Introduction
Utilities face tightening budgets, rising rates, and increasing demands — new loads (data centers), resilience mandates, and decarbonization goals.
Reference:
“Utilities may subsidize data-center growth…” — Utility Dive, Mar 10 2025
“US utilities grapple with Big Tech’s massive power demands…” — Reuters, Apr 7 2025
Core idea: every dollar must be justified. Utilities must avoid waste, optimise operations, and get the most from existing technologies.
Preview: redundancy, CapEx vs O&M, operator enablement, prioritisation, and case studies.
Redundancy & Over-capacity — Are We Wasting Dollars?
Define redundancy/reserve capacity and its purpose.
Common inefficiencies:
Idle or low-utilization backup systems.
“Just-in-case” spares that create maintenance drag.
Actions:
Conduct a redundancy audit (usage frequency, cost vs benefit).
Shift to risk-based redundancy — prioritize assets based on criticality and actual performance.
Key question: Does each redundant asset measurably improve reliability or just add cost?
CapEx vs O&M — Making the Right Trade-offs
Define CapEx vs O&M and how regulatory treatment influences spending behavior.
Problem: utilities often favor CapEx (rate-base growth) over smarter O&M optimization.
Opportunity:
Replace “run-to-failure” models with lifecycle-based cost analysis.
Move from reactive maintenance to targeted reinvestment.
Framework:
Compare lifecycle cost, failure risk, and reliability gain.
Quantify avoided O&M through CapEx upgrades.
Reference: McKinsey — Advanced Analytics in Utility Asset Management.
Technology & Operator Training — Extracting More Value from What You Have
Many utilities underutilize SCADA, analytics, or predictive maintenance tools.
Core idea: technology ROI depends on human adoption.
Strategies:
Inventory existing technologies and their usage rates.
Develop training programs and operator simulations.
Measure outcomes: % proactive maintenance, downtime reduction, alarm volume.
Cultural component:
Promote data-driven operations and continuous improvement.
Reference: McKinsey data shows 10–20 % O&M savings through analytics + training.
Prioritisation Framework — Spending Wisely in a Constrained Environment
Objective: align limited investment with highest-impact outcomes.
Criteria:
Risk to service reliability/resilience.
Cost of failure or outage.
Asset criticality and lifecycle stage.
Regulatory / decarbonization drivers.
Tools:
Scenario planning for demand growth (data centers, EVs).
Transparent governance and post-investment review.
Outcome: consistent, defensible investment prioritization.
Case Studies
A. Analytics-Driven Asset Management (Transmission Utility)
North American T&D utility used predictive analytics to target replacements.
Result: double-digit O&M reduction, improved SAIDI/SAIFI.
Lesson: data + culture change unlock greater value than hardware spend.
B. Madison Water Utility – Strategic Asset Management Plan
Full asset inventory + condition ranking + capital planning framework.
Applicable to electric utilities for CapEx/O&M balance.
Lesson: structured asset data → smarter funding decisions.
C. Rate Study Integration – Linking O&M to Long-Term Capital Needs
Example from municipal rate design showing connection between maintenance today and rates tomorrow.
Lesson: integrated financial + asset management planning improves transparency.
Key Actions & Recommendations
✅ Audit redundancy & utilisation
✅ Compare O&M vs CapEx trade-offs using lifecycle cost
✅ Train operators to fully leverage existing tech
✅ Adopt risk-based prioritisation framework
✅ Implement governance & post-investment review
✅ Engage regulators and ratepayers on transparency
✅ Track KPIs: maintenance cost per MW, downtime, analytics adoption, ROI
Conclusion
Funding is tightening while expectations rise.
The path forward:
Rationalize redundancy.
Balance CapEx/O&M with data.
Empower operators.
Prioritize ruthlessly.
Future-ready utilities will measure success not by size of spend, but by value extracted per dollar.