Utilities Privatization


Maintaining access to reliable, resilient, and cyber secure energy resources, generation assets, distribution infrastructure, and facility-related controls and data is critical to the execution of Department of Defense (DoD) missions. Alternative Financing Mechanisms (AFMs) leverage commercial sources of capital in order to finance near-term enhancements to DoD utility infrastructure. As part of a comprehensive Installation Energy Plan (IEP), AFMs can provide material benefits to DoD Components by providing cost-effective access to capital that might not otherwise have been obtainable through traditional methods. AFMs require DoD Components, however, to also use contractual mechanisms to ensure compliance with energy security, energy resilience, and cybersecurity requirements. Utilities privatization is one of several AFMs that a Military Department may use to finance utility improvements in support of the DoD's energy reliability, energy resilience, and cybersecurity goals. In the privatization process, military installations shift from the role of owner/operators to that of smart utility service customers. Privatized systems continue, however, to function as Defense Critical Infrastructure (DCI) and a DoD Component's decision to pursue utilities privatization must be consistent with prioritized mission assurance requirements, 10 U.S.C. 2688, applicable DoD instructions and guidance, and the affected installation's IEP.

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