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Asset management is becoming an increasingly critical and complex area of focus for the modern utility landscape. From smarter sensors, meters, and equipment all across the grid to the heightened need to ensure safety and reliability by tracking health and status of all grid-tied equipment, utilities both large and small must always be looking for the most appropriate tools and optimized solutions for keeping pace with asset management. This episode of the Energy Central Power Perspectives Podcast delves into the intricacies of utility asset management with two distinguished experts from 1898 & Co.: Paul Von Hertsenberg, Director of Generation Asset Advisory, and Arlin Mire, Senior Project Manager focusing on transmission and distribution.
From exploring the differing perspectives of generation versus transmission to dissecting the current status of the U.S. power industry in its asset management practices, these guests provide a holistic view of the sector. They not only shed light on the challenges but also offer forward-looking insights and actionable steps for utility decision-makers in the conversation with podcast host, Jason Price, and podcast producer, Matt Chester. Dive deep into this conversation as these asset management experts uncover the role of stakeholders, the impact of emerging technologies, and the regulatory landscape influencing asset management.
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Thanks to the sponsor of this episode of the Energy Central Power Perspectives Podcast: 1898 & Co.
Key Links:
1898 & Co. on Energy Central: energycentral.com/o/1898
Planning for Future EV Charging Demand Requires Sophisticated Forecasting by Utilities: https://energycentral.com/o/1898/planning-future-ev-charging-demand-requires-sophisticated-forecasting-utilities
Did you know? The Energy Central Power Perspectives Podcast has been identified as one of the industry's 'Top Energy Podcasts': blog.feedspot.com/energy_podcasts/
TRANSCRIPT
Jason Price:
Welcome to the Energy Central Power Perspectives podcast, the show that brings leading minds from the energy industry to discuss the challenges and trends that are transforming and modernizing our energy system. And a quick thank you to 1898 & Co., our sponsor of today's show. Now let's talk energy.
I am Jason Price, Energy Central podcast host and director with West Monroe. Coming to you from New York City and with me as always, from Orlando, Florida, is Energy Central producer and community manager, Matt Chester. Matt, the name of the game in today's episode is asset management. The topic of asset management is critical for investment decisions and a major sticking point when it comes to utility modernization. Matt, give our listeners the quick definition of asset management and more importantly, some insight into why it might be critical to those in the energy central community.
Matt Chester:
Yeah, I'd be happy to do that, Jason. From my understanding, asset management is positioned as a somewhat broad term, where it means an enterprise, there's systems that they use in place to keep tabs on things like the location, the use, the relative value, the health of its assets, both tangible and intangible assets. And in the utility sector, where a single organization can have thousands of miles of grid and across that grid, millions of endpoint customers, each with their own meters, necessary distribution equipment, transformers, and even increasingly onsite generation equipment. Asset management, it's not optional, it's a mandatory way for utilities to ensure efficient and reliable operation of the entire enterprise.
Jason Price:
Yeah, thanks for that, Matt. Indeed, the new technologies, strategies and opportunities of asset management are more exciting than ever. And anyone who has tuned out on the topic will want to start listening intently. Particularly given the recent federal funding, as much of the investment dollars is for replacement and upgrade of assets on the grid. And today's episode will provide listeners the perfect opportunity to learn more. Today, we're being joined by not one but two experts in the world of utility asset management, whose teams are doing some incredible work to bring innovative asset management practices to life. Joining us today are our guests from 1898 & Co. First we have Paul Von Hertsenberg, director of Generation Asset Advisory at 1898. Paul, thanks for being with us today on Power Perspectives podcast.
Paul Von Hertsenberg:
Hey Jason, thanks. Happy to be here. And I will say this topic beats the heck out of being the subject of a true-crime podcast.
Jason Price:
Well, we're thrilled to have you on and along with him is Arlin Mire, a senior project manager at 1898 who focuses on the transmission and distribution side of the equation. Same to you, you Arlin, thank you for joining us today.
Arlin Mire:
Yeah, thanks Jason for having me on.
Jason Price:
So let's start by understanding each of your points of view a bit better since each of you come from slightly different angles of the utility sector only to unite when it comes to asset management. So can you give us a quick rundown of the areas you plan. Arlin, let's start with you.
