Salt River Project
The SRP Asset Optimization (AO) group was formed in 2013 in response to a series of catastrophic transformer failures. AO’s strategy is to improve the management of power system critical assets across the entire lifecycle of the asset. AO is evaluating risk for critical substation and transmission system assets. AO uses a two-tier risk approach with system wide asset risk profiling and then a targeted risk management of individual assets in association with local subject matter experts (SME’s). AO’s primary focus is balancing Risk, Reliability, and Cost of the assets. The topic presented today and panel discussion is about the “lessons learned” from our journey of setting up the AO group. In this presentation, we will touch on the areas of: Executive Sponsorship, Skill Sets, Asset Selection, IT Partnership and Data Governance, and Ongoing Challenges.
Founded in 1903 – a decade before Arizona was a state – SRP is an integral part of Arizona’s history. As the oldest multipurpose federal reclamation project in the U.S., SRP has helped make it possible for millions to live in the desert. Today, SRP is the largest provider of water and power to the Phoenix metro area, home of the nation’s fifth-largest and fastest-growing city, delivering about 800,000 acre-feet annually to agricultural, urban and municipal water users in a 375-square-mile service area while managing a 13,000-square-mile watershed. Also, SRP is a community-based, not-for-profit public power utility, providing generation, transmission and distribution services, as well as metering and billing, to more than 1 million retail electric customers in a 2,900-square-mile service area that spans three Arizona counties — including most of the Phoenix metro area.
SRP is comprised of two separate entities: the Salt River Project Agricultural Improvement and Power District, an agency of the State of Arizona that serves as an electrical utility for the greater Phoenix metropolitan area, and the Salt River Valley Water Users’ Association, which serves as the primary water provider for much of central Arizona.
As one of the nation’s largest public power utilities, SRP provides reliable, affordable electricity and water to more than 2 million people living in central Arizona. That includes delivering power to more than 1 million retail electric customers in a service area that includes Maricopa, Pinal, and Gila counties. The combined population of the greater Phoenix metro area today is nearly 5 million, and SRP provides about 60 percent of the water to the region through an extensive system of reservoirs, underground storage facilities, wells, canals, and irrigation laterals.
- SRP is not accountable to the AZ Corporation Commission, but the AZ legislature
- SRP’s governing board is composed of landowners within the Salt River Valley – agile and flexible
- SRP service territory is relatively compact – metropolitan Phoenix and eastern Arizona mining area
- Not-for-Profit – no shareholders – reinvest profits – lower ROR.
On June 30, 2011, an Extra-High Voltage (EHV) Transformer at SRP’s Thunderstone receiving station failed, resulting in a fire. At the same time a nearby receiving station that picked up the load had a relay malfunction resulting in the receiving station going offline, causing the most widespread outage in recent SRP history. This was the ninth EHV transformer failure from the previous decade, seven of which were attributed to bushing failures. Over half of the bushing failures involved one type of bushing. Significant efforts have been made in responding to the risks identified following the bushing failure at Thunderstone. The next step included moving from a tactical response to a strategic approach, which led to the development of a transformer asset management roadmap. In this roadmap, SRP applies industry best practices to systematically manage power transformers across the entire asset life cycle – balancing cost, risk, and reliability.
In 2013, an asset management department was formed to oversee this roadmap, named T&D Asset Optimization. This department acts as a steward to the numerous departments which play a role in managing critical assets. This paper will focus on a few of the lessons learned since the formation of the AO department grouped into five categories: Executive Sponsorship, Skill Sets, Asset Selection, Information Technology (IT) Partnership and Data Governance and Ongoing Challenges. I will discuss a few observations for your consideration that may make the journey less bumpy.
- New normal: “You will never have again enough time, energy, resources or money to do the job, so you need to start thinking differently on what are the most important things to get done with the time, energy, resources, and money you do have.”
