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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. nuclear power project developers continue to weigh the impact of Westinghouse Electric Company, LLC's (Cranberry Township, Pennsylvania) long-anticipated Chapter 11 bankruptcy filing, particularly with regard to the future of nuclear power projects in South Carolina and Georgia. The developers of the South Carolina project said they would continue to fund the project while they weigh all options, including potential project abandonment.
Westinghouse, a unit of Toshiba Corporation (Tokyo, Japan), filed for Chapter 11 bankruptcy protection on Wednesday, citing "financial and construction challenges" surrounding its contracted U.S. AP1000 power plant projects. These include two AP1000 units each for Southern Company's (NYSE:SO) (Atlanta, Georgia) additions at the Alvin W. Vogtle Nuclear Power Station in Waynesboro, Georgia, valued at $16.2 billion; and SCANA Corporation's (NYSE:SCG) (Cayce, South Carolina) additions at the Virgil C. Summer Nuclear Power Station in Jenkinsville, South Carolina, valued at $15 billion. Massive cost overruns and delays have occurred at both sites. For details on these projects, see Industrial Info's project reports for the Vogtle and Summer plants.
Toshiba said in a press statement that Westinghouse would have to book a $6.1 billion write-down for cost overruns at the two projects.
"Today, we have taken action to put Westinghouse on a path to resolve our AP1000 financial challenges while protecting our core businesses," Interim President and Chief Executive Officer José Emeterio Gutiérrez said in a press statement. Westinghouse said it obtained $800 million in debtor-in-possession (DIP) financing from a third-party lender to help fund and protect its core businesses during its reorganization. The financing will fund Westinghouse's core businesses of supporting operating plants, nuclear fuel, and components manufacturing and engineering, as well as decommissioning, decontamination, remediation and waste management.
Westinghouse said it has reached an agreement with each owner of the U.S. AP1000 projects to continue the projects during an initial assessment period.
SCANA Corporation and Santee Cooper (Moncks Corner, South Carolina), a 45% partner in the Summer Nuclear Power Station addition project, said in a press release they remain committed to the completion of the project. They said they have been working with Westinghouse to reach an agreement that allows work on the project to continue.
The agreement "allows for a transition and evaluation period during which SCANA and Santee Cooper will assess information provided by [Westinghouse] and determine the most prudent path forward for the project."
SCANA Chief Executive Officer Kevin Marsh said in a conference call with investment analysts Wednesday that the company will assess its options over the next 30 days. Those options range from continuing the project without Westinghouse to abandoning it altogether.
Marsh said Westinghouse wants to "continue in the nuclear service business; they just don't want to continue in the nuclear construction business."
Meanwhile, SCANA will pay to keep the project moving while it mulls its options, Marsh said, adding, "During this transition and evaluation period we expect construction to continue with 5,000 workers on site daily."
Fluor Corporation (NYSE:FLR) (Irving, Texas) will continue as construction manager during this period.
Westinghouse has indicated additional costs associated with the South Carolina project, but SCANA executives said they believe those costs, if verified, could be covered through the creditor proceedings in the bankruptcy case, or by a guarantee by Toshiba. Most of the claimed cost overruns stem from labor productivity and supply chain issues, the SCANA executives said.
SCANA executives said assessments by the company's subsidiary, South Carolina Electric & Gas Company, indicate that project abandonment is the least preferred option.
"We built these plants because we needed generation for our service territory," Marsh said. "We've got a commitment to our customers. If we just cancel these plants we still have a generation issue we have got to face."
For related information, see March 27, 2017, article - Westinghouse's Bankruptcy Unlikely to Affect more than $31 Billion in U.S. Nuclear Projects.
In Georgia, construction of the two new units at the Vogtle Power Station was about 60% complete. Construction of Units 3 and 4 was about 39 months behind schedule. Currently, Unit 3 is scheduled to begin operating in mid-2019 and Unit 4 is scheduled to begin generating electricity one year later.
