A utility company must replace an old coal-fired power plant. State regulators require that the utility company minimize the costs to ratepayers, but costs are difficult to ascertain given the potential for high taxes on carbon emissions as well as volatile fuel prices during the multi-decade life of the replacement. The differences in job related risk to the various technologies further complicate the investigation. The senior vice-president must select carefully, because he will be required to defend that alternative to a lot of enthusiastic and diverse stakeholders. A capital funding evaluation should be conducted that takes into account the numerous uncertainties associated with this specific problem.
This is a a finance case about budgeting.
PUBLICATION DATE: January 15, 2010 PRODUCT #: NA0007-PDF-ENG
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