We propose an economic electricity reliability planning model which includes customer outage costs (COCs). The objective is to select transmission and distribution (T&D) planning projects which minimize the total costs of providing service in the T&D system. Total costs include both traditional labor and material costs of a T&D project and customer outage costs. We apply this model to evaluate two distribution projects using outage cost data recently collected by Niagara Mohawk Power Corporation (NMPC). We compare the projects selected in this approach to the projects that would have been chosen if outage costs were not used in the analysis. Copyright © 1995 Published by Elsevier Ltd.