This utility’s underground cable system contains approximately 8600 miles of cable. Some of the cable is at least 40 years old. Currently, the company is replacing only about 0.01% of the cable per year. The company is not sure what the life expectancy of cable is but they believe that the 0.01% replacement rate is not consistent with any reasonable estimate of remaining life. The company believes that a more proactive policy is needed to:

• avoid having to replace a large quantity of cable in a short period
• avoid degradation in reliability due to increasing cable related outages
• avoid potential, very high cost, double contingency outages in looped cable areas
• minimize the life-cycle cost of their underground cable system.

VMN Group’s methodology and software were applied to this problem. We developed the least-cost strategy for repair / replace of the utility’s cable assets. We also developed a twenty-year expenditure forecast associated with implementation of the strategy.

After initial data-gathering and some discussion of assumptions about the behavior of underground cable, we were able to complete the study and discovered some very interesting results. We decomposed the underground cable system by cable type. For the most popular type of new cable (750kcmil), we found that the optimal policy resulted in a 77% decrease—over $60M in present dollars-- in the present value of the asset management cost. This is not an atypical result for these kinds of assets.