Coverage: Southern Co. reaches deal to continue nuclear plant construction
Atlanta-based utility Southern Co. has agreed to take the lead on building two nuclear reactors at a power plant in Georgia from bankrupt contractor Westinghouse Electric Co.
Stephen Cunningham and Tiffany Kary of Bloomberg News had the news:
The Atlanta-based utility owner said in a statement late Friday that an interim contract with Westinghouse will be extended to June 3 while the companies finalize and gain approval for a new service agreement. Just last week, Southern Chief Executive Officer Thomas Fanning said Toshiba Corp.’s Westinghouse unit had “given every indication” it wanted out of the pact to build reactors but was refraining from a decision under the contract that was due to expire Friday.
Westinghouse’s bankruptcy in March threw into question the fate of four U.S. nuclear reactors — the two at Southern’s Vogtle plant and another two being built at Scana Corp.’s V.C. Summer station in South Carolina. The projects were the first to gain U.S. approval for construction in more than 30 years and were once seen as ushering in a new wave of nuclear generation in the country. Fanning has said his company could take over the work at Vogtle if Toshiba provides $3.7 billion to finish it as promised. The deal is said to also depend in part on Scana agreeing to follow suit, so the two companies will be able to share resources.
The companies reached an agreement in principle that “allows for the transition of project management from Westinghouse” to Southern once their current engineering and construction contract is rejected in Westinghouse’s bankruptcy case, Southern said in its statement. “During this time, work will continue at the site and an orderly transition of project management will begin.”
Russell Grantham of the Atlanta Journal-Constitution reported that the project is $3 billion over budget:
Since the late-March bankruptcy of Westinghouse, the project’s key contractor, Georgia Power has been spending about $50 million a month under the extended contract to continue building two new nuclear reactors at the plant near Augusta.
Georgia Power and Southern told state regulators Thursday that they have been gathering information at the site and from Westinghouse to determine what to do in the wake of the bankruptcy filing.
Westinghouse, which is reorganizing under Chapter 11, provided the designs for the new reactors and had been overseeing construction.
Westinghouse is owned by Japanese conglomerate Toshiba. It is expected to seek to exit the Vogtle project as part of its bankruptcy reorganization. Georgia Power and Southern say they are looking at all options, including completing construction under different management, converting the project to another type of power plant, or abandoning it.
The project is well over $3 billion over budget and more than three years behind schedule.
An Associated Press story reported that Southern owns 46 percent of the project:
About an hour before the agreement was due to expire Friday, Georgia Power issued an 11 p.m. statement saying it had been extended.
The utility owns a 46 percent stake in the project, which is billions of dollars over budget and years behind schedule.
Company officials say they’re still studying costs and a timeline for several options, including taking over construction of both nuclear reactors, canceling one or canceling the project altogether.
Westinghouse Electric Co., the U.S. nuclear unit of Japan’s Toshiba Corp., filed for bankruptcy in March.