BRADENTON, Fla. – The owners of four new nuclear reactors under construction in South Carolina and Georgia reached milestones that may open the way to the completion or the rejection of the projects, which are entangled in the prime contractor’s bankruptcy.
SCANA Corp. and South Carolina-owned Santee Cooper an agreement Thursday under which Toshiba Corp. will provide a $2.17 billion guarantee on the new nuclear units at V.C. Summer Nuclear Station, where Westinghouse Electric Co. had contracts prior to filing a Chapter 11 petition on March 29.
The definitive agreement will provide $1.19 billion to SCANA’s South Carolina Electric & Gas for its 55% share of the project and $976 million to Santee Cooper for its 45% ownership to satisfy obligations of Toshiba-owned Westinghouse.
The settlement stands regardless of whether the owners complete one or both of the nuclear units that are under construction, or they abandon the project, according to J. Michael Baxley, Santee Cooper senior vice president and general counsel.
“We are committed to making a financially responsible decision for our customers and other stakeholders,” said SCANA Chairman and CEO, Kevin Marsh. “We are close to completing our analysis of the various options to determine the most prudent path forward.”
The South Carolina Public Service Authority has issued $4.2 billion of bonds to finance its share of the project.
SCANA said Santee Cooper in a joint statement said that they anticipate the additional cost to complete both units will “materially exceed” prior estimates by Westinghouse as well as the anticipated guaranty settlement payments from Toshiba.
The nuclear reactors need to be online before Jan. 1, 2021, to qualify for production tax credits under current federal tax rules.
“At this point, the project owners believe that the units could not be brought online until after this date,” the joint statement said.
SCE&G officials will present an update to the South Carolina Public Service Commission at 10 a.m. on Aug. 1. The SCPSC has also received a complaint about the project from the Friends of the Earth and Sierra Club, environmental organizations that are calling for the projects to be abandoned.
On Thursday, the U.S. Department of Energy approved a deal for Georgia Power to take over construction of two reactors at Plant Vogtle, even though an assessment about the viability of continuing the work is not complete.
The DOE’s consent was necessary to allow Georgia Power to finalize its negotiation for Westinghouse to reject its Plant Vogtle contracts, and to complete the $3.68 billion financial guarantee Toshiba inked to support Westinghouse’s obligations.
Georgia Power owns 45.7% of the two new units under construction at Plant Vogtle.
The two largest public power owners at Vogtle are the Municipal Electric Authority of Georgia, which has issued $2.92 billion of bonds for its 22.7% ownership share, and the nonprofit Oglethorpe Power Corp., which has issued $1.5 billion of first mortgage bonds for its 30% stake.
On Friday, S&P Global Ratings lowered OPS’s issuer credit rating and senior secured debt ratings to A-minus from A, and said the outlook is negative.
“The downgrade reflects OPC's exposure to the delayed Vogtle units 3 and 4 nuclear projects, the construction projects' history of cost overruns, and S&P Global Ratings' expectation that the utility will face financial pressures” related to the Plant Vogtle project, said S&P analyst David Bodek.
S&P also lowered OPC’s short-term rating on its $1 billion commercial paper program to A-2 from A-1 and lowered its ratings on three series of the utility's debt to AA from AA-plus that receive bank credit support.
