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Lines Companies
Energy Industry Challenges: Lines Companies

Lines company operations have traditionally been managed as one aspect of an integrated energy delivery, retail and generation or trading business.

Commercially, lines company operations have been treated as cost rather than profit centers. Revenue has been derived from the retail operations with operating expenditure being budgeted for network maintenance and management.

Primary commercial drivers have been to create an acceptable financial return from the integrated business with minimal reference to the value of the assets employed.

Network asset management which has tended to be rather more reactive than planned has traditionally been performed on a 'cost plus' basis. Asset maintenance and capital work programs have tended to be driven by annual expenditure budgets which do not necessarily reflect the income derived from the use of the asset.

The impact of industry deregulation on network management operations has been significant and has included:

Retail and lines company operations separated into autonomous business units.

Lines company operations required to operate as profit rather than cost centres.

Distribution use of System (DuoS) charges required to be provided as a transparent component of delivered energy cost.

Statutory constraints imposed on the return on investment (ROI) allowed on the asset value of the distribution network with permissible ROI often reducing annually.

Imposition of performance metrics (e.g. SAIDI, CAIDI and SAIFI) with possible financial implications when targets are not met.

Formal contractual obligations to connected customers and/or retailers.

In addition to evolving statutory requirements some lines companies have also found that connected customers become more discriminating in a competitive deregulated market.

A Kinetiq industry paper, New Opportunities & Challenges, discusses some of the issues that lines companies around the world are having to face as the energy industry continues to change.

 



Energy companies need to collect, store and manage increasing volumes of metering data. Kinetiq's PowerView module provides the ability to readily access and extract value from stored data.

 

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