Risk assessment methods applied to electricity distribution system asset management

This paper highlights some aspects of the many facets of electricity distribution system risk assessment – describing the different risk consequence categories which are relevant in the whole risk picture with regards to their characteristics, their type of impact and applicable risk analysis methods. The paper illustrates that distribution system asset management constitutes of a variety of more or less conflicting objectives – and that there is no single risk assessment method which cover all the different aspects of distribution system risk. 2 ELECTRICITY DISTRIBUTION SYSTEM ASSET MANAGEMENT The electricity distribution sector has been increasingly focusing on the concept of asset management as guiding principle for performing business. For example, the UK regulator, Ofgem, has explicitly encouraged the distribution companies to get certified according to the publicly available specification PAS 55 “Asset Management” (BSI 2004a; BSI 2004b), in order to establish a adequate level of competence in asset management within the distribution companies, to assure long term asset risk management and establish greater clarity of the policies and processes that underpin the investment decisions of network companies (Williams et al. 2007). The concept of asset management covers (at least) two aspects; the management of the physical infrastructure, and the management of the organizational aspects. In this paper we focus on the first of these two aspects, namely the infrastructure management. A very general definition of asset management is given in specification PAS 55-1 (BSI 2004a): “Asset management is simply the optimum way of managing assets to achieve a desired and sustainable outcome”. The importance of risk management (as a means of avoiding undesired events) is highlighted in the more formal definition of asset management: “systematic and coordinated activities and practices through which an organization optimally manages its assets, and their associated performance, risk and expenditure over their lifecycle [..]” (BSI 2004a). This definition emphasizes the lifecycle aspects of cost, performance and risk exposure – where performance is a measure of what is achieved, while risk exposure represents foresight – looking into potential future outcomes, with the aim to avoid undesired events. From this definition we can see that risk management is well integrated in the asset management scheme. The principle of continuous process improvement is also a guiding star of asset management, integrating the different aspects of a sound asset management in a plan-act-review-improve circle. Risk assessment as a part of the asset management process of continual improvement, is illustrated in Figure 1 (BSI 2004b). 3 RISK AND RISK ASSESSMENT IN ELECTRICITY DISTRIBUTION SYSTEM ASSET MANAGEMENT The understanding and management of risk are key issues for distribution companies in their asset management approaches. Asset