EA Technology’s unified risk management methodology gets Ofgem approval

Ofgem is the regulator of Great Britain’s gas and electricity networks, with wide-ranging powers and duties. It oversees the island’s 14 licence areas, which are currently run by six distribution network operators (DNOs): Electricity North West, Northern Powergrid, Scottish and Southern, Scottish Power, UK Power Networks and Western Power Distribution.

Background

By 2015, all six DNOs had adopted EA Technology’s Condition Based Risk Management (CBRM) to oversee their maintenance programmes and undertake regulatory reporting. Calculating asset health, probability of failure, consequence of failure and risk gave the DNOs a good picture of their ability to maintain power to their customers and ensure investment in the network was sufficient, and prudently implemented. However, over the years, the DNOs had implemented their own versions and interpretations of CBRM, to the point where they were arriving at their findings in different ways. Ofgem challenged the DNOs to unify their risk management methodologies so that a benchmark could be determined and successful management measured.

Actions

As EA Technology had created the original CBRM, we were asked to join the six DNOs in fulfilling the task of creating a new, unified methodology. This would give Ofgem the
ability to consistently monitor them and better measure performance by comparing like with like. The working group was set up with EA Technology as a key partner. Together we came up with an overarching methodology based on precisely defined asset classes, calculation and configuration values.Once the framework had been agreed, it was vital that
it was put to the test, so once again the DNOs asked
us to work through the methodology and design an implementation framework. It was a collaborative process,with our project manager in constant touch with the DNOs to clarify meanings, suggest improvements and refine algorithms. We delivered 25 asset models with sample data under the title of the Common Network Asset Indices Methodology (CNAIM).

Conclusion

Since its publication in 2016, all DNOs have been using CNAIM for all their regulatory reporting. Our new solution allowed real asset data to be loaded into models easily, so
appropriate testing and configuration for each model of those assets could be tested and modified accordingly.EA Technology’s history of working on the original CBRM, and our expertise in asset modelling, stood us in good stead to be the natural choice for a partner to produce the CNAIM. As we already have relationships with all the DNOs,
the whole process was collaborative and carried out in a
very short amount of time, especially compared to typical administrative project durations in this heavily regulated industry.