Ga. utilities prepare to take over embattled nuclear project in possible model for S.C. reactors

June 29, 2017 GMT

The utilities behind a plan to build two nuclear reactors in Georgia say they’re ready to take control of the embattled project from Westinghouse Electric Co. — a resolution the troubled contractor is seeking to replicate in South Carolina.

Georgia Power and its parent, Southern Co., say they’re expecting to take over project management at the Plant Vogtle expansion by the end of July. That announcement is part of a $3.7 billion settlement inked this month.

Under the Georgia arrangement, Westinghouse’s parent company, Tokyo-based Toshiba, would start making monthly payments this fall to fulfill its promise to guarantee the nuclear reactors’ completion. Westinghouse would stay on as a contractor for the project, which is using technology it developed.

In return, Georgia Power and a handful of other utilities in the Peach State would bear the risk of moving forward with the project, and Westinghouse wouldn’t be liable if the reactors aren’t finished.

Like the ongoing expansion of South Carolina’s V.C. Summer Nuclear Station, the project has been mired in spiraling costs and delays. Westinghouse ultimately filed for bankruptcy in March because of a “liquidity crisis” brought on by the budget overruns in Georgia and South Carolina, Toshiba said in a court filing last week.

Toshiba is trying to alleviate the financial pressure by negotiating deals that cap its liability for the projects, whose future are in doubt. It’s asking the New York bankruptcy judge overseeing the Westinghouse case to sign off on the Georgia deal in part to clear the way for a similar arrangement in South Carolina.

In its filing last week, Toshiba said the judge’s approval “provides a pathway for the V.C. Summer owners to opt into the same settlement framework.” Earlier this week, South Carolina Electric & Gas and Santee Cooper, which own the Fairfield County project, delayed a decision on whether to keep pursuing the plan.

Santee Cooper, the Moncks Corner-based state-owned utility that owns a little under half the project, declined to comment on the negotiations. A spokeswoman for Cayce-based SCANA Corp., SCE&G’s parent company, didn’t respond to a request for comment Thursday.

Toshiba has said that it’s set aside the equivalent of roughly $6 billion to cover the guarantees it’s made for its subsidiaries, but the Westinghouse troubles have cast doubt on the Japanese conglomerate’s financial stability.

The company is trying to sell its lucrative computer memory business, worth an estimated $18 billion, in part to help cover the cost of the U.S. nuclear project, marking a major blow to the 141-year-old technology giant.

But even that effort is now in question. One of its partners in the chip-making business, California-based Western Digital, has raised objections to a sale, which Toshiba had hoped to announce by Wednesday.

Instead, Toshiba announced Wednesday that it had filed a lawsuit in Japan alleging that Western Digital “interfered with the bid process” in its sale of its chip business and seeking the equivalent of $1.1 billion in damages. Western Digital, for its part, says it’s entitled to sign off on the transaction — and that it’s filed a lawsuit of its own in California.

Those cases are pending.