribution management, this paper constructs the input distribution
model considering the rigid needs and economic benefits of operation and maintenance input, and verifies
the effectiveness of the model in combination with empirical analysis. The distribution model can further
promote the rationality of the operation and maintenance investment allocation of power grid enterprises
and the scientific decision-making, and improve the lean management level of enterprises.
1 INTRODUCTION
With the continuous advancement of power market-
oriented reform, it is very important for power grid
enterprises to strengthen the lean management of
operation and maintenance cost in order to obtain the
ability of sustainable development in the open
market.
At present, relevant scholars have done a lot of
research on how to optimize the lean management of
operation and maintenance investment. For example,
literature (Guo, Deng, Wei, Pan, 2020) puts forward
the method of improving the lean management of
enterprise asset operation and maintenance cost from
the budget management level of power grid
equipment operation and maintenance. Literature
(Wang, 2020) focuses on innovating the strategy of
distribution network operation and maintenance
management, and analyzes the specific methods of
distribution maintenance cost management, so as to
improve the operation efficiency of power grid.
Literature (Yang, 2021) attempts to establish an
organic relationship between the cost investment of
key production equipment and the contribution of
power grid resources, so as to provide decision-
making information for the company's investment
strategy, so as to maximize the comprehensive
benefits of power grid resources under reasonable
investment. literature (Yin, 2021) takes X power
supply company as the research object, based on the
idea of multi-dimensional lean management system,
sorts out and analyzes the existing ideas and
experience of operation and maintenance
management cost improvement, and develops the
multi-dimensional lean management framework
design of X power supply company's operation and
maintenance cost, and integrates X power supply The
company is divided into five major operation centers:
maintenance and operation, operation, marketing,
operation support, and enterprise management.
Through the collection and allocation of operation
and maintenance costs, it can meet the needs of
accurate accounting of operation and maintenance
costs, and deeply mine data value to realize
maintenance and operation. The multi-dimensional
lean management of maintenance operations,
marketing operations, and other operating expenses
verifies the effectiveness of the proposed multi-
dimensional lean management framework design,
and promotes X Power Supply Company to gradually
realize the multi-dimensional lean management
system reform of operation and maintenance costs.
Literature (Yu, 2021) puts forward relevant
suggestions on equipment asset operation and
Li, Y., Yang, H., Guo, X., Xi, X. and Niu, X.
Research on Decision-making Method of Distribution Network Project Operation and Maintenance Investment Considering Regional Rigid Needs and Benefits.
DOI: 10.5220/0011360100003440
In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 961-966
ISBN: 978-989-758-593-7
Copyright
c
 2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
961