Arlin Mire:
Yeah, so my specialty is really in constructing the business case for investment, specifically around linear assets, transmission and distribution, but we include substations as well. Our philosophy is to have a data-driven approach. There's many data sources. We auto generate thousands of potential projects from asset data. We would calculate lifecycle benefits and costs and try to help our clients understand where the point of diminishing returns is in their grid investment portfolios. Where are you spending too much, where's not enough? And they're built to withstand regulatory scrutiny in many jurisdictions across the country.
Jason Price:
And Paul, same question to you.
Paul Von Hertsenberg:
Yeah, so I primarily work in the power generation sector with generation owners and operators. We work across the entire asset lifecycle. So whether constructing new, determining remaining useful life buying or selling assets, we're supporting the owners and operators there. My background is in power plant operations and maintenance. So I do spend quite a bit of time working on routine maintenance, especially where it intersects and works with the asset management and maintenance strategy becoming a big part of the overall asset life cycle on rotating assets. The folks that we support are under immense pressure to really effectively and efficiently maintain their assets. So we help out where we can.
Jason Price:
So given that each of you're coming from different perspectives, generation versus the wires themselves, how do you two and your teams end up working together? And are your projects siloed or are you looking at it more comprehensively at the entire width of the sector? Who would like to take this one?
Arlin Mire:
Yeah, I'll take that one. So that's a good question and the reality is it depends on the driver. Sometimes we're building regulatory cases where strict accounting is really crucial. We're trying to align benefits and objectives to their costs. Sometimes isn't a lot of overlap in those situations. But where we see our powers combine, if you will, is when the utility is looking for help organizing activities and projects more at the enterprise level. So there's not discretionary spending, and that takes precedent a lot of times, but making sense of all the projects that have been placed into the hopper for a chance at the discretionary budget is really where we shine. And so our teams have blended experience between management, consulting and engineering level knowledge of the assets. And so it allows us to bring a lot of options to the table and include it in the overarching decision framework.
You can think about generation projects, and there's a multitude of benefit to the plant and to the company. You're producing unplanned to force outages, improving resiliency or efficiency, reducing operating costs, extending the remaining useful life of the assets. And those all have quantitative impacts to the lifecycle and the net present value to the utility. So Paul and his teams understand that in immense detail. And some come from the utility and know it firsthand actually, but the net present value of T&D assets, and linear assets, and investments is calculated largely in the same way, improving reliability, resiliency, life extension, reducing operating costs. So we can combine those kinds of projects and thousands of potential ones into a true optimization model that we can build a long-term plan that satisfies lots of utility constraints simultaneously. Only a few utilities have taken action this far down the road, but that's where we start to blend our capabilities together.
Jason Price:
All right, so asset management, critical for the industry, sticking around for quite some time because it's an asset intense industry as it is, it sounds like from both of you, it's really like the work is, a lot of work still to be done. So Paul, over to you. Give us the state of the sector, if you will. What is the current status of the US power industry when it comes to where they are with proper asset management practices?
Paul Von Hertsenberg:
So I know we defined asset management at the top of the episode, but thinking about proper asset management and proper asset management practices, everyone has a different view on that. And I'd say most people are in very different places when it comes to proper. So I guess, broadly, folks are in very similar situations for the pressures they're under, whether it's coming from changing budgets, different stakeholder engagement, regulations, new technologies, and then the response is where it starts to differ. We like to look at asset management as a journey from being reactive to proactive decision making, or as a systematic approach to realizing value from your company's assets. So even within organizations, different business units can be different levels of maturity in that journey.
I think I can safely say that most organizations have picked up on wholesale run to failure and replacement not being the most effective strategy, but what's being done about it and how far along most people are is where it starts to depart. So different variations of time-based or condition-based maintenance are being implemented. We've got varying aspects of condition monitoring, or online monitoring, and then different uses of technology. So I think a lot of people have really been recently thinking about how data can enhance the decision making and the asset management strategy, but once again, it's a wide range from folks using all the information available to those that are just beginning to understand what is or isn't there, and building on that.
Jason Price:
That's good context and clearly it sounds like both of you've seen it all now, Arlin, back over to you, I'd love to get your take on the why behind that status. Given the wide array of stakeholders, competing priorities, and fixed budgets, why is asset management positioned the way it is?
