Modeling Dependent Outages of Electric Power Plants

We propose a framework to model dependence of outages of electric power plants. Our framework allows for common factors, such as weather events and fuel shortages, to drive outages. We calibrate our model for power plants in the Electric Reliability Council of Texas and the Western Electricity Coordinating Council regions using a unique data set of actual outages from the North American Electric Reliability Corporation. We find strong evidence of dependence in power plant outages based on the input fuel of the plants and illustrate how our framework can be used to evaluate the reliability of the supply of electricity for both regions, and also the impact on reliability of building additional capacity.