Show me the Money—High-Profile for Advanced Analytics in Utility Project Finance

Advanced analytics will likely play a front-and-center role in the majority of goals associated with a drive toward operational excellence which American Electric Power highlighted in a recent publicly-available presentation to a major investment bank.

Well-prioritized advanced analytics project plans

As part of its Vision 2022 plans for strategic transformation, AEP presented details to a subsidiary of Mitsubishi at a recent financial conference regarding its “Relentless O&M Optimization.”

Details on AEP’s efforts appear on a subsequent slide titled “Bending the O&M Curve,” and provide an excellent high-level priority list of Operations and Maintenance improvement goals.

The vast majority of these goals happens to have a very high level of advanced analytics-related work associated with each of the eight areas, and the associated examples provided by AEP:

Lean Management System Implementation/Continuous Process Improvement

• Distribution – Drive enhanced reliability which will lead to reduced O&M cost associated with storm restoration in the long term
• Supply Chain – Optimizing the material requisition process to improve material lead times, reducing lock outs and increasing crew productivity resulting in reduced O&M cost
• Fleet Operations – Focused on reducing the number of vehicle platforms/options acquired and itemizing the acquisition process to reduce acquisition and maintenance costs
• Generation (system productivity) – Fleet wide team-based focus on the reduction of waste associated with targeted plant systems, e.g. coal handling, scrubbers

Data Analytics

• Workforce optimization – Employee/contractor mix
• Hot socket model – Using AMI data to preemptively identify meters at risk
• Revenue Protection – Detecting meter tampering
• Frequency Regulation – Analysis of PJM bidding strategies

Automation

• Scrap metal billing and management
• Service Corp billing allocation factors
• No-bill workflow assignment process
• Customer workflow scheduling

Digital Tools

• “The Zone” – Machine learning tool to operate fossil units at optimal level to minimize O&M and pital, while maintaining and improving performance
• Generation Monitoring and Diagnostic Center – Predictive capabilities that save O&M and capital

Use of Drones

• Storm damage assessment
• Real estate and land surveys
• Transmission facility inspections, construction monitoring and documentation
• Telecommunication tower inspections
• Cooling tower and boiler inspections

Outsourcing

• Rapid application & information support
• Lockbox for customer payments by check

Workforce Planning

• Approximately 4,000 employees will retire or leave in the next 5 years

Strategic Sourcing

• Reducing cost through Procurement Category Management – Continuing to mature our Category
• Management program and aggressively using strategic sourcing opportunities to optimize the value
• AEP receives from the $6B spent annually on goods and services

In an area of interest to personnel involved in asset health and in related efforts associated with optimization of work and outage management systems, the AEP report also includes transmission line age profiles, as well as profiles for T&D transformers and circuit breakers, and related projections for the quantities of these four classes of assets which will be exceeding their expected useful life in the future:

AEP’s full presentation from the MUFG conference is at this link.