The owners of the Vogtle and V.C. Summer nuclear expansions separately secured a few more weeks to allow work to continue onsite at each project while they decide how to proceed with the half-built AP1000 reactors after Westinghouse’s financial debacle.
In Georgia, owners of the project to expand Plant Vogtle extended an interim assessment agreement with Westinghouse until May 12. But Georgia Power’s parent company Southern Co. also revealed it is negotiating a new service agreement that could engage Westinghouse to provide design, engineering, and procurement services in the event Southern Nuclear Operating Co.—Southern Co.’s nuclear unit operations arm—takes over management of construction at Units 3 and 4.
And in South Carolina, owners of the project to expand V.C. Summer extended a similar agreement through June 26. The project owners detailed their concerns and options in a recent ex parte briefing at the South Carolina Public Service Commission (PSC)
Vogtle Agreement Extended Until May 12
Georgia Power and Vogtle’s other owners on April 28 extended an interim assessment agreement with Westinghouse before it was set to expire, giving them until May 12 to assess the project. The company entered into that agreement on March 29 along with the Vogtle project’s co-owners Oglethorpe Power Corp., the Municipal Electric Authority of Georgia, and the City of Dalton on the same day Westinghouse filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.
The interim assessment agreement essentially provides that Westinghouse will provide engineering, procurement, and management services for Plant Vogtle Units 3 and 4 as agreed to in an original agreement. Georgia Power agreed to pay $5.4 million per week for these services, and Westinghouse agreed to provide information requested by the project owners required to continue construction and investigate the completion status of the units.
However, in a May 1 filing with the Securities and Exchange Commission, Southern Co. noted that Georgia Power and other Vogtle owners are negotiating a new service agreement that could engage Westinghouse’s design, engineering, and procurement services to Southern Nuclear Operating Co. “in the event [Southern Nuclear Operating Co.] assumes control over management of construction of Plant Vogtle Units 3 and 4.”
At the same time, Georgia Power is scrutinizing in detail how long it will take and how much it will cost to complete the project. Georgia Power said it is determined to enforce a guarantee offered by Westinghouse’s parent company Toshiba for Westinghouse’s payment obligations, and to access $920 million of letters of credit provided by Westinghouse to the Vogtle owners.
“The company will continue to take every action available to hold Westinghouse and Toshiba accountable for their financial responsibilities under the engineering, procurement and construction (EPC) agreement and the parent guarantee,” said Georgia Power in a statement on April 28.
V.C. Owners Extend Agreement Until June 26
On April 28, SCANA Corp. subsidiary South Carolina Electric & Gas Co. (SCG&E) and Santee Cooper—owners of the two-unit expansion of the V.C. Summer nuclear plant—and Westinghouse also extended an interim assessment agreement through June 26.
The amended agreement, which is subject to bankruptcy court approval, also allows the co-owners “more time to maintain all their options” by continuing construction of the project, SCANA and Santee Cooper said in a joint April 28 statement. The owners are also examining all relevant information for a “thorough and accurate assessment to determine the most prudent path forward,” it said.
“The goal is to reach a decision that would balance the needs of its customers and stakeholders.”
The agreement requires the project’s owners to pay all costs and administrative claims accrued by Westinghouse during the assessment period. The owners will also directly pay Westinghouse $5.4 million a week for continuation of the engineering, procurement, and construction (EPC) services.
Westinghouse, which was crippled by financial setbacks stemming from the reactor projects in Georgia and South Carolina, has publicly said that completion of the four units would require about $4 billion beyond what it could contractually require the V.C. Summer and Vogtle project owners to pay.
On April 12, Jimmy Addison, SCANA’s chief financial officer, told the South Carolina Public PSC in an ex parte briefing that Westinghouse had recently informed SCE&G that the V.C. Summer project share of that $4 billion cost estimate is about $1.5 billion.
“Bankruptcy gives Westinghouse the ability to reject or walk away from these fixed-price obligations,” Addison said. “However, if it does so, SCE&G and Santee Cooper have the right to claim damages and collect them, along with the Vogtle project owners and other unsecured creditors, from the value of Westinghouse’s businesses and assets.”
Addison also noted, however, that the damages are subject to a contractual cap of 25% of the payments the companies have made to Westinghouse at the time it breaches the EPC contract. As of April 12, the cap would be about $1.7 billion for the total V.C. Summer project, he said.
SCANA officials noted at the hearing that during the interim assessment period, the V.C. Summer owners are evaluating several options. These include: outright canceling the units; focusing on completing one unit while delaying the other; or continuing building one unit but abandoning the other.
“All other things being equal, our preference would be to complete the units for the benefits that they would provide for our system,” SCANA CEO Kevin Marsh told the PSC. “We are giving all available options full and equal consideration on their merits. We are not prejudging any option.”
—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)