Northern Gas Networks (NGN) is a gas distribution company serving over 2.7 million homes and businesses in the north of England. The company is planning a total expenditure of over £1 billion for the forthcoming RIIO-2 regulatory period on its network of 37,000 km of gas pipelines and associated infrastructure.
UK gas and electricity companies face a range of new requirements under the RIIO-2 framework. With final determinations due out in December 2020, Utility Week hosted a virtual panel discussion with Ian Coates, Asset Strategy Lead for NGN and Stefan Sadnicki, Managing Director for Copperleaf in Europe, Middle East and Africa (EMEA), to explore how NGN approached the ramp up to submission of its RIIO-2 business plan.
Developing the RIIO-2 Plan
In 2016, the business plan requirements under the new framework led NGN to examine its Asset Investment Planning and Management (AIPM) processes and explore how to address several challenges. NGN recognized an opportunity improve its capabilities in a number of key areas:
- Asset risk reporting: Transition from a time-consuming Excel-based approach towards a more efficient process that could accommodate the regulator’s new Network Asset Risk Metrics (NARMs) methodology
- Cost-benefit analyses: Easily demonstrate a consistent application and implementation of cost-benefit analyses, both within each asset class and across the business as a whole
- Scenarios: Generate and assess different investment scenarios to deliver on the plan—and defend the selected options
- Visibility and performance tracking: Measure progress against the plan at a more granular level and justify any deviations
The Copperleaf Experience
According to Ian, good asset management practice is at the heart of these challenges. He explained that Copperleaf’s Decision Analytics solution has enabled NGN to respond confidently to the introduction of NARMs and support the development of its 5-year regulatory submission.
“We’ve developed our value framework, which underpins the C55 system [to give us] a consistent approach to valuing projects and schemes, and even strategies across our asset base,” said Ian. In practice, this means that every investment decision is supported by a consistent analysis of data.
During the discussion, Stefan and Ian elaborated on the implementation approach at NGN and described the key benefits and improvements realized from an advanced AIPM solution like C55. They also highlighted the importance of culture change as a key part of any business transformation:
Bringing the business along the journey with you is incredibly important. Part of asset management in general is about breaking own silos between traditional departments.
Asset Strategy Lead
Northern Gas Networks
What’s Next on NGN’s Asset Management Journey?
Pending the final determinations in December, NGN is now focusing on delivering the RIIO-2 plan. Key goals in the next phase include improving visibility and tracking of performance against the plan, extending the planning horizon to build a longer-term view, and moving towards “a living investment plan” where regulatory submissions will be a snapshot of the plan in C55. The Copperleaf team looks forward to supporting NGN in achieving this vision!
To learn more about NGN’s asset management transformation, watch the full webinar.