Avangrid Subsidiaries NYSEG and RG&E Deliver Best Reliability in Five Years

Rhea-AI Summary

Avangrid, Inc. (AGR) subsidiaries NYSEG and RG&E announce best reliability in five years with significant year-over-year improvements. Over $320 million planned for infrastructure investments in 2023 to enhance grid resiliency. CEO Pedro Azagra emphasizes $5.2 billion investments approved for improved reliability, shorter outages, and energy cost management.

Insights

Energy Sector Analyst

Investments in infrastructure, particularly in the energy sector, are critical for ensuring the reliability and resiliency of power supply. The announcement by NYSEG and RG&E of their best reliability results in five years signals a positive outcome from their ongoing investments in the grid. This is significant for stakeholders as it demonstrates the company's commitment to improving service quality, which can lead to increased customer satisfaction and potentially reduce regulatory penalties associated with not meeting reliability standards.

From a financial perspective, the $320 million planned investments across the state could lead to long-term operational savings by reducing the costs associated with power outages and service interruptions. However, it is also important to consider the capital expenditure required for these improvements and how it may impact the company's financials in the short term, including effects on cash flow and debt levels.

The use of advanced technologies such as smart meters and automation is indicative of a shift towards modernizing the grid, which may offer additional revenue streams or operational efficiencies in the future. These investments are likely to be viewed favorably by investors looking for companies with a proactive approach to managing aging infrastructure and adapting to increased demand for electricity, particularly as the electric vehicle market expands and the overall energy consumption patterns evolve.

Risk Management Expert

From a risk management perspective, the infrastructure investments by NYSEG and RG&E are a strategic move to mitigate the operational risks associated with power outages and system failures. By targeting the System Average Interruption Frequency Index (SAIFI) and Customer Average Interruption Duration Index (CAIDI), the companies are directly addressing the reliability metrics that are crucial for regulatory compliance and customer expectations.

Enhancing the grid's resiliency, especially in the face of increasingly intense and frequent storms, reduces the risk of widespread outages and the associated costs of emergency response and repairs. This proactive approach not only benefits customers but also protects the company's bottom line by potentially lowering insurance premiums and avoiding revenue losses from unserved energy. Additionally, the focus on non-pipes and non-wires alternatives reflects a risk-averse strategy to diversify investments and reduce reliance on traditional and sometimes vulnerable, infrastructure components.

However, the scale of these investments also introduces financial risks, such as the potential for cost overruns or delays in project completion. These risks must be carefully managed to ensure that the promised improvements in reliability and resiliency are delivered without negatively impacting the company's financial health.

Utility Regulation Expert

The role of utility regulation is to ensure that customers receive reliable service at reasonable rates while allowing utilities to earn a fair return on their investments. The New York Public Service Commission's establishment of reliability targets such as SAIFI and CAIDI is a clear example of how regulatory bodies measure and enforce performance standards.

NYSEG and RG&E's reported improvements and planned investments are likely in response to these regulatory requirements, indicating a successful regulatory influence on utility performance. It's important to note that rate cases, such as the one mentioned, are mechanisms through which utilities recover the cost of investments from customers over time. The $5.2 billion of investments approved in the latest rate case will be scrutinized to ensure that they are prudent, necessary and beneficial to the customers.

While the upfront costs are often recovered through rate increases, the long-term benefits of improved reliability and resiliency can lead to lower overall costs for consumers. Furthermore, investments in smart meter technology can empower consumers to manage their energy usage more effectively, potentially leading to cost savings and environmental benefits through reduced energy consumption.

In 2023, Companies saw year-over-year improvements in outage frequency and duration

More than $320 million in infrastructure investments planned across the state this year to continue this trend

BINGHAMTON, N.Y.--(BUSINESS WIRE)-- New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RG&E) subsidiaries of Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, today announced their best reliability in five years. Delivering energy safely and reliably to their 1.9 million customers is the top priority for NYSEG and RG&E. As the electric and gas infrastructure in Upstate New York ages, the Companies invest in the grid via reliability projects and upgrades to realize this objective. In 2023, both NYSEG and RG&E delivered their best reliability results in the last five years, with significant year-over-year improvements. This critical work will continue, particularly due to the size and scope of resiliency work needed to support growing dependency on electricity.

“With the increasingly intense and frequent storms in our region and growing electric demand, our customers deserve continued resiliency and improved reliability, and the $5.2 billion of investments approved in our latest rate case enable that forward momentum,” said Pedro Azagra, CEO of Avangrid. “Enabling New York to have more reliable power, shorter or avoided outages, and new smart meter technology helps customers manage their energy costs; we will continue to invest to improve even more.”

The New York Public Service Commission sets reliability targets for its utilities in the form of System Average Interruption Frequency Index (SAIFI) and Customer Average Interruption Duration Index (CAIDI) metrics. These require the Companies to meet targets for both how often outages happen as well as the duration of those outages.

In 2024, NYSEG and RG&E will invest $38 million in resiliency projects which include rebuilding circuits in Brewster, Elmira, Lancaster, Liberty, Oneonta and Rochester Central; $35 million in automation, which add an additional 294 locations where they can remotely control equipment from the Energy Control Center; and more than $250 million on replacing aging substation and overhead line equipment.

NYSEG and RG&E will also replace 45,000 aging electrical poles statewide, resume tree trimming on a regular cycle in NYSEG territory, and continue with non-pipes and non-wires alternatives to traditional upgrades.

When a customer’s power is out, restoration can’t come soon enough, but NYSEG and RG&E are taking the steps necessary to modernize the grid to provide the safe, reliable service that’s vital to our way of life. These results prove that investing in the electric infrastructure is the key to provide customers with the power they need, when they need it; this is a responsibility the Companies take seriously.

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $41 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs more than 7,500 people and has been recognized by JUST Capital in 2021, 2022, 2023 and 2024 as one of the JUST 100 companies – a ranking of America’s best corporate citizens. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2023 for the fifth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214402357/en/

Media:

Shelby Cohen

Shelby.cohen@avangrid.com

607-788-6785

Source: AVANGRID, Inc.

FAQ

What is the ticker symbol for Avangrid, Inc.?

The ticker symbol for Avangrid, Inc. is AGR.

How much is planned for infrastructure investments in 2023 by NYSEG and RG&E?

Over $320 million is planned for infrastructure investments in 2023 by NYSEG and RG&E.

What is the total investment approved for improved reliability, shorter outages, and energy cost management?

CEO Pedro Azagra emphasizes $5.2 billion investments approved for improved reliability, shorter outages, and energy cost management.

What are the reliability targets set by the New York Public Service Commission for utilities?

The New York Public Service Commission sets reliability targets in the form of System Average Interruption Frequency Index (SAIFI) and Customer Average Interruption Duration Index (CAIDI) metrics for utilities.

What are some of the resiliency projects planned by NYSEG and RG&E for 2024?

Some of the resiliency projects planned for 2024 include rebuilding circuits in Brewster, Elmira, Lancaster, Liberty, Oneonta, and Rochester Central; automation investments; and replacing aging substation and overhead line equipment.