The Economics of Reliability – US Power Generation, Transmission, & Distribution

In February 2021, a historic freeze hit the southern region of the United States causing power outages that had never been seen before. As power companies face stricter regulations and the pressure of always having to operate, the reliability of their assets will become even more important to the industry’s long-term success and the prevention of future catastrophic events. In this report, Pinnacle analysts dive into the impact that reliability has on the power generation, transmission, and distribution industry. Throughout this report, we analyze the financial and operational data of 32 publicly traded power companies and identify the key trends that are driving reliability.

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Key Insights from this Report

  • Operators have been navigating a decade-long transition and are in position to adopt new approaches to asset investment and maintenance.
  • Operators have realized margin expansion through stricter cost controls but need to set aggressive reliability targets to achieve their next big improvement.
  • Operators are slowly and steadily growing their asset base, meaning excess capital is not required to close historical investment gaps.
  • On average, operators spend 7% of revenue on reliability programs, through the most efficient operators spend less than 5% of revenue.

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