Helping a large dual unit station achieve significant reductions in O&M costs
“In just this year alone, the MCR project results have yielded $8.7 million (10%) in non-outage related savings that will be repeated year after year. Our goal is to achieve cost performance on par with the number one performer for plants our size. If we keep working on these initiatives, if we’re not number one, we’ll be pretty darn close.”
—Chief Nuclear Officer
Background
A large dual unit station operates in a very challenging market in the west. Energy prices in the market are low at the margin, and are driven by substantial tax-subsidized wind generation and an abundance of low-cost gas-fired generation. As a result, profit margins for the station have become very narrow. The Chief Nuclear Officer of the station, knowing he needed to reduce O&M costs in order to become more competitive in the market, asked MCR to help.
Solution
MCR conducted an initial benchmark analysis focused on four major areas with opportunity for cost reductions. Informed by the benchmark, we guided the station’s cost center owners through our zero-base budgeting process. Using our cost analysis templates and supporting database, we worked with the cost center owners to analyze, challenge and risk rank every line item in the 2015 budget. Based on the risk ranking, we identified costs that could be reduced or eliminated from operations. Reflecting the cost reductions, the revised budget was consolidated, reviewed with the station’s management team and presented to the station owner’s Board.
Results
MCR and the station’s team identified opportunities to reduce non-labor O&M costs by 10% on top of substantial cost reductions implemented in the previous year. In addition to the savings, the new 2015 budget plan now includes a justification of every expenditure and a better understanding of the potential risks of not funding any specific budget line item.