maintenance investment management from the
perspective of comprehensive performance and risk
management of distribution network equipment.
Aiming at improving the operation efficiency of the
company's power grid assets.
To sum up, at present, relevant scholars consider
how to improve the lean management of operation
and maintenance investment from the aspects of
benefit evaluation, activity-based cost management
and financial management, while the research on the
allocation of operation and maintenance cost
investment of provincial and municipal power grid
enterprises is relatively weak.
2 ANALYSIS OF CURRENT
SITUATION OF DISTRIBUTION
NETWORK OPERATION AND
MAINTENANCE INVESTMENT
2.1 Status Quo of Operation and
Maintenance Investment
Management of Distribution
Network
The investment in distribution network operation and
maintenance is an important part of the economic
activities of power grid enterprises, and it is an
important and effective means for enterprises to
ensure the safe operation of the distribution network
and improve the output efficiency of the power grid.
Distribution network operation and maintenance
investment is also an important measure for power
grid companies to continuously optimize physical
asset management. Therefore, for the increasing
number of power grid operation and maintenance
investment projects, how to reasonably determine the
operation and maintenance investment strategy,
reduce the operation risks of various power grids, and
maximize the benefits of operation and maintenance
funds It is of great significance to realize the
sustainable development of power grid enterprises.
However, in reality, the cost budget management
of power grid enterprises for distribution network
operation and maintenance investment lacks certain
scientificity. In actual work, the power grid enterprise
distribution network operation and maintenance
investment is mainly based on the principle of the
distribution system, that is, from the province to the
local level. However, this task distribution system
has certain drawbacks in work management: due to
the lack of corresponding overall management, when
the superior assigns the task of distribution network
operation and maintenance investment, due to the
lack of overall overall planning, the task distribution
is uneven, and the task is not fully considered. The
actual operation and demand of equipment in various
prefectures and cities, so that there is often a
phenomenon of inconsistent policy implementation
in work, resulting in serious regional differences in
distribution network operation and maintenance
investment.
2.2 Distribution Network Operation
and Maintenance Investment
Management Problems
Combined with the analysis of the current situation
of the company's operation and maintenance
investment, the current operation and maintenance
investment management still has the following
problems. (1) Under the new situation, the company
is facing greater pressure on investment in operation
and maintenance With the continuous deepening of
the new round of power system reform, especially
the change in the pricing model of transmission and
distribution prices, the liberalization of the electricity
sales side and the introduction of competition, the
liberalization of incremental power distribution
business investment, and the approval of the
company's allowable income on the basis of effective
assets. The investment in asset operation and
maintenance has a profound impact. After the
electricity reform, the permitted cost of power grid
enterprises consists of depreciation and operation and
maintenance costs. The identification of effective
assets includes two parts: stock and increment.
Specifically, the constraints of electricity reform on
the stock and new costs are mainly reflected in the
following two aspects: First, the stock cost is
determined by the cost supervision and review, and
the key point of the cost supervision and review is
the “unreasonable” cost of materials and repair costs.
factor" is eliminated. Second, in the incremental cost,
the material cost is determined at 1% of the original
value of the newly added fixed assets in the current
year, and the repair cost is determined at 1.5% of the
original value of the newly added fixed assets in the
current year. The incremental cost is subject to rate
constraints. From 2014 to 2016, the company's
operation and maintenance costs accounted for
2.97% of the original value of fixed assets on
average, which exceeded the approved standard of
2.5% for incremental costs by 18.8%. (2) To meet the
needs of policy development, deepen the
implementation of lean management of operation and
BDEDM 2022 - The International Conference on Big Data Economy and Digital Management
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maintenance investment At present, the pressure on
control of operation and maintenance costs of power
grid enterprises is prominent. Strengthen the lean
management of operation and maintenance costs.
The first is to pay attention to process control and
strengthen the compliance and rationality review of
operation and maintenance investment, so as to adapt
to the trend of gradual refinement of cost supervision
and review in the context of electricity reform. The
second is to strengthen the basic ledger management
of operation and maintenance investment, enrich and
improve the basic database of operation and
maintenance investment big data, and support the
research, formulation and implementation of
operation and maintenance cost investment strategy.
Thirdly, by collecting relevant data and adopting
standard sorting, data mining, model construction
and other means, carry out analysis and diagnosis of
the current situation of the province's power grid
maintenance and operation cost, and establish a
standard cost based on asset life cycle management.
The fourth is to form a lean supervision and review
strategy for power grid maintenance and operation
and maintenance costs based on historical cost and
impact analysis, further optimize the level and
structure of maintenance and operation costs, and
achieve continuous cost reduction. (3) At this stage,
the company's operation and maintenance cost
allocation method needs to be further improved In
actual work, the scale of operation and maintenance
investment of power grid enterprises is mainly based
on the principle of distribution system, that is,
distribution from provinces and cities to local levels.
However, this task distribution system has certain
drawbacks in work management: due to the lack of
corresponding overall management, when the
superiors assign tasks, due to the lack of overall
overall planning, the task distribution is uneven, and
the actual equipment of each prefecture and city is
not fully considered. operation and demand. As a
result, inconsistent policy implementation often
occurs in work, resulting in serious regional
differences in technical renovation and overhaul.
3 CONSTRUCTION OF
DISTRIBUTION NETWORK
OPERATION AND
MAINTENANCE INVESTMENT
ALLOCATION MODEL
3.1 Concept of Classified Investment in
Distribution Network Operation
and Maintenance
The relevant concepts involved in the distribution
network operation and maintenance investment
allocation decision model are defined as follows：
Total investment in distribution network
operation and maintenance
A
I
: refers to the total
investment in distribution network operation and
maintenance that can be used for regional distribution
by provincial and municipal power grid enterprises in
that year.
Rigid operation and maintenance investment
i
G
I :
refers to the basic operation and maintenance
investment required to meet the normal operation of
the existing distribution network assets in region
i .
Emergency operation and maintenance
investment
i
J
I : refers to the operation and
maintenance investment reserved for region
i by
power grid enterprises to meet the emergency needs
of distribution network.
Flexible operation and maintenance investment
i
R
I : refers to the remaining operation and
maintenance investment funds available for
distribution after meeting the rigid investment and
emergency investment in all regions. The calculation
formula of flexible operation and maintenance
investment is as follows:
i
J
i
GA
i
R
IIII −−=
(1)
3.2 Basic Idea of Distribution Network
Operation and Maintenance
Investment Allocation Decision
Method
Distribution network operation and maintenance
investment allocation decision is based on the
analysis and research of existing methods, find the
problems existing in existing methods, establish a
reasonable allocation decision model, provide a
scientific basis for the distribution network operation
Research on Decision-making Method of Distribution Network Project Operation and Maintenance Investment Considering Regional Rigid
Needs and Benefits
963

