December 13, 2021
Summary
Most publicly-traded utilities in the United States have a DMI Index of up to 1.2 percent. Deregulated utilities tend to have a higher DMI Index compared to regulated utilities.
A higher DMI Index is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI Index because most of their enterprise value is derived from data. For example, Google’s DMI Index is 93 percent as we will discuss in a later blog.
Definitions
- DMI Index = Data Valuation / Enterprise Value
- Data Valuation = Customer Data Valuation + Equipment Data Valuation + Employee Data Valuation + Other Asset Valuation (this exercise uses Customer Data Valuation exclusively)
- Enterprise Value = Equity Value + Long Term Debt – Cash, a key metric used in the investment community
- Deregulated utilities operate in states, which allow customers to “shop” for energy across providers
Methodology
The YDC team recently published a DMI Index for top utilities in the United States. Here is an example for Vistra Corporation along with a benchmark for other utilities.
The data valuation is based on customer data only and relies exclusively on publicly-available data sources. The total value of data will likely be higher once additional datasets relating to equipment, financials, real estate and employees are included in the coverage.
The Customer Data Valuation methodology uses customer counts, revenues, gross margin, churn rate, customer tenure and discount rates. Data sources include financial statements, the United States Department of Energy and social media from September 2021. Going forward, we will be working to make the data valuation more real-time.