This paper considerably extends the modelling and evaluation techniques presently used in assessing the reliability of transmission and distribution networks. The concepts described lead to a realistic analysis of such systems. The most important features that are described concern the incorporation of all realistic failure and restoration modes, development of the concept for overall system indices, inclusion of variable repair times and the ability to extend the usual loss of continuity criterion to include loss of quality, this often being of vital importance. All the techniques and concepts discussed were used to analyse a typical system, the results of which are included in the paper.