- Need to get comfortable with lower reliability, condition-based maintenance cycles, smarter redundancy, and more low-risk asset failures.
The Asset Health Program at SRP began with leadership at the executive level. What do we intuitively know about executive leaders? They control the money, resources, and time. They want results fast or at the minimum see substantial progress and as a whole aren’t a patient bunch. This is very subjective and you may argue stereotypical, however, points to consider for success are the following:
- Know your sponsor and what drives them
- Do they have a long or short-term focus?
- Have they cultivated their vision for asset management to their direct reports and above?
- What is their timeframe for seeing results? Is it reasonable?
- Is their vision part of their personal goals (not just in year one), but every year after?
- Do their direct reports also have the same asset management goal year after year?
- Does the asset management vision align with the corporate strategy or is it on its own?
Answers to these simple questions will go a long way for achieving success for starting and maintaining effective asset management.
At SRP, we were fortunate in that the Senior Director of Power Delivery believed in Asset Management through data analysis – let’s be smarter on how we make decisions to run the business. SRP’s goals reflected this approach and the Strategic Plan for Power Delivery reflected this objective specifically, thereby aligning vision with goals. Supporting Key Performance Indicators (KPI’s) were also established and reported on monthly.
- Know the “who” and “why” around asset management
Group Skill Sets
You may be wondering why Group Skill Sets even made the list as one of the key lessons learned categories for starting an asset management group. Forming a new asset management group in a Utility requires engineers, asset SME’s and field personnel who are the “boots on the ground.” But what about the skill sets of: project managers, champions, storytellers, seed planters, and marketers? A successful team needs a balance of the engineering staff and staff with these other “softer skills” often overlooked or downplayed.
For SRP, the Director over the new asset management group, recognized this and brought in a person from IT with a background in business and marketing. Data Governance was setup, using IT and other business expertise in the most efficient way. A presentation “road show” was launched, to the various departments in Power Delivery, about what AO role and purpose was. This effort “planted seeds” on how the world around them was going to change and that stakeholders needed to start thinking differently about how to run their respective departments with the assets therein. The road show emphasized what we called the “New Normal” – You will never have again enough time, energy, resources or money to do the job, so you need to start thinking differently on what are the most important things to get done with the time, energy, resources, and money you do have.
In addition, SRP corporate setup an Analytics Center of Excellence and analytics curriculum coursework to improve our analytics skill set capabilities for our employees across all of SRP.
- Consider non-technical skills for balance
What assets do you start with? For SRP it was transformers where we were having failures that were very expensive. Were transformers the correct asset to begin with? SRP didn’t have a choice and that’s both good and bad. Fortunately, it worked out for SRP pretty well. However, other utilities we have discussed asset management with started with critical substation equipment and then branched out into power line assets. Some utilities started with the assets with the highest capital outlay or highest maintenance costs or those assets that contribute negatively to reliability. The point is that there is no right or wrong answer, but you can choose poorly or wisely. Here are some considerations to help you choose:
- Which assets are the ones keeping you up at night from whatever criteria is important to you – reliability, age, cost, maintenance, failures, etc.?
- Where is the data on the asset located? Is it centralized in one/few systems or spread-out over many systems and applications?
- Do you have access to the data or is it controlled by various groups or departments?
- How accurate or inaccurate is the data?
- Is what is needed captured in the data already or do you now have to put in processes to capture what you need?
- Is one group or several groups responsible for asset data entry?
- If you can choose what assets to start with, choose wisely
IT Partnership & Data Governance
“I love our Information Technology group! They’re responsive, helpful, timely, they understand our business and bend over backwards to help us – said no one ever.” This is generally, but not always, what I hear, from other utility colleagues and even outside our industry.
If you have your own IT shop inside the business and not outside in the corporate environment, your feelings might be different. At SRP we have a hybrid of both. Depending on how you answered some of the previous questions on data, where it is, what format, who controls it, how accurate it is, etc., you are going to need to form a partnership with IT or a Business IT group in your area or both to be successful. No asset management initiative will be successful without the data to capture for analysis, to see trends, make predictions, and so on.
