The term "asset management" has many interpretations and meanings to different utility managers, consultants and vendors. To some it is the timely maintenance of the installed assets. To others the term defines the asset information architecture and data availability. Others would say it's the long- and short-term planning of the energy delivery systems. So which is correct? If you said they all are, you're right...sort of. In the United States, the complex nature of the utility industry's asset management challenge often seems to defy description. The key is that each of these definitions, along with several others, is part of the entire asset management toolset and philosophy. In an attempt to provide some universal definitions and clarity, this article will provide an overview of the state of asset management in the United States.
Coming to terms - what is T&D asset management?
Let's put a stake in the ground and define asset management as a series of business processes all focused on assets that need to be related, balanced and connected to each other. While it is possible to breakdown these processes down into many small components, the four major areas of asset management are:
- Asset Strategy Planning (ASP) - using the pyramid model (see Figure 1), ASP is the policy deployment and strategic decision support portion of the model. It is based on a systems dynamics model, which is created using historical information, business goals, objectives (KPIs), operational strategies, and a desire to implement a standard corporate policy. ASP is both the beginning and the end of the asset management process.
A plan is developed taking into consideration all of the controllable variables and a statistically significant estimate of variables that can happen. This plan includes CAPEX and O&M for the organization's short- and long-term planning efforts. In this way, the utility can conduct a detailed analysis of the decisions that have been made and answer questions such as:
- Are we under/over the budget?
- How will SAIFI and SAIDI be affected?
- What level of risk is involved?
- Are there "asset time bombs" on the horizon?
Figure 1: Asset management decisions are made at different levels with the organization. This pyramid positions the information systems and tools that support decision making in a hierarchy illustrating their relative strategic position.
- Asset Performance Monitoring (APM) - Utilities base decisions, which affect credibility and earnings, on the best information available. In order for the ASP model to be effective, it needs to be flexible enough to incorporate new information relative to internal policies and external influences. APM provides information that enables asset engineers and managers to continually review and tweak the system dynamic models used in the ASP. APM critical factors include clear development of KPIs, feedback on actual performance and the ability to be alerted to any unacceptable risk.
- Asset Lifecycle Management (ALM) - Asset performance and life expectancy is tied to asset use, maintenance and events that occur during the in-service life of the asset. The developed ASP model allocates funds for the required maintenance of the assets that would result in the life-expectancy used in the model. The asset lifecycle begins with installation of the asset followed by required maintenance. The lifecycle continues as the asset ages to the point of replacement, as it becomes less reliable and predictable. It is critical that T&D managers develop and adhere to maintenance policies, practices, predictive scheduling tools and programs that produce the expected lifecycle reliabilities. Asset maintenance needs to be carefully analyzed and tracked in order to anticipate early degradation of assets or the increased performance of units. Planned and executed operations and maintenance of the assets needs to be an integral part of the program.
- Asset Information Management (AIM) - To fully execute each component of the asset management pyramid, performance data and other information about the T&D assets must be tracked throughout their respective lifecycles. As lifecycles can often span several decades, knowledge about the utility's assets is becoming as critical as the physical asset itself. As shown in the Asset Lifecycle Management graph (Figure 2), all events associated with an asset need to be recorded as part of AIM.
Figure 2 – Asset Lifecycle Management
Figure 2: The diagram above shows the lifecycle of assets from the time they are first identified in an asset strategy plan through detailed planning, procurement, construction and on into operations and maintenance.
Typical data that should be tracked include design specifications and drawings, change histories, populations, conditions, locations, maintenance requirements and histories and much more. This data and information needs to be complete and easily accessible by the numerous users and systems that focus on assets. This information may reside in WMS, GIS, CAD, ERP, or enterprise content management systems. While many of these systems were designed as stand-alone applications or with limited integration, that situation is changing. With the development of the common information model (CIM) for all utility assets this situation has been greatly helped. Integration tools that are capable of exploiting this CIM model are on the market and are being employed in the nation's transmission for SCADA and EMS, as well as other applications using technical application integration tools. A second wave aimed at energy delivery applications is now available using both technical and enterprise application integration tools.
Why do U.S. utilities need to focus on assets?
Lessons learned from the United Kingdom
To quote Bob Dylan, "the times they are a changing." There are a whole host of business drivers that require a carefully balanced, documented and implemented plan to minimize exposure to potential risks, while meeting the requirements of the utility's stakeholders, abiding by legal requirements and meeting certain societal expectations. As we move forward toward increased deregulation, utilities should carefully examine the benefits of shifting more of their attention on network reliability.
Since the United Kingdom is further down the road to deregulation than the U.S., let's examine some of the lessons they have learned in the last few years:
- Before deregulation most utilities were network focused and operated under a philosophy of "engineering excellence." The T&D system was reliable, redundant and provided an acceptable rate of return.
- Phase 1 - Deregulation occurs and the business drivers change to focus on improving operational efficiency and increasing dividends. The emphasis is on obtaining an adequate return on any and all capital expenditures including mergers and acquisitions. Stated simply, utilities are financially focused.
- Phase 2 - Performance of the networks slip and the business drivers change once more. Regulators tighten controls and limit revenues, while demanding improved customer service. Utilities change their focus to the customer and invest in programs and services to "delight the customer."
- Phase 3 - At present, regulators in the UK review every utility’s performance yearly and periodically adjust rates based on perceived acceptable operating and performance standards. Utilities still face the difficult task of retaining shareholder value without compromising customer service. The focus is now on improving core competencies and network performance. This asset centric organization is the result of this pressure to meet the needs of all the stakeholders at acceptable level.
The asset processes in today's U.S. utility
Most would agree that U.S. utilities are, for the most part, departmental silos organized around specific engineering, operations or maintenance tasks. Typical examples are network planning, dispatch operations, construction, maintenance, substation department, line department and so forth. Asset investments have been at a very tactical level. At one utility, capital budgets are driven by the manpower required for winter storms rather than actual network requirements. At another, engineers stop design work on all projects once CAPEX funds have been allocated. Work does not begin again until the next annual budget is approved.
IT investments have generally focused on solving tactical problems for the needs of the different silos and not for the utility as a whole. This needs to change based on a uniform corporate investment and operating strategy. To get to this desired state, a corporate policy needs to be developed and implemented across the entire organization. In this way, the utility can work toward clearly defined and unified goals and objectives at the corporate, operations and functional levels.
A logical first step to becoming an asset-centric organization is to develop an asset strategic plan. This is the unifying tool and guide we believe utilities will need to be successful in an ever-changing environment.