Arlin Mire:
Yeah, so as Paul mentioned, there's multiple stages of maturity and the ideal stage from one utilities to the next is going to be different. Utilities have different resources. So on one end of the spectrum you have a company like New York Power Authority. I had the privilege of assisting with their ISO 55,000 certification process. They truly embraced ISO 55,000 and related asset management principles from top to bottom. And then the other extremes, you have small asset management groups within the utility. Maybe you have just a few people and have an advisory role really in decision making. I think oftentimes development of what are our asset management best practices, you put that in the category of important as opposed to urgent. Utilities have limited resources, as you mentioned, people, time and money. And I think it's easy as a utility or any company to say, "Hey, this company should do blank, why aren't we better at that?"
But the reality is it takes thousands of people and they often wear multiple hats in utility and they're all making thousands of decisions a day to keep the lights on and electric rates down. And contrary to some public opinion, a lot of people that work at the utility are rate payers, and so that's important to them. So there's lots of urgent items that require constant attention, but items in the important category, like bolstering asset management practices, it takes dedicated resources, time, patience before you start to see results. Oftentimes patience runs out or the push maybe doesn't survive reorganization of people and departments with new objectives.
Jason Price:
All right, that's great context. Paul, I want to go back to you some things that you had said earlier. I want to revisit some of it and pull some threads here. Both of you clearly have a good understanding of the state of affairs with asset management, but our listeners do want to know what's actionable and what's forward-looking. So what should the utility decision makers be doing at this moment? What are they overlooking, and where are the easy opportunities for improvement? More importantly, with all the funding, the federal funding, what role is that playing in helping push this area forward?
Paul Von Hertsenberg:
Great question. I'd probably start with challenging and empowering your people. Really good asset management isn't just a few decision makers sitting in a room. It takes skill sets that people bring from various backgrounds and across the organization. I think guided by the value drivers, the risk tolerance, and the vision and goals of the organization, you can really come up with creative and good ways to address and tackle the move forward. I'd say in addition to that, I like trying to make my data work for me.
Most utilities, especially generation plants, have just decades of information, decades of data that is, I'd say a little bit underutilized. So what insights can be drawn from that as far as asset health, top risks, where the priorities lie, understanding is it in a good enough format and is it complete to get answers out of it is a different question, but at least start asking yourself what insights can I draw from this information? I think ultimately, we've talked about it, the goal is to safely and efficiently keep the lights on, but there's just so much more that plays into that. So it's a big challenge that should invite a lot of different backgrounds and information to solve.
Jason Price:
Sure. Arlin, how did Paul, do, did he miss anything on that list?
Arlin Mire:
Paul did fantastic, but I think there may be a couple items we can probably talk about a little bit. So one of the things we think about when it comes to federal funding is the Infrastructure Investment and Jobs Act. We've seen a lot of our clients start to seek grant funding through that, especially the Justice40 Initiative, the environmental justice initiative where they're looking to try and get 40% of federal investments flowing to disadvantaged communities that are marginalized and underserved. And so a lot of our clients are trying to understand where certain projects overlap these areas of the country. And so there's a lot of good detail in there and that's a way to probably get some support and funding for areas of the system that really need it.
And so on top of that, I'd also pay close attention to the level of rigor that you're using to justify projects. Paul's mentioned this several times, but when you move to data driven decision making, you need to take care to document a lot of the project drivers and build a quantified business case wherever possible, being consistent across the plan or program. Several of our clients are struggling in front of commissions and the old ways of creating and justifying projects are really being met with unprecedented headwinds. So I think improving some of those strategies and processes can turn some quick benefits.
Jason Price:
I'm glad you brought up the Justice40, it's something that sometimes under assumed in our experiences as well. So it's an important and critical aspect that the government's looking for, the equity case, the equity side of the equation, and certainly the Justice40 side of it as well. So I appreciate the timeliness of bringing that up. Arlin, let's stay with you for a moment. We're really talking about asset management coming at a crossroads, because of the federal funding in particular, which you just brought up. So when we look at asset management, we're talking about a range of stakeholders, the customer, the regulator, the investor, the workforce, and so on. And of course technology is driving a lot of this. So I want to hear from you, why do you think now we're at a critical point in the modernization movement? What is it that will tell us that maybe perhaps there's some signs that we're near the end, like we're accomplishing the journey.
What are some metrics maybe you look for to make sure that we're hitting on all those key aspects that say that we're doing the job and moving in the right direction, and just your general assessment of how we're doing, given the past year and a half, two years, the transformation and the funding that's come into play. Anything you can shape the conversation a bit further to give us the confidence that we're moving in the right direction, we're still too early to tell, are you optimistic? Just your general impressions would be great here.
