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It will become increasingly more important to be able to estimate the cost of achieving a given level of reliability for a distribution company. Specifically, if baseline values of reliability are to be established by utility regulators, distribution companies need to understand the amount of expenditure required to reach a particular level of reliability. There is no easy method to do this, but distribution engineers and planners play a key role in estimating the cost of obtaining a given level of reliability. From a distribution engineering perspective, the first step to determine the costs needed to achieve a given level of reliability is the review of system design audit and review of past performance. This generates insight into the underlying causes of poor reliability. This is a necessary first step in being able to gauge how reliability-improvement funds can be spent most effectively. The system design audit involves a physical inspection of representative areas of the distribution system. During the audit, it is also important for the auditor to have discussions with area engineers and operating personnel to gain their perspective on the root causes of reliability problems.