Publications
Publications
- August 2017 (Revised December 2017)
- HBS Case Collection
Accounting for Nuclear Power Provisions at RWE
By: Paul Healy and Jonas Heese
Abstract
In early 2016, RWE, a utility that operates nuclear power plants in Germany, came under scrutiny from regulators and the media over the adequacy of its provisions for costs of decommissioning and dismantling (D&D) its nuclear power plants. Accounting standards required utilities to record the present value of projected D&D costs as a liability. However, there were many uncertainties associated with these estimates given the actual cash outlays that would be incurred decades into the future. In addition, German government bond rates used to discount projected future costs had fallen to record lows, and RWE as well as its competitors were struggling with depressed electricity prices. Would RWE's provisions be adequate to cover the future costs?
Keywords
Liabilities; Provisions For Long-term Obligations; Discounting; Accounting; Energy Generation; Energy Industry; Germany
Citation
Healy, Paul, and Jonas Heese. "Accounting for Nuclear Power Provisions at RWE." Harvard Business School Case 118-013, August 2017. (Revised December 2017.)
About The Authors