and maintenance investment allocation decision-
making in various regions, improve the utilization of
resources, and improve the economic and social
benefits of operation and maintenance investment.
The distribution decision of operation and
maintenance investment of distribution network in
each region should not only consider the current
situation of regional power grid and load
development demand, but also consider the economic
benefits of operation and maintenance investment.
Under the condition that the total operation and
maintenance investment can be allocated in the
whole planning area, the decision-making idea of
distribution network operation and maintenance
investment allocation in each region is as follows:
1)According to the existing scale of distribution
network, the rigid operation and maintenance
investment in each region is estimated by the
simplified model.
2)Under certain conditions of electricity sales,
electricity price and target rate of return, the internal
rate of return method is used to inverse calculate the
economic operation and maintenance investment of
distribution network in each region according to the
predicted electricity. Economic operation and
maintenance investment can reflect the economic
rationality of operation and maintenance investment
under certain conditions.
3)According to the rigid operation and
maintenance investment, economic operation and
maintenance investment and planned operation and
maintenance investment in each region, determine
the upper and lower limits of the distribution range of
operation and maintenance investment in each
region, and give a reasonable operation and
maintenance investment range.
4)Based on the rigid operation and maintenance
investment, economic operation and maintenance
investment, operation and maintenance investment
distribution interval and operation and maintenance
investment strategy, four practical distribution
methods and models involving flexible total
operation and maintenance investment (respectively
according to the equal rate of return method,
according to the rigid demand of distribution
network, according to the relevant electricity
distribution method and comprehensive distribution)
are adopted to distribute the operation and
maintenance investment in each region, Get the final
operation and maintenance investment allocation
scheme.
3.3 Decision Model Construction
When the total distributable capital is less than the
sum of rigid investment in each district, it indicates
that the total distributable investment of provincial
and municipal power supply companies is relatively
limited and can not meet the basic operation and
maintenance investment demand of distribution
network in theory; When the total distributable
investment is greater than the sum of rigid operation
and maintenance investment in each region, it shows
that the total distributable investment of provincial
and municipal power supply companies is sufficient.
Under the condition of meeting the basic operation
and maintenance investment demand of distribution
network in theory, there is still remaining investment
to improve the distribution network. In these two
cases, the operation and maintenance investment
allocation decision can be made according to the
following schemes:
If the total allocable investment in the whole
planning area is less than the sum of rigid O & M
investment in each region, the investment allocated
by each region shall be allocated according to its
rigid O & M investment proportion, and the
calculation formula of O & M investment allocation
i
RE
I in region i is:
R
i
R
A
i
RE
I
I
II *=
(2)
If the total allocable capital of the whole region is
greater than the sum of the rigid operation and
maintenance investment of each region, each region
still has some flexible operation and maintenance
investment space on the premise of meeting its rigid
operation and maintenance investment. The
calculation formula of the total flexible operation and
maintenance investment of the whole region can be
expressed as:

=
−=
m
i
i
RAF
III
1
(3)
The amount of flexible investment allocated by
each region will not produce direct benefits, but will
help to improve its distribution network and improve
its technical and economic indicators. In this case,
the operation and maintenance investment can be
allocated among regions according to the following
four methods:
1) Distribution according to rigid demand of
distribution network
The rigid operation and maintenance investment
reflects the basic operation and maintenance needs of
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964

the distribution network in each region. If the flexible
total operation and maintenance investment is
distributed to each region according to the proportion
of the rigid operation and maintenance investment in
the total rigid operation and maintenance investment,
the distribution result will contribute to the
coordinated development of the distribution network
on the basis of meeting the rigid demand. If the
flexible operation and maintenance investment
allocated by each region is allocated according to the
proportion of its rigid operation and maintenance
investment in the total rigid operation and
maintenance investment, the allocated operation and
maintenance investment of region
i can be obtained
from the following formula.

=
=
m
j
j
R
i
R
F
i
F
I
I
II
1
1
*
(4)
i
F
i
R
i
RE
III
11
+=
(5)
Where:
i
FI
I is the flexible operation and
maintenance investment in region
i under the first
distribution method; It is the allocated operation and
maintenance investment of the second region under
the first allocation method.
2)Distribution according to equal rate of return
The economic operation and maintenance
investment reflects the economic rationality of the
operation and maintenance investment of the
distribution network in each region. If the
distributable total operation and maintenance
investment is distributed to each region according to
the same economic benefits, the distribution result is
conducive to the income balance of the distribution
network in each region.
If the total allocable operation and maintenance
investment is distributed according to the equal rate
of return method, the allocated operation and
maintenance investment in region
i can be obtained
by the following formula.
m
E
m
RE
E
RE
E
RE
I
I
I
I
I
I
2
2
2
2
1
1
2
... ===
(6)
A
m
RERERE
IIII =+++
2
2
2
1
2
...
(7)
3) Distribution according to relevant electricity
If the flexible operation and maintenance
investment allocated by each region is allocated
according to the proportion of its power to the total
power, the allocated operation and maintenance
investment in region B can be obtained by the
following formula:

