Risk-based asset management optimization

This paper describes a risk-based approach developed by Toronto Hydro-Electric System Limited (THESL) for optimizing and justifying asset management (AM) decisions related to medium-voltage electrical distribution systems. This approach balances the risk of in-service asset failures against the capital expenditures required to mitigate these risks in order to identify the optimal scope and timing of investments into aging infrastructure. At a broader level, this approach has been applied as part of a business case evaluation process, whereby the reductions in total cost of ownership — including asset risk, non-asset risk and maintenance costs, are compared to the overall investment costs to maximize the net present value (NPV) of investments.