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Westinghouse cites Plant Vogtle in bankruptcy papers filed today; ratepayers could see hike

Plant Vogtle, construction, 2014

Plant Vogtle experienced cost overruns and construction delays that led to Westinghouse filing bankruptcy papers. Photo from 2014. File/Credit: Georgia Power

By David Pendered

The bankruptcy papers Westinghouse filed today in regards to Plant Vogtle names the nuclear plant in Georgia as one of two reasons the company faces a dire financial situation. The other reason is a nuclear power plant in South Carolina.

Plant Vogtle, construction, 2014

Plant Vogtle experienced cost overruns and construction delays that led to Westinghouse filing bankruptcy papers Wednesday. Photo from 2014. Credit: Georgia Power Company

The papers filed by Westinghouse Electric Corp. LLC don’t waste words before laying the blame on losses in nuclear plant construction.

The papers contend most of Westinghouse’s core businesses are, “very profitable.” These profitable endeavors will be used to show the overall company is viable.

Westinghouse’s one trouble spot is the construction of nuclear power plants, the papers contend:

  • “The debtors [Westinghouse] will … reorganize around their profitable Core Businesses and isolate them from the one specific area of their businesses that is losing money: their construction of nuclear power plants in Georgia and South Carolina.”

Reuters reported Tuesday that electric bills could rise higher than expected in the two states as a result of the bankruptcy filing. Reuters quoted Stan Wise, chairman of the state’s utilities regulator, Georgia Public Service Commission (PSC):

Stan Wise, Chairman of the Georgia Public Service Commission

Stan Wise, Chairman of the Georgia Public Service Commission

  • “We’re getting briefings about what we’re facing and at this point I don’t think any of the options are terrific.”

The delays and cost overruns at the two plants resulted in Westinghouse’s majority owner, Toshiba Corp., reporting Feb. 14 that it expects to incur a $6.1 billion loss related to the two plants.

The bankruptcy papers indicate that Westinghouse might seek to pull out of the two plants – Vogtle, near Waynesboro, and V.C. Summer, located about 20 miles northwest of Columbia, S.C.:

  • “The ultimate resolution of the Debtors’ [Westinghouse’s] involvement in these projects remains uncertain, but the Debtors’ chapter 11 cases will remove the threat that the construction cost increases pose to the Debtors’ ability to operate their Core Businesses.”

However, the majority owner of Westinghouse, Toshiba Corp., has indicated its intent to complete the projects, according to a Feb. 17 sector comment from Moody’s Investors Service.

Evidently, Toshiba can’t afford for Westinghouse to walk away. Construction delays and cost overruns have created a series of challenges that:

  • “[P]otentially expose the Debtors to billions of dollars either in (i) cost overruns to complete the projects or (ii) penalties and liabilities if they abandon the projects. The Debtors cannot afford either option. Notwithstanding that the Debtors’ other businesses are profitable and world-class, the Construction Business cost increases have led to a liquidity crisis that the Debtors can only solve in chapter 11.”

The intent to complete the two plants is good news for their owners, Georgia Power and South Carolina Electric and Gas Co.

After Toshiba reported Feb. 14 that it expected to incur losses of $6.1 billion due to cost overruns at the two plants under construction, Moody’s noted on Feb. 17 that:

  • “We view Toshiba’s stated commitment to complete the two US nuclear projects, despite intentions to stop constructing new nuclear plants elsewhere overseas, as credit positive for the utility partners.”

On Wednesday, Michael Haggarty, an associate managing director at Moody’s, issued the following statement:

  • “Westinghouse’s Chapter 11 bankruptcy filing and Toshiba’s ongoing financial weakness have raised new questions over their ability and willingness to complete the Summer and Vogtle nuclear projects under the terms of the fixed price contracts, placing additional financial pressure on the project owners [see below].
  • “Our negative outlooks for these entities incorporated our expectation that a Westinghouse bankruptcy filing could occur, and reflect the likelihood that the projects won’t be completed under the current time and cost arrangements. We anticipate the project owners will evaluate alternatives for finishing construction, which in all likelihood would result in higher risk and additional costs.”

Issuers with ownership stakes and their Moody’s credit rating include:

VC Summer Nuclear Generating Station Units 2 and 3

  • South Carolina Electric & Gas (Baa2 negative)
  • South Carolina Public Service Authority (A1 negative)
  • SCANA Corporation (Baa3 negative)

Vogtle Electric Generating Plant Units 3 and 4

  • Georgia Power (A3 negative)
  • Oglethorpe Power (Baa1 negative)
  • MEAG (Power Project J – A2 negative; Power Project M – A2 negative; Power Project P – Baa1 negative)
  • City of Dalton, GA (General Obligation – Aa2; Combined Utility Entity – A2)

The bankruptcy papers also point to the global scope of the atomic energy industry.

Westinghouse technology is present in about half the world’s commercial nuclear reactors.

Westinghouse ownership includes Toshiba Corp. (87 percent); Japanese conglomerate IHI Corp. (3 percent); and Kazakhstan’s National Atomic Company, Kazatomprom JSC, owns the remaining 10 percent according to the bankruptcy papers.

Westinghouse filed the papers in the Bankruptcy of the Southern District of New York.

David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.


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  1. David Kyler April 3, 2017 9:57 am

    When are Georgia’s energy-consumers and tax-payers going to demand that power-industry investors carry their own financial burdens and risks?

    When Georgia’s Public Service Commission (PSC) approved the expansion of Plant Vogtle, Georgia Power assured them the $14 billion cost was a solid ‘bottom line’ for the project Since then, cost overruns have exceeded $3 billion and now appear to be headed to double or triple that much. Not only did the PSC allow original costs to be recouped by the investors in advance by adding a surcharge to energy customers (residential only, not business or industrial!), they even approved additional surcharges on monthly customer bills to recover cost-overruns.

    Ironically, many of those who support the costs of this blatant corporate welfare being loaded onto the backs of consumers are among the most self-righteously incensed by “giveaways” to the economically deprived. Unfair exploitation of politically disconnected consumers by Georgia Power must be immediately stopped, and those responsible for such opportunistic corporate hand-outs must be removed from office.

    The flagrant injustice of this issue is now epitomized by the floundering nuke industry, which – since its inception – has been subsidized by federal funds more than any other industry in U.S. history – even more than Big Oil. In fact, without the federal subsidy of nuke’s liability risks, there would be no nuclear power industry in our nation. By simply eliminating bail-outs for fossil fuels and nukes, no federal budget cuts would be needed, plus the prospects for both human and environmental health would be greatly boosted.

    Note to free-market advocates: Put your policy where your over-hyped theory is. Stop using tax-payer subsidies and customer fees to pay for projects intended to generate profits for private investors.

    ~ David Kyler, Center for a Sustainable CoastReport


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