After Ross explained the Simple Infrastructure Asset Management Diagram 3 in the previous post, Heather commented further. She cited that the most important part of asset management is the thinking part.
Yeah, I think, it’s just another opportunity to bring us back to the idea that it’s really about the thinking part. This is something that I spend a little time talking and I know Ross gets into it as well.
But how you think about your asset is really the most important part of asset management. I mean you will have some kind of computer or canned tools, that you know like a map or something like that, that will help you with your asset management process but the most important part is to able to think about your assets.
And so what Ross has presented is, on the left hand side where do you want your asset do, which is your levels of service. What do you need them to do in the future? And then, what risks you might face in terms of what assets are going to cause you risk? In order to be able to meet, what do you need to do?
And then how are you going to maintain your assets to kind of meet future demands, meet current demands, and that how are you going to pay for it?
So it really comes down to just how we’re going to think about our assets. And as Ross mentioned I did… do a blog post a little while ago about when they cut usage in California so drastically.
I mean that’s a great thing to do in terms of future demand but it created a risk. It created a big risk to those utilities because many of them were already facing inability to replace aging infrastructure or decaying infrastructure.
And then when you cut the usage, you cut revenue. And you cut revenue a whole lot more than you cut expenses because most utilities generate most of their revenue based on volume-metric charges, and most of their expenses are fixed. They’re kind of independent on how much water you produce.
So you’ve created this risk for the California utilities that said, okay well we have to meet our future demand of less usage, but now we have this risk that we can’t replace aging infrastructure or maybe even keep up with basic maintenance because we’re going to have less revenue.
And it could be somewhere in the order of 30 percent, if they cut 30 percent user, could be a little more, a little less, depending on how they collect their revenue.
So I think it’s, what he’s presented is a really great way to think about your assets and think about what’s going on in your system so that you’re better able to handle things as they come along.
At least you can think through, well now what do we do? Now what we deal we have less usage. Do we have to raise revenue?
Do we have to cut service? What is going to change based on our new situation?