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Article

Strategic Utility Planning With Future-Focused Solutions

Historically, a utility’s spending decisions were largely made on a reactional, situational basis. Smart capital planning has the capability to help utilities accurately forecast and plan for the future based on data-backed information. These optimized plans enable utilities to improve service reliability and keep financial prudency a top priority.


Yesterday's Capital Spending Plan: Equitable slice of the pie

In the past, utilities had abundant resources and funding to respond to pressures and upkeep infrastructure. Historically, asset intensive industries have been forced to make funding decisions with limited data and information. Instead these industries have often equally distributed funds to each department, so that immediate challenges can be focused on.

Yesterday’s Conditions A Reactive Strategy

  • In the past, much of a utility’s strategy with spend was focused on doing whatever it took to immediately provide routine services or respond to emergent issues. Future planning based on forecasting or data was scarce or not used to make crucial decisions.
  • Much of a utility’s maintenance was centered around putting fires out and reacting to immediately impactful challenges. Predictive maintenance to determine equipment condition was rarely used.
  • Even under yesterday’s conditions, important information was still collected. Routine business processes had utility leadership gathering data, however it often wasn’t used previously.

Today's Capital Spending Plan: Reactionary reallocation

Today, many asset intensive industries allocate funds by looking backwards, using previous year’s budgets to inform and set current year funding.

Today’s Conditions: Operating Business as Usual

  • Utility spend based on historical amounts, reacting to unplanned failures or making key decisions based on limited information leads to less predictable and potentially more expensive outcomes. Utility leadership must consider load growth, aging infrastructure and advancing or shifting technologies when deciding financial investments.
  • Balancing these variables will help to maintain or improve reliability and service without significant increase in cost to customers. For utilities today, systems, data and practices are not fully aligned with achieving optimized outcomes due to disparate data. Additionally, misaligned priorities across management teams can cause setbacks and disruptions.
  • Today’s current approach may keep the lights on and operations running as normal but ultimately can leave value on the table. Such lost value could include a decreased return on equity, diminished service reliability and a loss of cost savings for customers.

Tomorrow's Capital Spending Plan: Proactive forecasting

Forward-looking solutions should focus on data enabled forecasting to allow a utility to make informed decisions.

Tomorrow’s Trends: Looking to an Optimized Future

  • With smarter capital planning, a fully integrated utility will be able to predict and plan spend based on the condition of equipment, trends in technology and load growth. Available data is aggregated and supplemented by advanced analytics to optimize allocation based on numerous factors that impact daily operations.
  • Contrary to popular belief, smart capital planning doesn’t always require huge investments in new technologies and systems. Oftentimes, the data necessary is already gathered. Capital planning requires stakeholder coordination, information sharing and integration between interested parties. This will provide a foundation for analysis to determine forward-thinking solutions.
  • This future approach matches portfolio management to the customized level of prudent spend necessary to optimize customer, shareholder, regulator and company needs.

Because the future won't wait.

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