=
+
+
=
m
t
i
N
ii
N
F
i
E
EfE
EfE
II
1
t
3
)*(
*
*
(8)
i
E
i
R
i
RE
III
33
+=
(9)
4) Weighted comprehensive distribution
Based on the first three distribution schemes, the
expert opinion method is used to make the
distribution network operation and maintenance
investment distribution decision. The distribution
operation and maintenance investment in region I can
be expressed as:
)()*()(
33
1
211
3322114
i
E
i
R
i
E
m
j
i
E
A
i
F
i
R
i
RE
i
RE
i
RE
i
RE
III
I
I
II
IIII
++++=
++=

=
εεε
εεε
(10)
Where:
)10,10,101(,,
321321321
≤≤≤≤≤≤=++
ε
ε
ε
ε
ε
ε
ε
ε
ε
），
are the corresponding distribution weights of the
three methods, which are given by experts according
to the actual situation of the region. The factors
affecting the weight are mainly the coordinated
development goal of regional distribution network,
the goal of input benefit and the goal of power sales
coordination. If a goal has a high degree of attention,
the greater the value of the corresponding weight.
4 EMPIRICAL ANALYSIS
4.1 Basic Data
This paper takes 15 cities of HN provincial power
grid enterprises as the research object, analyzes the
factors related to their distribution network operation
and maintenance investment, and uses the
distribution network operation and maintenance
investment allocation decision algorithm proposed in
this paper to verify the effectiveness of the model.
The basic data of operation and maintenance
investment of HN provincial power grid enterprises
in 2019 are shown in the table below:
Table 1: Basic data table.
Area Rigid input
Economic
investment
Actual input
A 1.07 1.28 1.70
B 3.13 4.65 3.29
C 4.15 5 3.65
D 1.74 4.69 1.70
E 3.50 2.02 3.40
F 6.22 13.21 8.45
Research on Decision-making Method of Distribution Network Project Operation and Maintenance Investment Considering Regional Rigid
Needs and Benefits
965

G 8.22 24.52 2.60
H 1.85 2.07 2.60
I 3.12 3.98 3.24
J 0.79 1.73 0.78
K
3.37 1.87 3.38
L 5.37 20.44 4.48
M 3.03 8.17 2.62
N 4.01 9.38 3.54
O 3.72 6.09 6.67
amount
to
53.29 109.10 56.87
4.2 Allocation Plan
Combined with the income distribution calculation
model proposed in this paper, the calculation results
of operation and maintenance input allocation under
different schemes are shown in the following table:
Table 2: Distribution results.
Area
Assign
by
economy
Assignm
ent by
rigid
requirem
ents
Distribut
ed by
electricit
y
Compr
ehensi
ve
allocati
on
A 1.07 1.27 1.12 1.15
B 3.13 3.57 3.32 3.34
C 4.15 4.73 4.36 4.41
D 1.85 1.99 1.94 1.93
E 2.02 2.02 2.02 2.02
F 6.22 7.10 6.87 6.70
G 9.69 9.38 9.26 9.44
H 1.85 2.07 1.93 1.95
I 3.12 3.56 3.29 3.33
J 0.79 0.91 0.87 0.86
K 1.87 1.87 1.87 1.87
L 10.15 6.13 6.24 7.51
M 3.23 3.46 3.37 3.35
N 4.01 4.58 4.41 4.33
O 3.72 4.25 6.09 4.69
To sum up, the model proposed in this paper can
clearly analyze the rationality of the results of
investment distribution in the historical years, find
out the reasons for the unreasonable distribution, and
provide reference for the investment distribution
decision-making in the future years.
5 CONCLUSION
This paper comprehensively constructs the
distribution network operation and maintenance
investment allocation decision-making model from
the dimensions of load growth, current grid operation
and maintenance demand, investment benefit and so
on. The main conclusions are as follows: (1) the
operation and maintenance investment allocation
model fully considers the current situation of power
grid operation and maintenance investment demand;
(2) the operation and maintenance investment
allocation model can further ensure the safety of
equipment operation; (3) the operation and
maintenance investment allocation model can
promote the operation efficiency of power grid
enterprises.
In the future, when making the distribution
network operation and maintenance investment
allocation decision, we should further consider the
data such as the economic development level of
different regions and the operation health level of
distribution network equipment, so as to further
improve the scientificity of operation and
maintenance investment allocation decision.
ACKNOWLEDGMENTS
This study is supported by the Science and
technology project of State Grid Henan Electric
Power Company (5217L021000N).
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Lucy Wang. Analysis of operation and maintenance
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