Informational Report

Asset Condition Assessment



Performing an Assessment (ACA) is becoming a  norm for utilities. METSCO is here to make sure the process generates actionable and meaningful insights that inform downstream planning and generate value for ratepayers and shareholders alike.  

Aging infrastructure deployed on power systems across North America requires major investments into the renewal of assets to ensure the distribution systems continue to perform safely and reliably.  

As regulators across jurisdictions gains sophistication, these investments are coming into increasing public scrutiny. There are no standardized criteria for assessing the health and condition of power system assets to determine their end of life and to support replace/repair decision. As a result, there is significant effort and expenditures incurred during regulatory hearings in debates over reasonableness of the scope of capital and O&M budgets proposed by the electric utilities.  

To confirm the prudence and economic efficiency of contemplated renewal investments, regulators increasingly employ risk-based tests to confirm the risk mitigation benefits outweigh the risk mitigation costs. This helps utilities ensure that the available resources are directed towards the areas of greatest risk or poorest condition.  

The first step towards implementation of a risk-based asset management approach is to develop a yardstick with which the condition of assets is measured. Asset condition is an assessment of the health of an asset using multiple objective criteria collected in the field and through laboratory testing. It plays a vital role in determining remaining useful life (and the asset’s effective age) and can be used to predict how long it will be before an asset needs to be repaired,  refurbished or replaced. Asset condition is also an indicator of how well a system component can be expected to perform its core functions.  

Managerial Reasons for Assessing an Asset’s Condition  

  • To pinpoint discrete assets that are not performing satisfactorily and the specific reasons behind their lagging performance.  
  • To help predict when an asset will reach the end of its useful life. 
  • To determine what remedial work needs to be performed to return an asset to satisfactory condition. 
  • To gather information about the reasons for a  likely mode, timing and impact of asset failure. 

Benefits of an Asset Condition Assessment  

  • A higher level of confidence in capital, maintenance, and operating investment decisions. 
  • A better understanding of the condition and operating constraints of the assets. 
  • Assessment of financial and operational risk exposure and ensuing optimization of investments. 

To complete an asset condition assessment,  METSCO’s engineers and economists perform the following steps in coordination with our clients. 

Collect the Data

Practical techniques that are commonly deployed to gather relevant information indicating the distribution system assets current functionality and condition include: (i) visual inspections; (ii) in-situ testing; (iii) lab testing; and (iv) performance statistics. Some factors  that are considered for an asset’s condition include: 

  • Age 
  • Operating and Natural Environment 
  • Maintenance History 
  • Key Stakeholder Perceptions 
  • Utilization Rate

Cleanse and Analyze the Data  

Data is inspected, organized and transformed into a usable format for the ACA. Statistical data analysis can be divided into three segments and usually follow one another: (i)  descriptive statistics; (ii) exploratory data analysis; and  (iii) confirmatory data analysis. 

Develop a Robust Asset Health Index  

The best practices for assessing the condition of distribution assets entail development of an algorithm for evaluation of health indices of various assets that allow an objective and repeatable measurement of the health and condition of an asset, based on its readiness in carrying out its intended function on the system.  Asset health indices are based on identification of aging mechanisms and failure modes of the assets and are developed by placing appropriate weights on various condition indicating parameters to express the level of degradation of an asset’s health along the way to its end-of-life. 

The asset replacement criteria are based solely on the condition of the components. The condition of an asset that would indicate the need for replacement is based on industry standards, utility practices and regulatory requirements and guides. For example, CSA notes that once a pole has reached 65% of its original design strength, it should be scheduled for replacement. The criteria are based on degradation of an asset’s condition to unacceptable levels that would reduce strength below a specific value, as is the case noted above for the wood poles or a reduction in reliability or safety to unacceptable levels. 

Examine Condition Trends and Make a Plan  

The condition of most assets will deteriorate over time.  The condition of an asset may deteriorate at various rates, either steady-state or in a logarithmic state. When an asset reaches an unacceptable operating state, an appropriate intervention method will be planned and carried out to return the health of the asset (and effectively the system) to a new condition. 

With the right analysis techniques, expertise and METSCO’s proprietary analytic tools, utilities can decrease their asset renewal backlog effectively with appropriate interventions. An annual Asset  Condition Assessment will determine if the utility had underspent on capital and O&M to address the system’s health. If the budget is effective, the system’s overall health will improve.  

What Makes METSCO’s ACA Approach Unique?  

We Translate Data Results into Managerial Insights  

METSCO’s ACAs rarely stop at a table that breaks down assets across their condition bands. With clients’  consent, we typically provide multiple ways to segment the results, including by replacement value of system components at risk, the risk allocation between line and station assets, and dynamic future projections in light of historical and forecasted spend levels. We structure the data insights in a clear and compelling way to elevate asset management onto the plain of corporate decision-making, providing different corporate stakeholders with insights relevant to them, and demystifying the engineering world in the process. We also leverage the practical insights gained during the project by way of interviews and observations, to supplant data conclusions with actionable recommendations that fit the client’s circumstances.  

We Spent 20+ Years at the Forefront of the Discipline  

METSCO’s senior partners authored the industry’s earliest Asset Health Index concept papers, and first put them to practical use more than two decades ago. Since then, we integrated our core engineering tools with advanced economics and management science insights, to yield an ever-evolving framework that we successfully applied in a variety of industrial settings. Our research and development team works closely with a  number of industry associations committed to furthering the knowledge base and practical experience of asset degradation prediction and intervention. METSCO widely recognized engineering scientists and economists that regularly contribute to the ACA field through research studies in partnership with IEEE, IEC, IDEA, CSA, and  CEATI, along with utility and industrial clients.  

We Have the Tools to Support the Next Steps in Your AM Journey  

Few forward-thinking utilities and industrial companies stop their asset management efforts at the ACA results,  increasingly seeking to translate them into dynamic frameworks that leverage technological advancements in  IoT and machine learning. METSCO’s suite of cloud-based ENGIN asset management solutions provides a robust platform to turn ACA findings into dynamic evidence-based strategies and plans that integrate engineering and economics to yield informed, sustainable and profitable investment decisions. 

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