- A new service agreement at the Vogtle site will remove Westinghouse as the EPC and slot the firm as a vendor. The utility is paying Fluor, a separate EPC, for ongoing work.
- At SCANA the utility extended the interim agreement with Westinghouse to June 26 and retained Fluor as its EPC. The utility still may cancel the twin reactor construction project if Westinghouse / Toshiba does not make good on its commitments to cover multi-billion dollar cost overruns.
- New cost estimates will be needed for completion of both projects and the public utility commissions in both Georgia and South Carolina will have to review and approve them for the projects to go to completion.
- The stakes are enormous with four Westinghouse 1150 MW AP1000 reactors under construction – two in Georgia and two in South Carolina. While interim arrangements take the projects at both sites to the end of June, long-term commitments still depend on complex financial arrangements that have yet to be negotiated between the utilities and Westinghouse and Toshiba.
Update May 15, 2017
Power plant owners limit Toshiba’s Westinghouse liabilities
(Reuters) The owners of the unfinished Vogtle power plant in Georgia led by Southern Co has agreed to cap Toshiba Corp’s responsibility for its guarantees on the much-delayed nuclear project at $3.6 billion.
The agreement pegs Toshiba’s guarantees for the unfinished Vogtle plant at about $3.6 billion, payable over at least three years, but the deal was not yet final.
The deal is also contingent on the owners of the incomplete V.C. Summer power plant in South Carolina, including utility company SCANA Corp coming to a similar agreement with Toshiba.
It is more cost-effective for both the Vogtle and V.C. Summer nuclear power plants to be completed together. Southern is assessing the cost to complete the twin reactor project in Georgia and Scana is considering scrapping its reactor effort in South Carolina and building a natural gas plant instead.
Voglte Sets New Service Agreement with Westinghouse
Georgia Power and Westinghouse have, in principle, reached a new service agreement which allows for the transition of project management from Westinghouse to Southern Nuclear and Georgia Power once the current engineering, procurement and construction (EPC) contract is rejected in Westinghouse’s bankruptcy proceeding.
The interim assessment agreement will remain in place until June 3 while the new service agreement is final and all court-related approvals are obtained. During this time, work will continue at the site and a transition of project management will begin. As previously stated, the company will take all actions necessary to hold Westinghouse and Toshiba accountable for their financial obligations.
Georgia Power said in a statement it will continue work to complete its full-scale schedule and cost-to-complete analysis and work with the project Co-owners (Oglethorpe Power, MEAG Power and Dalton Utilities) and the Georgia Public Service Commission to determine the best path forward for customers.
Westinghouse Bankruptcy Throws Fate of Reactors into Question
(Bloomberg) What this means is that Southern Co. has agreed to take the lead on building two nuclear reactors at its Vogtle power plant in Georgia from bankrupt contractor Westinghouse Electric Co. as soon as next month.
According to news media reports Southern said in a statement that an interim contract and service agreement with Westinghouse will be in place on June 3.
This is good news because the looming bankruptcy of Toshiba, the parent firm of Westinghouse, scrambled the plans for completion of the two reactors at Southern’s Vogtle plant and another two being built at Scana Corp.’s V.C. Summer station in South Carolina.
Southern CEO Thomas Fanning told the media his company could take over the work at Vogtle if Toshiba provides $3.7 billion to finish it as promised. The deal is said to also depend in part on Scana agreeing to follow suit, so the two companies will be able to share resources.
The Westinghouse’s bankruptcy has moved slowly with Westinghouse recently asking for a two-week delay until May 26 to file a full schedule of its assets and debts.
The key reason is that Toshiba has not yet filed an audited financial statement. The problem for Westinghouse is that without an audited financial statement from the parent firm, it cannot value its assets and liabilities nor come to terms with creditors.
Reports of Expected Toshiba bankruptcy Raises New Doubts About SCANA
(The Post and Courier) The utilities building new reactors at the V C Summer site aren’t saying what impact a potential Toshiba Corp. bankruptcy filing could have on the troubled construction project, even as more questions are being raised about the Japanese conglomerate’s financial health.
“We haven’t been informed about a Toshiba bankruptcy filing, and we won’t speculate about one,” Rhonda O’Banion, spokeswoman for South Carolina Electric & Gas parent SCANA Corp., said this week.
