SCANA Corp. and state-owned utility Santee Cooper on July 27 said Toshiba has agreed to pay nearly $2.2 billion to cap its liabilities from the unfinished V.C. Summer nuclear project in South Carolina. Toshiba subsidiary Westinghouse, which was building two nuclear units at the Summer site along with the troubled Vogtle nuclear project in Georgia, filed for bankruptcy in March.
Toshiba reached a similar $3.7 billion agreement with Southern Co. in June as it seeks to limit its liabilities from the Vogtle project. Both AP1000 nuclear projects are years behind schedule and billions of dollars over budget.
Decision on Summer’s Future Expected Soon
SCANA, represented by principal subsidiary South Carolina Electric & Gas Co. (SCE&G), and Santee Cooper in a statement on July 27 said they expect the cost to complete the Summer plant will “materially exceed” both Westinghouse’s estimates for completion and the payments from Toshiba, outlined as $2.168 billion over a five-year period. SCANA and Santee Cooper said they expect to decide soon whether they will continue with Summer’s construction, modify the project, or abandon it. The two project owners on June 26 extended an interim assessment agreement with Westinghouse as they sought more time to evaluate the project. The agreement extended the assessment period to Aug. 10, as the owners wanted “to determine the most prudent path forward” with a goal “to reach a decision in the third quarter” of 2017.
The Department of Energy (DOE) on July 27 approved a service agreement between Westinghouse and Southern Co. subsidiary Georgia Power for work at the Vogtle plant, and DOE struck a separate deal with Georgia Power on a loan guarantee agreement calling for the utility to provide DOE with a cost assessment of the project by year’s end. Georgia Power told POWER it expects to finish a cost-to-complete and schedule assessment for Vogtle by the end of August.
Westinghouse has said it will soon deliver a five-year business plan to Apollo Global Management, the company’s lender that extended an $800 million loan to Westinghouse early in its bankruptcy. The business plan is expected to include an agreement with SCANA in which Westinghouse will continue to supply engineering and other services to the Summer project, similar to its agreement with the owners of the Vogtle project.
Westinghouse on July 26 asked the U.S. Bankruptcy Court in Manhattan to give it until December 6 to file a plan of reorganization, in part due to its ongoing discussions with SCANA. The court said it would hear that request on September 7.
Payments Tied to Ownership Stakes
The latest agreement calls for Toshiba to pay SCE&G $1.192 billion for its 55% project ownership, under the engineering, procurement, and construction (EPC) contract. The remaining $976 million will go to Santee Cooper for its 45% project ownership. The payments will be made in installments between October 2017 and September 2022.
A portion of the payments will come from the bankruptcy court process of Westinghouse, and the payments will occur if one or both of the nuclear units at Summer is developed, or even if the project is abandoned. If it was determined that the actual cost of construction of the two units is less than the amount paid by Toshiba, or the maximum amount payable under the EPC agreement, Toshiba will receive part of the difference.
Santee Cooper and SCE&G have worked with Westinghouse about how to proceed with the Summer project even before Westinghouse filed for bankruptcy protection.
-Darrell Proctor is a POWER associate editor. (@DarrellProctor1, @POWERmagazine)