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Preparing for the Next Nuke

Using scenario analysis to help utilities map out their strategies.

Fortnightly Magazine - March 2006

these assets is likely to grow in each scenario. A CO 2 tax in Green World and Nuclear Resurgence would be particularly advantageous to the existing and second-generation fleet of nuclear power plants.

Energy Saving, Metering, and Pricing Technology. Economic, technology, and regulatory drivers are expected to push energy intensity further along its downward trend in all four scenarios. Demand for energy-saving technologies, including metering and real-time pricing, will be especially significant in the two high-price scenarios where consumers pay a premium to cut power usage and save bills.

Regulatory Expertise Grows in Importance.

Fear of terrorist attacks, federal-state regulatory tension, and regulation and enforcement of environmental quality, and reliability are fundamental drivers in the four scenarios:

Terrorism & Turmoil: Security Concerns;
Green World: Environmental Regulation and Transition Away From Carbon;
Return to Reliability: Reliability Concerns; and
Nuclear Resurgence: Environmental Quality and Federal Legislation.

Regulatory challenges represent significant regulatory risk across all scenarios, and that risk is likely to grow in any plausible future business environment. As a result, regulatory expertise at both the federal and state level will continue to be a key core competency required for competitive advantage.

Should You Consider Building a New Nuclear Plant?

Scenario analysis provides the opportunity to play “what if” and test considerations across alternative views. Combining the qualitative power of scenario analysis with the quantitative capabilities of market and risk analytics software solutions can provide CEOs with a consistent, transparent, and independent decision support solution to assess strategy options across the enterprise and across alternative views of the energy future. Simulating the impact on market fundamentals and portfolio performance takes scenario planning to the next level and makes it suitable to guide business decisions and transactions.