Arlin Mire:
Yeah, sure. It's an interesting question. I think we're moving in the right direction. It's interesting, because over the last decade plus we've seen, of course, a lot of utilities have embraced asset management in several different facets. But I'm also starting to see people understanding the next chapter, which is if we want to rebuild the system properly, we need to think about creating projects that handle multiple issues at once. And that's inherently difficult, because the utility has to have lots of different groups that are responsible for certain sections of the system or certain objectives of the company, and you're trying to get them to start thinking together and saying, okay, aging infrastructure is of course an issue that everyone talks about, but what about future issues? Electrification, DERs, two-way power flow. What about resilience? It's not just reliability and aging infrastructure now.
And so trying to plan more holistically I think is one of the next pieces of the chapter in our system. And I think a lot of our utilities are starting to think that way and trying to figure out how to get there. But it is definitely a journey. The other thing to inject in there is the customer-centric component. While all of our utilities agree that well customers are the most important piece of the business, it's been difficult to try and incorporate a customer focus into the plan. How does this affect customers? How does this reduce outages? How does this increase reliability? What can we do to keep the lights on in major events, blizzards, ice storms, hurricanes, you name it. So it's a real big hairy animal to try and conquer. But I think we're heading in the right direction based on a lot of the discussions we're having with each of these.
Jason Price:
Paul, you've been looking at this issue for quite some time as well. Are you as equally optimistic? What's your impression of how we're doing?
Paul Von Hertsenberg:
Yeah, very optimistic and agree with what Arlin pointed out. I think there's just tremendous challenge and I think we're really rising to it. We talk about reliability, resiliency, and then balancing it with cost, safety, compliance, security, stranded investment. There's just so many different angles to evaluate and understand the value that you're bringing. So I'd agree we're moving in the right direction. I think there's still quite a bit of work to be done to reach, I'd say that optimized solution. But definitely a lot of good work going on between the increase in data availability, use of information, bringing people together to solve more complex problems in less of a vacuum than before, all while competing with different interests and stakeholders and funding and everything else.
Jason Price:
Arlin, why don't we start with you, and Paul certainly follow up. I'd love to hear you both around the regulatory side of things, and then certainly the standards like the ISO 55,000, which came up earlier in the conversation, certainly play a role in the asset management world. So what are some of those regulatory pressures or any regulatory drivers that are playing a role in the asset management world that you could describe? Again, Arlin, why don't you start and hand it off to Paul when you're done.
Arlin Mire:
Yeah, sure. So one of the things I mentioned earlier is trying to have a consistent approach towards making cases in front of the regulatory commissions and making sure that you're covering all the necessary facets and you can handle scrutiny from interveners or questions from commission and staff. And so where ISO 55,000, ISO 31,000, they help a lot with putting structure and frameworks around the decisions that you make. And I think that's really some of the key pieces you need to keep in mind whenever building your plans and going forth into the regulatory environment. Because what that'll give you is that'll give you a solid footing to be able to make the case When people ask you, "Hey, where did you make that decision? Why are you doing this work? Why are you not doing this other work? I think you're spending too much."
You now have something to point to that says, "Look, I did A, B, C, D, E, all these things that provide supporting documentation to why I'm here today requesting funding or approval for whatever we're doing." And that makes it really difficult because then other folks have to say, "Okay, well I disagree." And that's fine, you can disagree and have different opinions as long as you don't have anything flawed and big things that you missed, you're in a good footing. And so having solid ISO 55,000 foundations and practices really helped create a good case that's bolstered by lots of rigor.
Paul Von Hertsenberg:
Yeah, I'd agree there. I think some of the variability we're seeing in that is, I think Arlin mentioned it earlier, where you've got vastly different size of organizations and different ability appetite to adopt a standard like the ISOs. So we are seeing just the right mix of practices influenced by ISO, influenced by the best practice industry leading practice to develop that level of rigor, even in some instances without going the full ISO route, but definitely a little bit more scrutiny and it's becoming increasingly important and challenging to prove the prudency on all the spend.
Jason Price:
Well, I compliment you both for taking such a complex topic as asset management, bring it down to earth, let's put it that way. And we're going to give you the final word, but we want to pivot now to what we call the lightning round, which gives us an opportunity to learn more about you, the person rather than you, the professional. So Paul and Arlin, we're going to ask five questions. You should give your answer a one word response or phrase, Paul, we'll start with you and then Arlin, you follow up. So gentlemen, are you ready?
