This activity considers how the utility manage its Operation and Maintenance (O&M) activities and includes best practices. It also includes the main accounting and financial practices that improves the efficiency and transparency of the utility on its financial management activities.
This activity considers how the utility manage its Operation and Maintenance (O&M) activities and includes best practices. It also includes the main accounting and financial practices that improves the efficiency and transparency of the utility on its financial management activities.
Utilities need to provide their services in the most efficient manner possible, as their associated costs to operate are considered when determining the tariffs that customers of these services pay. In general, electricity utilities operate in conditions of full or partial natural monopolies -- over a period of time -- as a single provider of service within a geographic location, and they are subject to a regulatory framework. For these sectors, the challenge is to determine what would be the optimal cost for their operation, as there is a natural tradeoff between the search for lower tariffs and a better quality in the supply of electricity, since greater investments in OPEX (Operating expenses) and CAPEX (capital expenditure) will contribute to better service, but they may have an impact on the tariff.
Most of the regulations indicate that the best way is to determine limits or reference costs for the operations of electricity utilities, and thus compel them to look for ways to be more efficient and offer services at a lower cost. This has been an effective means of controlling the fair value of electricity tariffs, but it can be a great challenge for companies whose capacity to adapt is reduced. This activity includes also the accounting, financial, procurement, and budgeting practices of the utility.