Electricity Asset Management Plan 2019-2029
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Vector Limited://
In line with the Three Lines of Defence principle, all Vector people are responsible for applying Vector’s ERM framework within their individual roles and are encouraged to proactively identify, analyse, escalate and treat risks, including considering the external trends and drivers that might impact Vector’s operating environment going forward. Under the governance of Vector’s Risk Management Policy, the Network Risk Management Process sets out the specific risk management methodologies and processes used within the Network’s business and in particular our asset management practice. Quality service metrics, i.e. SAIDI and SAIFI, are recorded in the risk management system and reported to the Vector Board with a specific focus placed on any corrective and remediation activities to address potential deviations from our service level targets. Identified network risks are assessed on both the likelihood of the risk occurring and the potential impact(s) of the risk. The resulting evaluation informs the asset investment process and the development of asset class strategies, and ensures appropriate treatments plans (which supplement existing controls) are developed and prioritised. This assessment is mapped against the Vector Group Risk Assessment Matrix, which articulates the Board’s risk appetite and enables risks from across the business to be raised and discussed using a consistent and transparent approach. Asset risk management is undertaken using a combination of risk and asset reliability models, including a Failure Mode and Effects Analysis (FMEA), to identify maintenance and other proactive controls, while Bow Tie diagrams enable a comprehensive (and visual) assessment of the causes and consequences of an individual risk and the controls in place to manage the risk. The network-related risk assessment includes identifying potential High Impact Low Probability (HILP) events that could adversely affect the state of the network with specific controls and mitigating activities identified to manage and address the potential consequences. Where appropriate, a visual inspection of the network’s health is undertaken post-HILP events to confirm the ongoing resilience of the system. To confirm the effectiveness of governance, risk management and internal controls across all business operations, Vector’s Group Internal Audit function operates an independent and objective assurance programme. The team follows a co- sourced model, drawing on both in-house and external expertise, and has unrestricted access to all Vector staff, records and third parties as deemed necessary. The team also liaises closely with KPMG, as Vector’s external auditor, to share the outcomes of the internal audit programme (to the extent that they are relevant to the financial statements). 3.7 ASSET MANAGEMENT IMPROVEMENT Periodically, we review our asset management practices using the Commerce Commission’s Asset Management Maturity Assessment Tool (AMMAT). In addition, Entrust, Vector’s majority shareholder (see Section 2.1), biennially conducts an independent review of the state of Vector’s network that includes an assessment of asset management. We use these reviews to inform our plans to improve our asset management practice. At an overall level, our asset management maturity compares well with generally accepted New Zealand electricity asset management practices to ensure the ongoing safe and efficient operation of the electricity network. Appendix 12 provides details of the latest AMMAT self-assessment. Our latest AMMAT review highlighted the good progress we are making in terms of formalising our asset management practices, and improving our asset management information systems and processes. We recognise the importance of continuous improvement and that this process is ongoing, in our aim of achieving a target score of three on each AMMAT rating criteria. We will continue to develop our CBARM models and formalise our data and information systems to support these models. We have reviewed our operating and contracting models in response to changes in our health and safety policies, potential risks associated with climate change, cyber-security, privacy and data analytics. In addition, Vector continues to make improvements to our asset management approach and adopt changes as expectations of EDBs change. To this end, Vector welcomes greater clarity and certainty from documents such as the Commerce Commission’s DPP Enforcement Guidelines. This information can guide input into our prioritisation and investment modelling. The management and tracking of identified risks and associated treatment plans is undertaken using Vector's enterprise risk management system, Active Risk Manager (ARM).
Set out below is an overview of the primary areas where ongoing improvements of our asset management practice is being implemented.
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