Achieving Significant O&M Reduction with Risk-Informed Budgeting
Utilities face cost pressure as demand grows and reliability expectations remain high, yet rate relief is increasingly challenged by political pressure and affordability concerns. The typical responses of across-the-board budget cuts, staff reductions, or deferred projects can deliver short-term relief but often misallocate resources. A more effective option is risk-informed budgeting (RIB), which systematically challenges every budget line item to ensure funding is prioritized according to need and strategic alignment. Well-implemented RIB programs can deliver 10%–15% savings in routine budgets even after attempting other cost-reduction efforts.