Weathering the Storm: Mapping the FEMA National Risk Index to Utility Service Territories

As climate volatility increases, utility companies face growing challenges in managing weather-related risks. From hurricanes to wildfires, these events not only disrupt operations but also impact financial performance. The frequency and intensity of these events are continuing to increase; Climate.gov reports that 2024 had the second most number of climate disasters that caused over $1 billion in damages, trailing only 2023.¹

This white paper describes a practical approach to map the Federal Emergency Management Agency (“FEMA”) National Risk Index (“NRI”) to utility service territories, enabling better assessment of weather risk and its implications for utilities and customers. The goal is to provide regulators and utility professionals with a data-driven framework to better understand the weather risk that impacts utility service territories and to inform regulatory outcomes that more accurately reflect that risk. A specific application to risk analysis supporting a return on equity (“ROE”) determination is presented.

¹ Smith, Adam B. “2024: An active year of U.S. billion-dollar weather and climate disasters.” NOAA Climate.gov, 10 Jan. 2025, https://www.climate.gov/news-features/blogs/beyond-data/2024-active-year-us-billion-dollar-weather-and-climate-disasters.

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All views expressed by the authors are solely the authors’ current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The authors’ views are based upon information the authors consider reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.