SRP leveraged the strengths of both the business IT staff and our corporate staff into a governance structure for optimum performance. We had staff in several departments unilaterally making production changes into our asset management system with no controls or oversight. We assigned IT responsibility to bring in process control and governance over the asset management system. That’s what IT is good at and this approach has been working ever since. We shifted activities such as backing up servers from the Business to IT. Again, that’s what IT is good at. These changes provided time for our analysts to do more high-valued activities. At the same time, whenever a new project or initiative was launched, by AO, we had IT sitting at the table with us. At some point, IT was going to be a key ingredient into the project. AO wanted IT engaged from the beginning. At the same time, IT had to understand upfront the issues AO was facing. This collaboration was a Win/Win for both IT and SRP.
- You need IT
I can summarize our top three challenges facing the AO group:
1. Culture/Attitude Paradigm Shift
All types of businesses, including utilities are littered with initiatives that can last a few weeks, a few months, or years, but very few initiatives become ingrained in the culture of the business. Steven Covey is famous for saying, “culture eats strategy for breakfast.” Culture doesn’t change overnight, it takes years and perseverance. Gone are the days when you had as much time as you need, could hire as many resources as required, and didn’t really have any problem paying for it all.
The call was initially to do more with less, which never made any sense and now the “new normal” I mentioned previously is hitting the brick wall of: aging workforce who just want to do the job the way it’s always been done, aging infrastructure that demands more attention, customers demanding more and more choice and flexibility. The list goes on and on.
Kind of depressing! Actually, really depressing. However, in simple terms: It becomes important to start figuring out which assets you have that are mission critical, by whatever criteria is important to your company, and focus on keeping those assets as healthy as you can with the time, energy, resources and money you have with more monitoring, maintenance and even proactive replacement. Those assets not so mission-critical, focus less on them.
2. How do you track success for the group using analytics for asset management?
The AO group developed a risk score for every single transformer we have in the Transmission system using consequence of failure (COF) and probability of failure (POF). We knew with a high degree of certainty the conditions that pointed to transformers that had signs of failure. AO also created a program to replace those critical very high-risk transformers prior to failure in collaboration with our SME’s in Substation Maintenance as a checkpoint for our analysis. This sounds like a promising approach, but AO couldn’t predict exactly when or how that transformer would fail and once you replace the transformer you’ll never know. AO continues to struggle on the questions: when is the transformer going to fail? Can we leave it in service longer? How long? All of which are good questions, but no data is going to tell you about a failure with certainty until the transformer actually fails and then it’s too late. You can only assess what could have happened had you not done anything which, when you’re spending millions of dollars in a capital constrained environment, doesn’t feel very good.
AO is open for comment on other utilities efforts and successes in showing a working asset management program exhibiting value on proactive replacements of assets.
3. Having a common methodology to assess assets equally across Generation, Transmission, and Distribution for allocation of time, energy, resources, and money to the assets that drive the most risk and criticality to your business model.
This is one of the “holy grails” of asset management. Evaluate all the assets, using an unbiased methodology, so that you allocate money and resources to the most critical risk assets across the organization. This theoretically takes out the territorial and department “battles” that can develop in the capital and maintenance budgets planning cycles where often the winner is the one who has the loudest voice or the strongest personality.
SRP, in 2019, will be in its third year of using Copperleaf C55 as part our capital planning process. Each year we get better aligning the requests for capital funding to the risk associated with the funding request based on a risk evaluation from the Copperleaf software. SRP doesn’t rely on the evaluation or user inputs yet fully, but continues to validate the C55 results with SME’s for final recommendations and adjusts C55 to align closer to the final recommendations. This is just another example of how the culture change takes time to embrace and understanding what our critical assets are and what the risk associated with those assets are.