Unison Regulatory Asset Management Plan Update 2019
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19 REGULATORY ASSET MANAGEMENT PLAN UPDATE 2019-29 ISO 55001 Asset Management AMS 671320 Unison Networks Limited | Regulatory Asset Management Plan Update 2019-29 TABLE OF CONTENTS SECTION 1 SUMMARY OF THE PLAN SECTION 2 BACKGROUND & OBJECTIVES SECTION 3 SERVICE LEVELS SECTION 4 NETWORK DEVELOPMENT PLANS SECTION 5 ASSET MANAGEMENT PLANNING SECTION 6 NON-NETWORK DEVELOPMENT MAINTENANCE & RENEWAL SECTION 7 RISK MANAGEMENT SECTION 8 EVALUATION OF PERFORMANCE SECTION 9 CAPABILITY TO DELIVER SECTION 10 SCHEDULES APPENDIX GLOSSARY OF TERMS This Regulatory Asset Management Plan (RAMP) Update is available for public disclosure and applies for the period 1 April 2019 to 31 March 2029. © UNISON NETWORKS LIMITED 2019 OF THE PLAN OF THE 1. SUMMARY 1 SUMMARY OF THE PLAN SECTION 1SECTION SUMMARY 1 SUMMARY OF THE OF THE PLAN PLAN 1-11-1 UNISON NETWORKSUNISON LIMITED NETWORKS | REGULATORY LIMITED | REGULATORY ASSET MANAGEMENT ASSET MANAGEMENT PLAN PLAN UPDATE UPDATE 201 2019-299-29 CONTENTS SUMMARY OF THE PLAN............................................................................................................. 1-2 1.1 About Unison................................................................................................................................... 1-2 A Changing Energy Landscape ...................................................................................................... 1-2 1.3 Asset Management ......................................................................................................................... 1-2 1.5 Overview of the Asset Management Plan....................................................................................... 1-4 1.5.1 Key Process Changes..................................................................................................................... 1-4 1.5.2 Key Expenditure Changes .............................................................................................................. 1-5 1.6.3 Improving Network Performance..................................................................................................... 1-8 1.6.4 Overhead to Underground (OHUG) Conversions ........................................................................... 1-9 Table 1-5: Network Performance Improvement Projects ............................................................................... 1-8 Figure 1-3: Asset Management Policy............................................................................................................ 1-3 Figure 1-4: Asset Management System Framework ...................................................................................... 1-4 Figure 1-6: AMP Risk Cost Profiles ................................................................................................................ 1-5 Figure 1-7: Network Capital Expenditure by Region ...................................................................................... 1-7 © Unison Networks Limited 2019 11-2-2 SECTION SECTION 1 1SUMMARY SUMMARY OF THE OF PLAN THE PLAN SECTION 1SECTION SUMMARY 1 SUMMARY OF THE OF THE PLAN PLAN 1-3 UNISON NETWORKS NETWORKS LIMITED LIMITED | REGULATORY | REGULATORY ASSET MANAGEMENT ASSET MANAGEMENT PLAN UPDATE 2019-2 PLAN9 UPDATE 2019-29 UNISON NETWORKSUNISON LIMITED NETWORKS | REGULATORY LIMITED | REGULATORY ASSET MANAGEMENT ASSET MANAGEMENT PLAN PLAN UPDATE UPDATE 201 2019-299-29 • Unison’s Strategic Asset Management Plan that specifies its asset management objectives and how they will be achieved, and SUMMARY OF THE PLAN • Unison’s three key asset management processes: Asset Management Planning – development of plans that ensure asset management 1.1 About Unison o objectives will be met, including asset renewal and asset capability improvement A Changing Energy Landscape o Lifecycle Delivery – the safe execution of asset management plans, ensuring that work is delivered efficiently and in conformance to quality standards, and The energy landscape is likely to change dramatically in the coming years and it is important for Unison o Continual Improvement – the monitoring, measurement and evaluation of the to evolve if it is to deliver value to its stakeholders. The timing and exact nature of the changes are performance of assets and asset management, and actions taken to continually unknowable, so it is also critical that Unison's existing strengths in managing electricity distribution improve how Unison does things. assets continue to be enhanced. As the environment in which Unison operates is changing faster than ever before, Unison will need to have an agile strategy and the ability to manage future uncertainties Unison’s Asset Management Policy is set out in Figure 1-3. to remain