Master of Science / Department of Electrical and Computer Engineering / Anil Pahwa / Unpredictable power outages due to environmental factors such as lighting, wind, trees, and animals, have always been a concern for utilities because they are often unavoidable. This research aims to study squirrel-related outages by modeling past real-life outage data and provide the optimal result which would assist utilities in increasing electric system reliability. This research is a novel approach to benchmark system performance in order to identify areas and durations with higher than expected outages. The model is illustrated with seven years (2005-2011) of animal-related outage data and 14 years of weather data (1998-2011) for four cities in Kansas, used as training data to predict future outages. The past data indicates that the number of outages on any day varies with the seasons and weather conditions on that day. The prediction is based on a Bayesian Model using conditional probability table, which is calculated based on training data. Since future weather conditions are unknown and random, Monte Carlo Simulation is used with the past 14 years of weather data to create different yearly scenarios. These scenarios are then used with the models to predict expected outages. Multiple runs of Monte Carlo analysis provide a probability distribution of expected outages. Further work discusses about cost-to-benefit analysis of implementation of outage mitigation methods. The analysis is performed by considering different combinations of outage reduction and mitigation levels. In this research, eight cases of outage reduction and nine cases of mitigation levels are defined. The probability of benefit is calculated by a statistical approach for every combination. Several optimal strategies are constructed using the probability values and outage history. The outcomes are compared with each other to propose the most beneficial outage mitigation strategy. This research will immensely assist utilities in reducing the outages due to squirrels more effectively with higher benefits and therefore improve reliability of the electricity supply to consumers.