Targeted Capital Optimization
Enhanced Financial Metrics
Targeted Capital Optimization – or TCO – represents a fundamental shift from traditional capital deployment to a comprehensive business model. We're not just talking about cost-cutting. We're talking about a strategic approach that transforms how companies think about, plan, and execute their capital programs.
When properly deployed TCO not only broadens your capital spending power, it reduces your O&M requirement, which improves the P&L and your FFO/Debt Ration.
Why it matters!
Capital portfolio performance impacts all of your primary stakeholders. Customers are experiencing unprecedented bill sensitivity. What used to be routine rate increases now draw advocacy group attention and media scrutiny. The days of automatic capital expenditure approval are over.
Regulators are responding with intensified scrutiny that goes beyond traditional reviews. State commissions demand detailed project justifications, question equipment specifications, and require demonstration of least-cost alternatives. Federal regulators are signaling mandates for system integrity improvements, leak detection upgrades, and enhanced monitoring capabilities.
Higher cost of capital is pressuring the financial metrics that matter to Investors. FFO to debt ratios are under scrutiny, EPS dilution from equity raises is raising analyst concerns, and the traditional utility investment thesis is being challenged.
Investors want want utilities positioned for growth opportunities while simultaneously demanding improved capital efficiency and stronger financial metrics.
Employees are watching critical infrastructure projects being delayed or canceled due to capital constraints. This creates operational risk, undermines morale, and potentially compromises the long-term reliability of your system.
TCO targets the concerns of all stakeholders simultaneously, rather than create tradeoffs between them. It lowers project costs without increasing execution or compliance risks. It improves O&M efficiency, which directly benefits customer bills while improving P&L and FFO to debt ratios.
It creates regulatory goodwill through demonstrated capital stewardship. And it reduces pressure to borrow more or dilute investor shares while enabling critical infrastructure projects to move forward.
This isn't about choosing winners and losers among stakeholders – it's about creating value for everyone.
Proven effectiveness.
TCO has been implemented across thousands of projects and typically creates 10-15% efficiency across capital portfolios. This are real capital dollars that may be reinvested to reduce risk, avoid borrowing pressure, and improve operational efficiency.
Financial Performance
Capital Efficiency: Creates billions in capital headroom for strategic redeployment
P&L Improvement: Improves P&L performance through enhanced O&M efficiency
EPS Protection: Reduces pressure to borrow or dilute investor shares
FFO/Debt Ration: Strengthens key financial metrics that matter to credit agencies and investors
Customer Bill Pressure: Reduces the impact of Capital Spending on Customer bills with more predictable capital deployment and tangible O&M cost offsets.
Operational Excellence
Improved Reliability: Maintains absolute commitment to system reliability, safety, and regulatory compliance
Boosts Efficiency: Eliminates inefficiencies without cutting corners or deferring necessary work
Leverages Suppliers: Optimizes contractor and supplier relationships for maximum project value
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No Risk. No Obligation
Achieving Excellence Together
Our Human Reliability program has consistently delivered outstanding results, creating quality and efficiency across various industries. We have significantly reduced consequential errors during high risk evolutions in gas utilities, minimized errors by engineers and analysts, improved safety protocols, and improved productivity through reduced rework and waste.
Join Leaders of Performance.
Join us in adopting a modern, adaptive approach to human reliability that respects the unique dynamics of your industry while leveraging the best of what INPO and DOE have pioneered. Let's work together to build safer, more efficient, and more reliable workplaces.