BRADENTON, Fla. – The owners of two new nuclear reactors in Georgia expect to get a check for $3.2 billion on Friday, potentially relieving the project of the risk that Toshiba Corp. won’t make good on its guarantee.
The Municipal Electric Authority of Georgia, 22.7% owner of the new units under construction at Plant Vogtle, said its share of the $3.2 billion final payment is about $732 million, according to a notice posted on the Municipal Securities Rulemaking Board’s EMMA filing system.
“The receipt of the remaining parent guarantee payments by Dec. 15 is an important and favorable development in mitigating project risk,” said MEAG President Jim Fuller. “Obtaining the value of these payment commitments will lead to lower costs for the reliable, emissions-free output from the new Vogtle Units.”
It was feared that Japan’s financially troubled Toshiba wouldn’t make the promised $3.68 billion in payments to Vogtle’s owners. The guarantee was negotiated when Toshiba’s Westinghouse Electric Co. filed for bankruptcy earlier this year, defaulting on its contracts to build reactors in Georgia and in South Carolina.
The other public owners of Georgia’s project are Oglethorpe Power, with a 30% share, and Dalton Utilities, which owns 1.6% of the project. Oglethorpe will receive about $968 million from the final payment and Dalton will get $51.6 million.
Investor-owned Georgia Power Co., the majority owner of the project with 45.6%, is the lead agency for the nuclear expansion and will get $1.47 billion from Toshiba Friday.
To date, the co-owners have received $455 million in total scheduled payments under the parent guarantee for reactors 3 and 4 at Plant Vogtle.
“The ahead-of-schedule payment of the full amount is credit positive for the four owners,” said Moody's Investors Service analyst Dan Aschenbach. “The agreement eliminates significant counterparty risk with Toshiba, strengthens the project’s liquidity and provides funding to mitigate future rate increases or to meet capital spending requirements.”
GPC recommended Aug. 31 to the Georgia Public Service Commission that construction of the nuclear units continue. Since that time, one participant in the project – JEA of Jacksonville, Fla., - has objected to proceeding with it.
The Public Service Commission continues another round of hearings Monday taking public testimony on GPC’s latest construction monitoring report.
The commission will also hear from staff and intervenors, including JEA if utility officials choose to provide testimony. Notices on EMMA have said that JEA believes the nuclear expansion project should be canceled.
JEA has a 20-year, take-or-pay power purchase agreement with MEAG Power for 206 megawatts of energy, which includes a share of debt service payments and a proportionate share of ownership risk, when Vogtle units 3 and 4 start operating.
During this week’s hearings, the commission has asked staff to recommend if certain expenses sought by GPC should be verified, and approved or disapproved. GPC has asked the PSC approve $542 million in expenditures on Vogtle construction incurred between Jan. 1 and June 30.
PSC staff said in reports that $498 million of the expenses sought by GPC are for liens and other paid pre-bankruptcy petition amounts owed to Westinghouse’s contractors, and should be deemed unreasonable.
If the commission agrees, only $44 million of GPC’s expenses would be verified and approved.