CB&I Out, Fluor In at Vogtle and V.C. Summer Nuclear Power Plant Construction Projects

There has been a major shake up in the contractors involved in both of the new AP1000 nuclear power plant projects under construction in the U.S.

Westinghouse Electric Co. LLC, a group company of Toshiba Corp., announced on Oct. 27 that it signed a definitive agreement to acquire CB&I Stone & Webster Inc., the nuclear construction and integrated services businesses of CB&I.

Fluor to Manage Construction Workforce

After the transaction closes—expected by the end of 2015—Westinghouse and its affiliates would become the sole contractor over both the Plant Vogtle Unit 3 and 4 construction project in Georgia and the V.C. Summer Unit 2 and 3 construction project in South Carolina. However, Westinghouse later entered into an agreement with Fluor Corp. to manage a significant portion of the construction for the two projects.

According to Fluor, the company “will be providing project execution and direction, accountability for and management of professional staff and craft personnel, and a focus on safety, quality and project delivery certainty.”

Fluor will begin work immediately under a professional services agreement to assess the two projects, engaging the workforce and planning a transition of duties and responsibilities required to develop appropriate plans to manage plant construction. Fluor and Westinghouse have further agreed that Fluor’s scope will complete project construction at these facilities on a cost reimbursable basis, without liability for pre-existing conditions associated with prior construction.

“We are very pleased with the vote of confidence that Westinghouse, and the nuclear facility owners have placed in our company to manage the construction of these two U.S. nuclear mega-projects,” said Fluor Chairman and CEO David Seaton.

Westinghouse Enhances Nuclear Offerings

Westinghouse said the acquisition of CB&I Stone & Webster would support growth in its decontamination, decommissioning, and remediation services; enhance the company’s major nuclear project management and environmental services offerings; and add to its engineering expertise. The businesses will be part of a new Westinghouse subsidiary, which will also include a new government services business that is under development.

Under the agreement, Westinghouse will purchase the business of engineering, construction, procurement, management, design, installation, start-up, and testing of nuclear-fueled facilities, including the V.C. Summer project, the Vogtle project, and CB&I’s nuclear projects in China. Westinghouse is also acquiring CB&I's nuclear integrated services business, which includes small capital projects for existing nuclear plants in the U.S. In addition to the professional technical employees who will join Westinghouse, the company will acquire heavy cranes and equipment, and 11 facilities in the U.S. and Asia from CB&I.

“This acquisition supports our company’s strategic global growth framework, and expands our capabilities,” said Danny Roderick, Westinghouse’s president and CEO.

The agreement excludes CB&I's fossil power generation capability, its nuclear and industrial maintenance business, the mixed-oxide nuclear fuel conversion project at Savannah River, the Federal decommissioning business, and the NetPower program for the development of power generation plants with zero CO2 emissions from the deal.

Although Westinghouse will assume full responsibility for all AP1000 nuclear projects and the nuclear integrated services business, CB&I will continue to supply discrete scopes of modules, fabricated pipe, and specialty services for the U.S. nuclear projects on a subcontract basis.

Positive Development for Nuclear Power Projects

CB&I’s President and CEO Philip K. Asherman considers the deal a positive development for all stakeholders in the current nuclear projects, saying that it will provide CB&I shareholders with “clarity and increased predictability from our growing backlog of work in markets that are more strategic to our future growth.”

Georgia Power, a subsidiary of Southern Co. and majority owner and operator of the Vogtle nuclear plant, said that the agreement is “extremely positive for the project.” As a result, the company and the other Vogtle co-owners (Oglethorpe Power Corp., Municipal Electric Authority of Georgia, and Dalton Utilities) have agreed on terms to settle all claims currently in litigation with the project's contractors and to include additional protections in the engineering, procurement, and construction (EPC) contract against future claims.

The agreement also reaffirms the current in-service dates of 2019 for Vogtle Unit 3 and 2020 for Vogtle Unit 4. Georgia Power said construction of the new units is progressing well and more than halfway complete based on contractual milestones.

South Carolina Electric & Gas Co., principal subsidiary of SCANA Corp. and majority owner and operator of the V.C. Summer nuclear plant, also considered the change to be beneficial. The amendment to its EPC contract revises the guaranteed substantial completion dates for Units 2 and 3 to August 31, 2019, and August 31, 2020, respectively, but links the dates to significantly higher delay-related liquidated damages.

“We are excited about the changes in the structure of the construction team and the amendment to the EPC contract for the new nuclear plants and see these changes as very positive,” said Kevin Marsh, SCANA’s chairman and CEO.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)