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Asset-Management Software Helps Canadian Utility
New software from CopperLeaf Technologies helps BC Hydro develop a long-range capital-spending plan.
August 13, 2004
2 Min Read
Some companies such as electric and gas utilities spend vast sums of capital on equipment and infrastructure. How they handle those assets can have a major impact on their cost structure and profits. For electric utilities, for example, critical assets such as generators are expected to operate 30 years or longer.
Executives from Canadian utility BC Hydro this week plan to make their final arguments to the British Columbia Utilities Commission on a 13,000-page rate plan filed in December. The presentation will take place almost one year after a major blackout hit the eastern United States and Canada. By October, the commission is expected to make a decision on the rate plan and set the prices that the electric utility can charge its customers.
Utility executives think they're well-armed to make their case for a rate hike because they're using new asset-management software that gives them more details on how capital expenditures will affect the company's ability to serve customers and turn a profit. For example, BC Hydro maintains 31 hydroelectric generators, some of which are more than 30 years old. They're each worth many millions of dollars.
New asset-management software from CopperLeaf Technologies Inc., which is being made generally available this week, lets BC Hydro develop a capital-spending plan that stretches out 20 years and describes in detail how much the utility plans to spend on each asset and when it needs to make the investments. In the past, each plant manager used spreadsheets to develop his or her own capital-spending plans. The CopperLeaf software, called Aptus, lets BC Hydro place capital spending in a broader financial context and include factors like rate of return and return on equity. The software also provides a way to evaluate and rank competing projects.
"We needed to look at investments for the entire company, because we had to prioritize capital," says Drew Dunlop, manager of strategic planning and operational innovation at BC Hydro, which has been using an early version of the software. "CopperLeaf gave us a look at the effect of cash flows [so we could] either advance capital projects or delay them and the payback period for a generator itself."
The software plugs holes in existing financial- and budget-planning systems, which don't take into account long-term capital expenditures, says Andrew Bartels, an analyst at Forrester Research. It's easy to make management and spending mistakes when some assets are in use for several decades and it's hard to estimate when they'll need to be replaced. Before Aptus, Bartels says, "they had to manage it manually with spreadsheets."
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