30 IEEE power & energy magazine may/june 2005

IIT HAS BEEN MY UTMOST pleasure to serve as the guest editor forthis special issue of IEEE Power &Energy Magazine on asset manage-ment. The advent of competition inwholesale electricity has forced powercompanies to focus their investmentson maintaining the competitive positionof their assets, while trying to squeezemore performance out of their agingequipment with less expenditure.

Asset management is now animportant phrase and issue in the oncequiet, monopolistic electricity world.

Asset management could offer morecomprehensive purchasing decisions,operating schemes, and maintenancescheduling for improving the return oncapital investment.

The first article on asset manage-ment is written by me and RobertoFerrero. Our article, “Time Manage-ment for Assets,” states that compre-hensive strategies for the acquisition,operation, and maintenance of assets ina competitive environment use ampleand intelligent chronological informa-tion on the status of physical assets.

The strategies that make up power sys-tem asset management may includeselecting more appropriate equipment,upgrading poorly performing equip-ment, or changing maintenance andoperating practices. Experience showsthat the coordination of time scales forasset management plays a critical rolein strategic decisions. Asset manage-ment based on possible time scales iscategorized as follows: real-time assetmanagement (online outage manage-ment); short-term (day ahead andweekly) asset management, whichencompasses risk-constrained assetvaluation; midterm (monthly and sea-sonal) asset management for optimalmaintenance scheduling of equipmentand optimal allocation of resources(for example, fuel, emission, andhydro); and long-term (yearly andbeyond) asset management, whichencompasses facility planning andacquisition. The article says that thefour time-based asset managementissues are quite interrelated. Properlong-term or midterm asset manage-ment could provide a wider range ofoptions for managing risks in short-term and real-time asset management.In addition, power system asset man-agement strategies over shorter timeperiods could yield useful signals,enabling asset management over alonger time span (mid- and long-term)to be more efficient and practical. Inessence, a global analysis of assetmanagement options could provideadditional opportunities for seekingoptimal, practical, and feasible man-agement states in various time scales.

Mohammad Shahidehpour

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a delicate balancethe business and science of asset management

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may/june 2005 IEEE power & energy magazine 31

Richard Brown and BruceHumphrey’s article, “Asset Manage-ment for Transmission and Distribu-tion,” maintains that asset managementis the art of balancing performance,cost, and risk. Achieving this balancerequires support from three pillars ofcompetency: management, engineer-ing, and information. Initiatives canstem from any of these pillars, but theymust always consider and coordinatewith the other two. Achieving this bal-ance also requires the alignment of cor-porate goals, management decisions,and technical decisions. It requires acorporate culture, business processes,and information systems capable ofmaking rigorous and consistent spend-ing decisions based on asset-level data.The result is a multiyear investmentplan, maximizing shareholder valuewhile meeting all performance, cost,and risk constraints. Instead of a hierar-chical organization where decisionsand budgets follow the chain of com-mand into functional silos, asset man-agement is a single process that linksasset owners, asset managers, and assetservice providers, allowing all spend-ing decisions to be aligned with corpo-rate objectives supported by asset data.This article states that asset manage-ment is capable of addressing the mostpressing issues facing the transmissionand distribution businesses, includingaging infrastructure, reliability, assetutilization, planning, automation,maintenance, project selection, and riskmanagement. Each issue is dauntingwhen considered in isolation. Moredaunting is the thought that true assetmanagement will optimize decisionsacross all of these issues simultaneous-ly. Asset management can be truly rev-olutionary, but only when it is based onthree functions, a single process, sup-porting systems, and a robust skill setof management, engineering, andinformation.

The following article by ColinPalombo, “Eight Steps to OptimizeYour Strategic Assets,” describes aneight-step process to implement port-

folio management for a single powerstation during its operational, revenue-generating life-cycle phase. Thesesteps can then be applied to extendportfolio management to fleets ofstrategic power assets and to otherphases in the plant or transmissionasset life cycle.

Palombo states that portfolio man-agement techniques can make a dra-matic impact onthe value yougenerate from thegenerating assetsunder your con-trol. Plants mayobtain up to a20% increase inreturn on capitalemployed ands u b s t a n t i a limprovements insofter benefits,such as improvedcollaboration, faster decision making,and reduced administrative effort.However, the success of this newapproach, and the value you can obtainfor your own plant, will depend heavi-ly on strong leadership and a wellthought-out, systematic approach toimplementation. If implemented suc-cessfully, portfolio management willhelp plant operators increase short-term earnings and position the plantfor superior economic returns over thelonger term. Portfolio managementalso provides other nonfinancialrewards, including better collaborationacross multiple departments and orga-nizational layers, faster managementprocesses based on real-time informa-tion, and a lower administrative work-load by using an automated portfoliomanagement system.

“One Asset, One View,” the articleby Yakout Mansour, Larry Haffner,Vidya Vankayala, and Ebrahim Vaahe-di of British Columbia TransmissionCompany (BCTC), discusses theimplementation of integrated assetmanagement at BCTC. The players inasset management are associated with

the following capability/maturity lev-els: asset operation, asset monitoring,asset management, and asset optimiza-tion. The article describes the detailsof business-assessment, impact-study,and asset-management strategies aspart of the BCTC project. The assetmanagement project executionincludes business process modelingand technology and people threads, all

running concur-rently. Alsodescribed are thebusiness model-ing, technicala r c h i t e c t u r e ,change manage-ment, and imple-m e n t a t i o nhighlights.

Asset manage-ment at BCTCaddresses process,technical, and

people dimensions and represents amajor IT project in the utility industry.A bus-based architecture leveraging amature technical architectural pattern ispresented, and management issuesinvolving impact assessment, training,and documentation are discussed. Thearticle shares BCTC’s experience withthe implementation of the proposedintegrated asset management strategy.The expected benefits of the projectinclude improved reliability andreduced failure rates, increased serviceprovider effectiveness, improved regu-latory submissions (i.e., planningintegrity, reduced total cost of owner-ship, and extended asset life), mini-mized inventory, the development of along-range asset management plan andaccurate cash flow, and improved per-formance measures, processes, andstructure that help meet governancerequirements to manage the BC Hydroassets. The conclusion asserts that inte-grated asset management is expected toenhance the capabilities of BCTC asthe proposed solution matures in func-tionality and more users adapt to itsstrategies. p&e

Portfolio managementtechniques can makea dramatic impact onthe value yougenerate from thegenerating assetsunder your control.