Optimizing Total Value

in copy bd optimizing total value
 
The decision to repair or replace equipment and systems should be based on optimizing the total value of the equipment or system for the business over its remaining lifetime. There are many factors to take into consideration when deciding whether to repair or replace equipment, which we’ve broken down below.


Cost to repair
Cost per breakdown 
  • Direct cost of repair, including cost of removing the broken part, disposing of it, replacement part cost, and cost of installation and testing
  • Cost of lost production, including lost profits from lost production, cost of scrap materials, impact of the repair on product quality and miscellaneous costs
  • Collateral cost including environmental cleanup, occupational health and safety and legal costs
One-time cost 
  • Cost of inventorying spares related to the repair
Ongoing costs 
  • Impact of repair on product quality and production capacity, and maintenance costs over the remaining service life
Cost to replace
Disposal cost of retired equipment
  • Decommissioning and disposal cost
  • Salvage value
  • Equipment depreciated value write-off cost (non-cash)
Cost of purchasing and installing a replacement unit 
  • Research time, capital equipment cost and spare parts inventory cost, cost of tying up working capital
  • Installation cost including miscellaneous parts and supplies, inspection and certification costs
  • Training and safety meetings prior to deployment
  • Lost production during installation and commissioning
The replacement unit’s impact on production 
  • Product quality
  • Equipment availability
  • Production capacity
  • Equipment operating costs
  • Labor costs
Out-of-warranty costs 
  • Cost of repairs
  • Lost production
  • Collateral costs
  • One-time costs
  • Impact on product quality
  • Impact on production capacity
This approach works well for looking at individual pieces of equipment but what if you need a major upgrade of multiple systems?

First determine what your objectives are that factor into the decision-making process.

Here are the typical objectives that we see:
  1. Update obsolete energy conversion system infrastructure to improve reliability and profitability
  2. Invest in core business and not utilities infrastructure systems
  3. Reduce energy carbon footprint and energy intensity
  4. Identify and rank alternatives by total NPV
Here is an example of a prototypical customer and the list of projects that they might want us to manage:
  • Chilled water production and delivery to the manufacturing building
  • Steam production and delivery to the manufacturing building
  • Compressed air production and delivery to the manufacturing building
  • Cooling towers and tower water delivery to the manufacturing building
  • HVAC units
  • New web-based monitoring and reporting system
  • Interior and exterior lighting
  • UPS and electrical infrastructure
Let NPV tell the story. Here is why a customer might choose to outsource their non-core utilities to Duke Energy One. 
 
in copy one article after tax cash chart

Here is the way we will approach your needs.

in copy one article approach graph
 
Here is what you can expect Duke Energy One will provide with our managed offer.

Construction Phase
  • Fixed firm pricing for equipment/installation/commissioning
  • Maintain an active presence during construction and commissioning
  • Assume ownership shortly after construction
Operation and Maintenance of Systems
  • Provide full-time ongoing operational personnel on site
  • Provide planned maintenance services under coordination of our personnel
  • Support monitoring and reporting system, and provide remote engineering as required
Ongoing Service Considerations
  • Outage response periods to be agreed upon by system and issue type; three buckets proposed based on urgency of response
Let us show you our capabilities and talk about our process to see if we can create value for your company. 

Contact us at 800.288.6807 or energyandmore@duke-energy.com.

Duke Energy Carolinas 
Duke Energy One is not the same company as Duke Energy Carolinas ("DEC"), and Duke Energy One has separate management; Duke Energy One is not regulated by the North Carolina Utilities Commission or the Public Service Commission of South Carolina or in any way sanctioned by the Commissions; Purchasers of products or services from Duke Energy One will receive no preference or special treatment from DEC; and
A customer does not have to buy products or services from Duke Energy One in order to continue to receive the same safe and reliable electric service from DEC. Nonpayment for these products or services may result in removal from the program, but will not result in disconnection of electric service. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY.

Duke Energy Progress 
Duke Energy One is not the same company as Duke Energy Progress ("DEP"), and Duke Energy One has separate management; Duke Energy One is not regulated by the North Carolina Utilities Commission or the Public Service Commission of South Carolina or in any way sanctioned by the Commissions; Purchasers of products or services from Duke Energy One will receive no preference or special treatment from DEP; and A customer does not have to buy products or services from Duke Energy One in order to continue to receive the same safe and reliable electric service from DEP. Nonpayment for these products or services may result in removal from the program, but will not result in disconnection of electric service. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY.

Indiana
These non-regulated utility products are not part of the regulated utility services offered by Duke Energy Indiana and are not in any way sanctioned by the Indiana Utility Regulatory Commission. Purchasers of these products will receive no preference or special treatment from Duke Energy Indiana in regard to their regulated electric service. A customer does not have to buy these products or services from Duke Energy One in order to receive the same safe and reliable electric service from Duke Energy Indiana. Purchasing such goods and services is completely at the customer’s discretion and similar products may also be available from other third party suppliers. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY. 

Ohio
These non-regulated utility products are not part of the regulated utility services offered by Duke Energy Ohio and are not in any way sanctioned by the Public Utilities Commission of Ohio. Purchasers of these products will receive no preference or special treatment from Duke Energy Ohio in regard to their regulated electric or gas service. A customer does not have to buy these products or services from Duke Energy One in order to receive the same safe and reliable electric or gas service from Duke Energy Ohio. Purchasing such goods and services is completely at the customer’s discretion and similar products may also be available from other third party suppliers. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY.

Kentucky
Duke Energy One is not the same company as Duke Energy Kentucky. Duke Energy One is not regulated by the Kentucky Public Service Commission. You do not have to buy Duke Energy One products or services (as applicable) in order to continue to receive service from the utility. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY.

Florida

Duke Energy One is not the same company as Duke Energy Florida ("DEF"), and Duke Energy One has separate management;  Duke Energy One is not regulated by the Florida Public Service Commission or in any way sanctioned by the Commission; Purchasers of products or services from Duke Energy One will receive no preference or special treatment from DEF; and a customer does not have to buy products or services from Duke Energy One in order to continue to receive the same safe and reliable electric service from DEF. Nonpayment for these products or services may result in removal from the program, but will not result in disconnection of electric service. THIS MESSAGE IS PAID FOR BY THE SHAREHOLDERS OF DUKE ENERGY.