SCE&G and V.C. Summer co-owner, Santee Cooper, placed on Jan. 10 the first steam generator at a Westinghouse AP1000 nuclear plant in the U.S.
Groups critical of nuclear plant construction projects are calling for state public service commissions in Georgia and South Carolina to protect ratepayers in those states by forcing utilities to shoulder the costs of further delays their ongoing projects expected in the wake of the bankruptcy filing of contractor Westinghouse Electric Co. LLC.
"Ratepayers should not be on the hook to pay for these facilities," Stephen Smith, executive director of the Southern Alliance for Clean Energy, which has opposed new nuclear projects in the region, told reporters on a conference call. Westinghouse was the contractor supplying and building four 1,150-MW AP1000 nuclear generating units, two each for two groups of utilities. It filed for bankruptcy reorganization March 29 in the U.S. Bankruptcy Court for the Southern District of New York, citing a cash crisis precipitated by the cost overruns on the two construction projects.
Work on the two-unit Alvin W. Vogtle plant expansion in Burke County, Ga., and the V.C. Summer nuclear station project in Fairfield County, S.C., will continue for at least 30 days under an agreement in which the utility owners of the projects will pay all expenses, Westinghouse said in the filing. Those utilities — including Southern Co.'s Georgia Power Co., Oglethorpe Power Corp., Municipal Electric Authority of Georgia, SCANA Corp. subsidiary South Carolina Electric & Gas Co. and South Carolina Public Service Authority d/b/a Santee Cooper — are reviewing how to proceed after that period.
Executives of SCE&G said in a conference call with analysts March 29 that the nuclear construction project could be abandoned, but their inclination was that completing it would be the most cost effective option. Similarly, Southern Co. said it would work with regulators to determine the best path forward.
Westinghouse and parent company Toshiba Corp. had guaranteed the cost of the projects, but when it became clear it would cost billions more than planned to complete the units, both companies experienced financial problems. Toshiba has provided letters of credit to guarantee completion of the work, and the assets of Westinghouse may bring enough in bankruptcy to provide additional funding for the two projects, SCE&G officials said.
The groups, including Georgia Watch and SRS Watch, called on the state PSCs to limit the cost overruns ratepayers of the regulated utility owners of the units would have to pay if the projects go forward, and force shareholders of the for-profit utilities Georgia Power and SCE&G to forgo profit margins and pay the lion's share of any further cost increases.
"Customers have lost billions of dollars on these projects and they shouldn't throw good money after bad," Peter Bradford, a former state utilities commissioner in Maine and New York, said on the call.
The bankruptcy court is going to protect Westinghouse creditors, not ratepayers of the utilities, said Bradford. He urged the state commissions in Georgia and South Carolina to retain bankruptcy advisers as a way to protect the states' interests in the Westinghouse proceeding.
Customers in Georgia do not need the additional capacity of the two Vogtle units, Smith said. Alternative sources for any new power needs can be secured far more cheaply than new nuclear construction, he said. Once the financial analysis of the cost to complete the units versus abandoning them is completed, it may make more sense to abandon them than finish construction, Smith said.
SCE&G had spent $4.5 billion for its 55% share of the two new Summer station units through the end of 2016, it reported to the South Carolina PSC. Georgia Power, which owns a 45.7% stake in the Vogtle expansion, had spent $3.9 billion in capital and construction costs through the end of 2016, it reported to the Georgia PSC.
In both states, the law allows recovery of most capital costs only after the units enter operation, or if they are prudently abandoned, but utilities may charge ratepayers some financing costs during construction.
Westinghouse and 30 affiliated companies filed for bankruptcy and listed about 35,000 creditors in the filing. The company listed assets of $4.3 billion and liabilities of $9.4 billion in the filing.
Interim financing of $800 million was offered by New York private equity company Apollo Investment Corp. to finance the operations of Westinghouse, with some additional financing provided by Toshiba.
This article was authored by William Freebairn, a reporter for S&P Global Platts, which like S&P Global Market Intelligence, is a division of S&P Global Inc.