Business Modelling - Case Study: Nuclear Decommissioning

The problem

Our client wanted to estimate the size of reserves required today to cover their nuclear decommissioning costs. A key issue was that a number of different parties had very different views as to what the decommissioning costs would be and it was essential that all parties came to a consensus view.

Solution

LCP identified the key factors that have a significant impact on the ultimate decommissioning cost and built a powerful financial model of the decommissioning process that allowed the client to assess the impact of changing these key factors. We then simulated the decommissioning process many thousands of times to build up a picture of what the likely range of costs could be.

Benefit to client

By showing the range of possible costs we reconciled all of the different parties. We managed to change the debate away from "what is the cost?" to it being an issue of how prudent the reserves should be and hence "how likely is it that the costs will be covered by the reserves?".