For related information, see January 5, 2017, article - Georgia Power Hit with Financial Penalties for Construction Delays at Vogtle Nuclear Plants.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Westinghouse, a unit of Toshiba Corporation (Tokyo, Japan), filed for Chapter 11 bankruptcy protection on Wednesday, citing "financial and construction challenges" surrounding its contracted U.S. AP1000 power plant projects. These include two AP1000 units each for Southern Company's (NYSE:SO) (Atlanta, Georgia) additions at the Alvin W. Vogtle Nuclear Power Station in Waynesboro, Georgia, valued at $16.2 billion; and SCANA Corporation's (NYSE:SCG) (Cayce, South Carolina) additions at the Virgil C. Summer Nuclear Power Station in Jenkinsville, South Carolina, valued at $15 billion. Massive cost overruns and delays have occurred at both sites. For details on these projects, see Industrial Info's project reports for the Vogtle and Summer plants.
Toshiba said in a press statement that Westinghouse would have to book a $6.1 billion write-down for cost overruns at the two projects.
"Today, we have taken action to put Westinghouse on a path to resolve our AP1000 financial challenges while protecting our core businesses," Interim President and Chief Executive Officer José Emeterio Gutiérrez said in a press statement. Westinghouse said it obtained $800 million in debtor-in-possession (DIP) financing from a third-party lender to help fund and protect its core businesses during its reorganization. The financing will fund Westinghouse's core businesses of supporting operating plants, nuclear fuel, and components manufacturing and engineering, as well as decommissioning, decontamination, remediation and waste management.
Westinghouse said it has reached an agreement with each owner of the U.S. AP1000 projects to continue the projects during an initial assessment period.
SCANA Corporation and Santee Cooper (Moncks Corner, South Carolina), a 45% partner in the Summer Nuclear Power Station addition project, said in a press release they remain committed to the completion of the project. They said they have been working with Westinghouse to reach an agreement that allows work on the project to continue.
The agreement "allows for a transition and evaluation period during which SCANA and Santee Cooper will assess information provided by [Westinghouse] and determine the most prudent path forward for the project."
SCANA Chief Executive Officer Kevin Marsh said in a conference call with investment analysts Wednesday that the company will assess its options over the next 30 days. Those options range from continuing the project without Westinghouse to abandoning it altogether.
Marsh said Westinghouse wants to "continue in the nuclear service business; they just don't want to continue in the nuclear construction business."
Meanwhile, SCANA will pay to keep the project moving while it mulls its options, Marsh said, adding, "During this transition and evaluation period we expect construction to continue with 5,000 workers on site daily."
Fluor Corporation (NYSE:FLR) (Irving, Texas) will continue as construction manager during this period.
Westinghouse has indicated additional costs associated with the South Carolina project, but SCANA executives said they believe those costs, if verified, could be covered through the creditor proceedings in the bankruptcy case, or by a guarantee by Toshiba. Most of the claimed cost overruns stem from labor productivity and supply chain issues, the SCANA executives said.
SCANA executives said assessments by the company's subsidiary, South Carolina Electric & Gas Company, indicate that project abandonment is the least preferred option.
"We built these plants because we needed generation for our service territory," Marsh said. "We've got a commitment to our customers. If we just cancel these plants we still have a generation issue we have got to face."
For related information, see March 27, 2017, article - Westinghouse's Bankruptcy Unlikely to Affect more than $31 Billion in U.S. Nuclear Projects.
In Georgia, construction of the two new units at the Vogtle Power Station was about 60% complete. Construction of Units 3 and 4 was about 39 months behind schedule. Currently, Unit 3 is scheduled to begin operating in mid-2019 and Unit 4 is scheduled to begin generating electricity one year later.
For related information, see January 5, 2017, article - Georgia Power Hit with Financial Penalties for Construction Delays at Vogtle Nuclear Plants.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
