Nuclear power plants reliably provide nearly 20% of electricity generation in the United States with 80% of these plants at least 30 years old. As nuclear plants continue to age, sustaining equipment reliability and addressing equipment obsolescence will continue to place upward cost pressures on operating and maintenance expenses as well as capital investment. The cumulative impacts of ever more demanding regulations also add to the cost of nuclear plant ownership. While nuclear costs have continued to rise, the advent of cheap shale gas and subsidized renewable generation have resulted in seemingly permanent low wholesale market prices. Combine increased costs with decreased revenue and the once forgone conclusion, a well-run nuclear plant will be highly profitable, is now in question.
In addressing cost pressures, licensees frequently look to traditional cost cutting methods to meet financial performance objectives: flat percentage, or across the board cuts in base budgets, staff reduction or deferred project spending. While these traditional methods may achieve some results, a more analytical approach to optimize spending will help ensure the right funding is applied to the right efforts at the right time. Zero Base Budgeting is an analytical approach to budgeting where the timing and amount of every budget line item is challenged. In our experience, an effectively implemented Zero Base Budgeting program has produced 10% to 15% savings in routine budgets even after implementation of other cost reduction initiatives.Download the Zero Base Budgeting white paper