Asset and risk management for electric utilities

BY SIRI VARADAN, UISOL, & SERGE VANASSE, Clevest

Aging transmission and distribution (T&D) infrastructure is a critical issue for electric utilities, resulting in the need for utilities to make decisions regarding the replacement, repair, or refurbishment of their assets under a constrained investment environment and other factors.

North American electric utilities are faced with determining the optimal portfolio of asset investment projects from a number of potential projects subject to major constraints including limited capital funds available for investment, regulatory scrutiny, staff availability, and the need to maintain adequate service reliability.

Successful asset investment planning provides the means for utilities to analyze and evaluate their asset improvement projects in a structured and methodical way to determine the optimal portfolio of projects that minimizes risk and maximizes their return on investment.

Asset investment planning enables asset managers to develop a capital budget plan (CBP) that minimizes risk for a fixed budget without compromising performance. Such a plan allows decisions to be easily justified and defended in the wake of stakeholder, not just regulatory, scrutiny. However, asset investment planning is not a trivial exercise and requires the right people, processes, tools and a thorough understanding of risk.

Risk is a multi-dimensional weighted metric that conveys a sense of what could happen if one or more goals are not met. For example, “What is the risk a utility faces when a safety goal and a reliability goal are not met?”