Utilities Look into Software to Aid in Asset Decision-Making

Utilities are trying to adopt a more strategic view of managing their assets in a constantly changing environment, industry observers say, but software systems make the goal difficult to achieve.

According to Richard MacDonald, Senior Vice President, SPL WorldGroup, Inc., the needs of operational managers often conflict with those of the finance professionals. Operations managers are concerned with real-time costs to make day-to-day decisions on repairing or replacing assets, while finance managers need to look at the big picture to present historical financial information to investors and regulators.

“Financial accountants don't need to see transactions as they happen. But 'on time' for finance is clearly 'too late accounting' for operations,” MacDonald wrote, in an article for the Energy Central Network.

He urges utilities to “get what they need with asset management” by finding a software system that focuses on operational accounting while passing data to the General Ledger at the same time. “What you get from these systems is better decision-making across the board.”

Complicating matters even further is questions about deregulation. The Federal Energy Regulatory Commission (FERC) in 1996 directed the power industry to open transmission lines to increase the choice of energy suppliers for consumers.

In the wake of Enron's collapse and the California power crisis, some states are leery of deregulation.

“Many states are moving back to regulated markets due to various problems such as regulatory policies, rising fuel prices, demand fluctuations, and shortages in supply,” research associate C. Aravind of Frost & Sullivan, North American Utility Asset Management Markets.

Energy companies are holding millions of dollars worth of energy assets, and third-party assets management service companies, which finance assts of power plants, can benefit in this environment because the power industry may move to sell some assets, according to Frost & Sullivan.

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