Energy Biz - July/August 2008 - (Page 62) » guidebook Dealing with Assets UTiliTiEs adopT nEw TaCTiCs By warrEn CaUsEy to sAy utilities Are Asset-heAvy operations and that many of those assets are aging is a cliché in today’s world. What can be classed as assets range from massively complex conventional and nuclear generating plants and hydroelectric dams, to widely dispersed transmission and distribution systems, down to trucks, meters, tools and sophisticated computer systems overlaying it all. For nearly 20 years now, increasingly sophisticated software systems designed to help utilities track and maintain their far-flung assets have been available on the market and growing more capable from year to year. Many utilities have installed these packaged enterprise resource planning (ERP), enterprise asset management (EAM) and other related systems. Some utilities have reached the point where they are fairly confident that they have a handle on what usually is called simply asset management. But this is by no means unanimous, according to a new survey by Sierra Energy Group, the research and analysis division of Energy Central. In fact, only 44 percent of all utilities have a dedicated asset-management software solution. That percentage goes up sharply among the 200 or so large, investor-owned utilities, but drops among mostly smaller municipal, federal, state and district utilities. Most utility assets were designed and built to be long-lived. However, the rapid growth of the U.S. economy since World War II required utilities to build many new systems and expansions, especially on the transmission and distribution side, leaving less money to replace assets as they grew older. Now, utilities face a host of new problems such as escalating fuel prices, environmental issues, renewable energy mandates, aging workforces, and legislative and regulatory uncertainty. As a result, they are not going to have extra resources to replace assets that are nearing or beyond the end of their anticipated lifecycles. Dealing with the aging asset problem calls for a sophisticated management approach. Fortunately, they have the tools for such an approach in modern asset management and financial systems. They July/August 2008 (ASSET MANAGEMENT) also have several models that have worked well for utilities in their nuclear plants and elsewhere. A holistic approach to asset management — one that links to financials, supply chain and related systems — enables utilities to monitor and respond to changing asset conditions over time, and not have to respond in a crisis mode to the aging asset issue. This is the best hope they have for dealing with assets while also trying to meet the current raft of demands they face. Several utilities, including First Energy, Northwestern Energy and others, already are adopting these methods. The entire lifecycle of an asset must be considered, including its associated financial and supply attributes in order to deal with the problem. The tools for dealing with aging utility assets are available. Not everyone is using them, however, and time is running out. A good indication of the difficulties they face can be found in the following list of top problems reported in a recent survey. New residential and commercial development Aging utility personnel and loss of corporate memory Aged assets Future generating capacity Availability of spare parts Equipment failures Accurate count and location of assets Too many outsiders tend to view the utility industry as monolithic so that one solution fits all. It is far from that ideal. Different utilities in different parts of the country, under different regulatory and ownership structures, built out their assets very differently. Now they are being forced by regulatory fiat to comply with new mandates, such as a certain percentage of renewable energy — and possibly the next challenge for the industry, carbon caps — with aging technology that varies widely and that is not very well tracked in many cases, especially at smaller utilities. It’s a recipe for disaster, many industry insiders believe. There is a wide disparity in how utilities maintain asset information. Utilities obviously don’t have the resources to go out and replace equipment that was installed 50 years ago and still functions well. Instead, they need to adopt a comprehensive model-based approach to dealing with these aging assets. That way they become a normal part of doing business and don’t represent yet another crisis to deal with. There will be enough of those over the next few years. 62 e n e rgyb i z
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.