Paul Von Hertsenberg:
Ready enough? Yeah.
Jason Price:
Okay.
Arlin Mire:
Yeah, I guess. Let's do it.
Jason Price:
What was the first concert you ever went to?
Paul Von Hertsenberg:
It's meatloaf.
Jason Price:
Arlin.
Arlin Mire:
Matchbox Twenty.
Jason Price:
What's your favorite home cooked comfort food, Paul?
Paul Von Hertsenberg:
I'd go chili every time.
Arlin Mire:
I cook a really great chicken and salsa.
Jason Price:
What famous person living or historical would you most like to sit at a bar and have a drink with?
Paul Von Hertsenberg:
Someone that requires really low social energy or Robin Williams.
Arlin Mire:
I think those are two opposite items. That's great. Yeah, I think I do Dave Grohl.
Jason Price:
Who are your role models growing up and who are they now?
Paul Von Hertsenberg:
Probably parents growing up and still to an extent, but probably my marketing department currently.
Jason Price:
Arlin?
Arlin Mire:
Yeah, I'd say probably my parents growing up as well. And now I think I look back to a lot of mentors who took time to answer things and teach me the ropes for management consulting.
Jason Price:
All right, and last, what are you most motivated by?
Paul Von Hertsenberg:
I think I really like seeing and helping people succeed, but really want to have fun while doing it.
Arlin Mire:
Yeah, our team puts a lot of effort into our projects and our work. So when our clients we're really appreciative of what we do for them, that feels me.
Jason Price:
That's great. Great job both of you. Phil, like I said, we're going to give you the final word of the podcast. So knowing that your audience of utility leaders, executives, and decision makers are listening in, what is your piece of advice and call to action for them? Arlin let's start with you.
Arlin Mire:
Yeah, so the next chapter in the grid is really approaching. And so a foundational tenant of asset management is managing the total lifecycle cost of our assets and equipment. So I think we have an opportunity now to challenge ourselves and think beyond assets and aging infrastructure and start to create projects that address lots of grid pain points today and tomorrow. Reliability, resilience, electrification, load growth, and then understanding where's the right overall level of investment for me today.
Jason Price:
Paul, you have the floor for the final word.
Paul Von Hertsenberg:
So I really like Arlin's response. I think I'd reiterate that this is a journey. Solid asset management practices don't happen overnight. You got to be intentional about the approach, the goals, understand that sometimes baby steps are necessary to lay a good foundation to the tremendous change that's happening. And then additionally, I'm excited. I think we talked about it earlier, we got stuff going on like never before in the industry. It's a really big challenge and it provides really good opportunities just to continue to iterate and improve our practices.
Jason Price:
Well you guys make a great team and we really appreciate you sharing your insight to our listeners today. And I know that our community will look forward to keeping the conversation going. So certainly look for any questions or statements and any follow up to engage the community. So with that, thank you again for sharing your insight. We hope to have you back and much appreciate taking the time to share this wisdom with you both.
Paul Von Hertsenberg:
Thanks Jason.
Arlin Mire:
Yeah, thanks for having us.
Jason Price:
Absolutely. And thank you to 1898 & Co. 1898 & Co. is a global business technology and security consultancy serving critical infrastructure industries. They partner with clients to plan, secure and optimize their business as part of Burns and McDonald and their 120 years of industry experience. They understand the complexity of your asset intensive business model, the trends impacting your industry and the need to ground big ideas and operational realities. Once again, I'm your host Jason Price. Plug in and stay fully charged in the discussion by hopping into the community at energycentral.com. And we'll see you next time at the Energy Central Power Perspectives podcast.
About Energy Central Podcasts
The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.
The ‘Energy Central Power Perspectives™ Podcast’ is the premiere podcast series from Energy Central, a Power Industry Network of Communities built specifically for professionals in the electric power industry and a place where professionals can share, learn, and connect in a collaborative environment. Supported by leading industry organizations, our mission is to help global power industry professionals work better. Since 1995, we’ve been a trusted news and information source for professionals working in the power industry, and today our managed communities are a place for lively discussions, debates, and analysis to take place. If you’re not yet a member, visit www.EnergyCentral.com to register for free and join over 200,000 of your peers working in the power industry.
The Energy Central Power Perspectives™ Podcast is hosted by Jason Price, Community Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.
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