relevant. Increasing support for a decarbonised energy policy coupled with breakthroughs in technology mean uptake of Distributed Energy Resources and the efficient integration of them within the electricity distribution system are becoming almost inevitable. For strategy purposes, Unison uses a combination of megatrends and scenarios to prepare for an uncertain future. Unison initially references megatrends to explore the social and technology trends that are shaping the world, and which are most likely to be relevant to Unison. Following this, scenarios are developed to structure Unison perceptions about alternative future environments in which today’s decisions might be played out. The opportunities and attendant risks generally fall under two broad categories; rate of trend development (Incrementalism or Metamorphosis), and ability to manage change (Master or Marionette). Some investment risks will need to be taken to ensure Unison meets its customers’ short-term expectations, irrespective of what the future looks like, but it is important that Unison is proactive, establish strong partnerships and invest wisely so that we can embark on a least regrets path towards a changing energy landscape. See section 4.4 for more detail on how Unison plans to use scenarios to identify future network constraints under each of the four scenarios, and how this work will be used to develop a least regrets pathway. 1.3 Asset Management Managing electricity networks is Unison’s core skill set, and Unison is very proud of its asset management capabilities. Unison sees asset management as a long-term undertaking, because of Figure 1-3: Asset Management Policy the high dependence that its customers have on its infrastructure now and will have for the foreseeable future, and the long-lived nature of assets Unison manages. At the heart of Unison’s asset management philosophy is the goal of balancing cost, risk and performance according to Unison’s stakeholders’ requirements. To ensure that this idea is embedded at all levels of asset management – from senior leadership decision making, right down to specific maintenance interventions carried out on assets – Unison has developed and embedded an Asset Management System (AMS). The AMS ties together and aligns everything Unison does in asset management. Core components of the AMS include Unison’s Asset Management Policy, which specifies: • 15 principles that Unison’s senior management team has committed to in asset management © Unison Networks Limited 2019 © Unison Networks Limited 2019 1-4 SECTION SECTION 1 1SUMMARY SUMMARY OF THE OF PLAN THE PLAN SECTION 1SECTION SUMMARY 1 SUMMARY OF THE OF THE PLAN PLAN 1-5 UNISON NETWORKS NETWORKS LIMITED LIMITED | REGULATORY | REGULATORY ASSET MANAGEMENT ASSET MANAGEMENT PLAN UPDATE 2019-2 PLAN9 UPDATE 2019-29 UNISON NETWORKSUNISON LIMITED NETWORKS | REGULATORY LIMITED | REGULATORY ASSET MANAGEMENT ASSET MANAGEMENT PLAN PLAN UPDATE UPDATE 201 2019-299-29 Unison has developed a diagram of its AMS as a communication and education tool, and this is risk management at Unison is FC1003 Unison Group Risk Management Framework, the risk provided below. This shows how line of sight in asset management flows from customers and external schema is aligned to this document to provide alignment across the business. stakeholders, into Unison’s strategy and objectives, and through Unison’s three major asset A key output of the risk schema shows the level of expenditure required to be spent to address the management processes: different levels of risk. This graph can be used to challenge expenditure across the different risk levels • Asset Management Planning over the ten-year plan. Asset risk assessments range from 1-125, where 1 represents a risk which is • Lifecycle Delivery, and as low as reasonably practicable, where 125 represents a very high risk to the network. Expenditure • Continual Improvement. that is required to address higher risk assets is given priority over lower risk alternatives. $45,000,000 $40,000,000 Carryover $35,000,000 0: 1-5 $30,000,000 1: 5-10 2: 10-15 $25,000,000 3: 15-20 $20,000,000 4: 20-25 Expenditure $15,000,000 5: 25-30 $10,000,000 6: 30-35 7: 35-40 $5,000,000 8: 40-45 $- 9: 45+ 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Financial Year Figure 1-6: AMP Risk Cost Profiles Figure 1-4: Asset Management System Framework 1.5.2 Key Expenditure Changes A significant change from Unison’s disclosed 2016/17 Asset Management Plan is an uplift in expenditure associated predominantly with Unison’s overhead conductor asset fleet. This increase in expenditure is reflected in Section 5 and Schedule 12a. 1.5 Overview of the Asset Management Plan The Renewal Envelope (refer section 5.4.8) is a Unison developed ‘top-down’ budgeting tool that predicts the replacement expenditure of each asset class based