Toshiba’s business partners told The Wall Street Journal that they are anxious about a bankruptcy filing that could wipe out many of the Japanese firm’s commitments, including a guarantee to pay up to $1.7 billion in cost overruns at the V.C. Summer project.
Toshiba pledged to make those payments after its Westinghouse Electric subsidiary, the South Carolina power plant’s main contractor, filed for bankruptcy reorganization in March. The guarantee plays a key role in whether V.C. Summer partners SCANA and Santee Cooper finish the $14 billion project, which is already over budget and behind schedule.
SCANA Corp., Santee Cooper Extend Agreement on Summer Nuclear Station
(Palmetto Business Daily) SCANA Corp. and Santee Cooper have amended the Interim Assessment Agreement with Westinghouse concerning the construction project at the V.C. Summer Nuclear Station. The main focus of the amendment was to extend the agreement through June 26.
This will allow for evaluations about the financial viability of the project, where South Carolina Electric & Gas Co. (SCE&G), principal subsidiary of SCANA, and V.C. Summer Nuclear Station project co-owner, Santee Cooper, can continue to make progress on the site. Additionally, Fluor will remain the project’s EPC.
The utilities must make a decision by June 26 whether to build one or both of the reactors or scrap the plan entirely. Santee Cooper’s board of directors met in a private session this week to get legal advice on the project but took no action.
If construction of the reactors is scrapped, SCANA officials have said the company would have to build a new facility powered by natural gas to meet its customers’ projected electricity demands.
Westinghouse To Complete Restructuring Plan By End Of June
(NucNet): Westinghouse plans to complete a restructuring plan by the end of June 2017 and a new business plan by the end of July 2017, the company’s interim president and CEO José Emeterio Gutiérrez said this week. He said the business plan, covering the next five years, will include implementation of the restructuring plan.
Mr Gutiérrez confirmed Westinghouse had received external financing of $800m (€730m) to protect the company’s core business during its reorganization.
“We are 100% sure that this will be sufficient to support the company throughout the bankruptcy proceedings”.
He said: “An important detail is that all the other company divisions are in good shape, continue to generate income and cash flow. That’s why we are convinced that the finances and the profit generated by the other companies, plus the $800m, will be enough while the bankruptcy claim is being reviewed.”
These funds are for operating divisions, like nuclear fuel, and cannot be used for the huge reactor projects in Georgia and South Carolina.
Westinghouse, the US-based nuclear unit of Japan’s Toshiba, filed for bankruptcy protection in the US in March 2017. Asked what had triggered the need to start bankruptcy proceedings Mr Gutiérrez said the problem was cost overruns for reactor construction in the US.
“By late 2016 we realized that the additional cost of completing the construction would be around $6.1bn. This means that the results of the fiscal year, which ended on 31 March, will show significant losses.”
South Africa to Sign New Nuclear Power Pacts After Court Ruling
(Reuters) South Africa plans to sign new, more transparent nuclear power agreements with five foreign countries after a high court blocked a deal with Russia due to a lack of oversight, the energy ministry said.
South Africa signed intergovernmental agreements with Russia, France, China, South Korea and the United States in 2014 as part of plans to build a fleet of nuclear power plants at a cost of between $30 billion and $70 billion.
Many investors view the scale of the nuclear plan as unaffordable and a major risk to South Africa’s financial stability, while opponents of President Jacob Zuma say the deal will be used as a conduit for corruption. Zuma denies allegations of wrongdoing.
The Western Cape High Court found last month that the agreement with Russia lacked transparency and offered Moscow favorable tax rules while placing heavy financial obligations on South Africa.
The energy ministry said it had “major concerns” about the court judgment but would not appeal the ruling. It will continue with nuclear energy plans adhering to stricter procedural guidelines, including consulting parliament.
“There is no intention to table the current agreements but (we) will embark to sign new agreements with all five countries and table them within reasonable time to parliament,” the ministry said in a statement.
Eskom on Friday reinstated its former chief executive Brian Molefe, a Zuma ally who has supported the nuclear power plan.
Molefe stepped down five months ago after being implicated in a report by the country’s anti-graft watchdog into alleged influence-peddling. He denied any wrongdoing.
His reappointment set off a new round of protests that he could not be trusted to run a transparent and fair procurement process.
Some analysts say former finance minister Pravin Gordhan was fired partly because he resisted pressures from a political faction allied to Zuma to back nuclear expansion.
New Finance Minister Malusi Gigaba has said nuclear expansion will only be pursued if it is affordable.
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