Annex 2: Lines Business Asset Management Disclosure - Suggested Requirements

This Document is Archived

Proposals for Amending the Electricity (Information Disclosure) Regulations

Energy Markets Policy Group

[ Last Updated 12 January 2006 ]

Core Elements of Asset Management
Criteria for Suggested Disclosure Requirements

Core Elements of Asset Management

A large number of models and approaches exist to the development of AMPs. Examination of comprehensive asset management definitions and models reveal the following common best practice features:

Driven by business objectives and service level targets
Encourage the use of "non-asset" solutions and demand management techniques as alternatives to asset acquisition
Emphasis on knowing what you own and why, where it is, and what condition it is in
Emphasis on optimising asset utilisation and performance
Take a total life-cycle approach
Focus on performance measurement, monitoring and continuous improvement
Clearly assign accountabilities and responsibilities for asset management

Activities such as detailed quantitative risk analysis, optimisation of renewals and predictive modelling are often termed advanced asset management techniques, and are beyond the definition of core asset management.

Criteria for Suggested Disclosure Requirements

The following criteria underpin the selection of the suggested information disclosure requirements:

Explicit support of service level objectives
Based on `core elements' of asset management
Economically justifiable with minimum compliance costs, consistent with criteria 1) and 2)

To ensure unambiguous and consistent definitions of asset management planning, promote best practice, and maximise comparability, disclosure should focus on the 'core elements' of asset management, as defined above.

AMP information disclosure should be sufficient to provide assurance of the suitability of network assets for future and current service targets, and that AMPs provide a sound basis for the ongoing assessment of asset related risk.

Disclosure Requirements - Introduction	Comments
AMP disclosure will require line companies to: disclose their most recent asset management plan, by: making it available for public inspection, during ordinary office hours, at their principal office post copies of the plan to people requesting it [disclose the plan on the Internet]	AMPs vary in length but should be expected to contain reasonably detailed information and analysis if they are to be meaningful. [Internet disclosure of the plans requires clarification of format and website placement.]
disclose asset management plans: each year that include a summary that consist of a single document that are able to - permit assessment of the suitability of asset management practice and assets for current and future service, specifically support the achievement of disclosed reliability performance targets, and form a sound basis for on-going risk assessment	AMPs will be revised yearly to support annual performance measure disclosures and performance assessment. AMPs are dynamic documents that are normally updated annually. Inclusion of summaries will aid understanding and readability. Minimum requirements for summaries are indicated below. Disclosure of plans as a single document will prevent disclosure of disjointed, poorly co-ordinated AMPs that are difficult to understand and read. In some cases this will require companies to amalgamate disparate documents for disclosure purposes, for example, separate network development plans. This does not necessarily require integration of separate plans into a new framework if the linkages between parts of the plan are made apparent and indexed. This requirement has been included to ensure the over-riding intention of disclosure is explicit, and emphasise that suggested disclosure information is compiled with these primary criteria firmly in mind.
include statements which clearly identify limitations in availability or completeness of asset information, and include details of: the assumptions made and basis for asset management planning in the absence of such information, including estimation and assessment methodologies used, and plans for improvement in information quality	The detail and accuracy of information available will vary. Identification of information gaps should be specifically addressed by requiring disclosure for AMP purposes. This will assist in transparency of disclosure, place emphasis on identification of deficiencies and promote improvement. Compliance costs will be incremental, as information for asset management purposes is progressively improved and collected. This is realistic given the cost of data gathering exercises.
Content of Summary
A summary of the asset management plan is to be included which provides a brief overview of: purpose of the plan asset management systems and information network and asset description service level objectives lifecycle asset management and development plans risk assessment performance and plans for improvement
Details of AMP background and objectives, including:
Interaction with other corporate goals, business planning processes and other plans Planning periods adopted Stakeholder interests (owners, customers, etc) Accountabilities and responsibilities for asset management Details of asset management systems and processes including asset management information systems/software and information flows	An outline of how the AMP is structured, together with links and relationships with business, financial, human resource, business continuance, information systems and other plans will reconcile corporate objectives with asset management objectives, put the detailed provisions in context and reveal overall approach. Skills and resources must be available to support the asset management strategy, and the organisation and identification of personnel accountability supports this. The way in which information systems support asset management processes should be disclosed.
Details of assets covered, including:
Description of the asset configuration Identification of assets by category Justification for asset Location, age and condition	What is owned and why, where it is and what condition it is in.
Details of proposed levels of service, including:
oriented reliability, security and availability performance targets Other targets relating to asset performance, asset efficiency, and effectiveness and efficiency of line company activity Justification for target levels of service based on customer, legislative, regulatory, shareholder and other requirements	The asset management process is based on the identification of the business need for the use of the assets. For the purposes of information disclosure it is appropriate to concentrate on customer related performance measures, although the AMP should also state other commonly used efficiency measures for assessing company asset management performance. Most companies have documented service levels and inclusion in the disclosure regime should not be onerous, although they will require careful consideration and definition by each company.
Details of network development and lifecycle asset management plans, including:
Description of planning criteria and assumptions Details of demand forecasts, network configuration analysis, and reliability assessments Policies on non-asset solutions, redeployment and upgrade of existing assets, acquisition of new assets, adoption of new technology and disposal of existing assets Analysis of the options available and details of the decisions made to satisfy and meet target levels of service Description and identification of maintenance policies, programme and actions to be taken for each asset group Description and identification of the network development programme and actions to be taken	These requirements will form the largest part of the AMP, and will generally be subject to the largest variation in format and content between companies. These requirements are intended to be sufficiently non-prescriptive to avoid compliance costs associated with revision of existing plans. Adoption of asset management practice that is cognisant of all elements of the asset life cycle, including design and planning, procurement, operation and maintenance and disposal costs will assist in long term efficiency improvement. Maintenance policies and strategies require to specifically address the needs of individual asset groups. Disclosure requirements will reveal whether appropriate steps have been taken to ensure that predictive, failure finding or scheduled maintenance tasks have been identified and are being undertaken.
Details of risk policies, assessment and mitigation, including:
Methods, details and conclusions of risk analysis Details of emergency response and contingency plans
Details of performance measurement, evaluation and improvement, including:
Review of progress against plan Evaluation and comparison of actual performance against targeted performance objectives Gap analysis and identification of improvement initiatives

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Printed: 25/11/2009