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Written by: Copperleaf

Navigating Changing Regulatory Landscapes with Strategic Asset Investment Planning

As climate events become more frequent, regulators are asking for more investment in climate resilience, and greater transparency on the risk, reliability, and environmental and social impacts from proposed investments

As the 2024 Copperleaf Summit fast approaches, and we reflect on the discussions at last year’s event, it’s clear that successfully meeting updated regulatory expectations and requirements was—and continues to be—on the minds of many organizations.

Our clients have been using best practice value models in the Copperleaf® product suite—models that have been proven and accepted by regulatory bodies globally. Using an Asset Investment Planning (AIP) solution that provides a methodology and data-driven approach to allocate capital spend allows organizations to create optimal investment plans, analyze and manage risks and sensitivities, predict expected outcomes, and defend plans to regulators and external stakeholders.

Here are a few highlights from sessions led by our clients and partners:

Adapting to a Changing Regulatory Environment

Together with Copperleaf partner Accenture, Brian Dewan, Electrical T&D Practice Lead at Copperleaf delivered a session on the factors shaping California’s utility landscape, including devastating natural disasters, stringent regulatory environments, and elevated energy rates—all of which present challenges to utilities and customers. The discussion highlighted how Copperleaf’s quantitative risk analytics can help utilities navigate expanding regulatory requirements and an uncertain future.

With the California Public Utilities Commission (CPUC) imposing a risk-based framework, California utilities are required to provide quantification of investment risks and Environmental and Social Justice (ESJ) impacts.

Copperleaf’s extensive library of flexible and modular value models allows organizations to evaluate and monetize the risks and benefits of projects, including measures like safety, reliability, cybersecurity, environmental impact, and ESJ. Having the ability to quantify the value of all investments and demonstrate how they contribute to organizational objectives leads to greater transparency in defending the plan and reporting outcomes to regulators and stakeholders.

Value-Based Asset Management for Electric Distribution

Chubu Electric Power Grid (Chubu), one of the largest electric transmission and distribution (T&D) companies in Japan, chose Copperleaf and partner MELCO to help increase the consistency and transparency of its distribution network and AIP processes, and support its commitment to providing safe and reliable energy.

The industry is facing nationwide slowing of electricity demand growth, rapid rise of renewable energy resources, increasing natural disasters, and aging infrastructure. Japan is undergoing an electricity network reform to ensure necessary investments are made while maintaining cost efficiency.

To aid energy companies in replacing aging assets, Japan provided guidelines for risk assessment, which includes a risk calculation method based on the UK’s Common Network Asset Indices Methodology (CNAIM). T&D companies must also maintain total risk below the current level, which means Chubu’s asset maintenance plan must meet this criterion as well.

Using Copperleaf’s scenario analysis and optimization capabilities, Chubu adjusted the timing of each replacement, and created a 10-year asset replacement plan that achieves the highest portfolio value while considering constraints.

Integrating Asset Performance Management and AIP

A global leader in the production, transportation, and delivery of energy was facing challenges in balancing customer advocacy and capital expenditures. Its asset management team worked with Copperleaf to address these issues with a solution that combines condition-based asset performance, value-based investment, and resilience to rare catastrophic events.

The company underscored the significance of collaboration across industries and the adoption of uniform standards and best practices in enhancing the efficiency of the regulatory process and achieving improved regulatory outcomes.

This client shared its experience with partnering with Copperleaf and Accenture to integrate data from various systems, such as AIP, APM, and Enterprise Asset Management (EAM). This integration has empowered the organization to elevate the maturity of its asset program and make data-driven decisions that deliver the highest value to its customers.

The regulatory sessions at the 2023 Copperleaf Summit provided valuable insights into the current regulatory landscape and how organizations can navigate it effectively. The discussions highlighted the importance of collaboration, the use of consistent standards and best practices, and the role of technology in streamlining the regulatory process to achieve greater value. We look forward to continuing and expanding on these conversations at the 2024 Copperleaf Summit.

Download our playbook on the Six Steps to Streamline Regulatory Approval to learn how your organization can improve your capital planning process.