Westinghouse Bankruptcy Clouds Future of Two Nuclear Projects in Southeast
BRADENTON, Fla. — Construction is expected to continue for the time being on new nuclear units in Georgia and South Carolina despite Westinghouse's Chapter 11 bankruptcy.
A bleak picture of the future emerged in initial court filings on Wednesday, although the private and public utilities financing the work at Plant Vogtle and VC Summer vowed to move forward.
"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," said Moody's Investors Service Associate Managing Director Michael Haggarty.
The Japanese corporation Toshiba owns the Westinghouse Electric unit.
Georgia Power Co. and South Carolina Electric & Gas Co., along with public power agencies involved in the respective projects, agreed to advance funds, subject to court approval, to pay certain bills that will keep construction going through April 28, according to filings with the Securities and Exchange Commission.
The Municipal Electric Authority of Georgia and the South Carolina Public Service Authority's Santee Cooper — the largest public power agencies involved in the projects — are also named in separate interim assessment agreements.
The two public agencies both have issued billions of dollars of municipal bonds to finance their ownership stakes in the nuclear plants.
"This agreement will provide SCE&G and Santee Cooper the time necessary to perform due diligence related to cost and schedule," Santee Cooper President Lonnie Carter said in a notice filed on EMMA. "It gives us critical direct access to resources and information that Westinghouse had not provided us to date, which will be important as we plan for the future of the project."
Westinghouse Electric Co. and four related units filed for Chapter 11 bankruptcy protection in the Southern District of New York on Wednesday.
The filing listed $9.8 billion of debt — most of which is related to the company's work as the primary contractor for the nuclear projects at Vogtle and Summer.
"The debtors will use these Chapter 11 cases to 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," said a declaration filed by Lisa J. Donahue, managing director with AlixPartners LLC, who is serving as Westinghouse's chief transition and development officer.
Donahue through AlixPartners was chief restructuring officer of the Puerto Rico Electric Power Authority from 2014 until February 2017.
Westinghouse will use the "protection and tools" afforded by the Bankruptcy Code to resolve issues surrounding the plants under construction, Donahue said.
The majority of Westinghouse units are "very profitable," including businesses relating to nuclear fuel and the servicing of nuclear plants in the United States and Europe, according to the declaration.
The company said it intends to reorganize around its core businesses to emerge from bankruptcy as a "healthy, well-capitalized company capable of continuing Westinghouse's proud history as an icon of American ingenuity."
Moody's said the Plant Vogtle and VC Summer projects likely will cost more to complete, pressuring the utilities that will ultimately foot the bill.
"We anticipate the project owners will evaluate alternatives for finishing construction, which in all likelihood would result in higher risk and additional costs," Haggarty said.
Moody's has negative outlooks on SCANA Corp., SCE&G, Santee Cooper, Georgia Power, Oglethorpe Power, and MEAG.
MEAG has issued $2.85 billion of M, J, and P nuclear project bonds for its stake in Georgia's Plant Vogtle where two new nuclear units are under construction using Westinghouse AP 1000 technology.
Santee Cooper has $7.1 billion of total outstanding debt, a portion of which was issued to finance its share of two AP1000 nuclear units at VC Summer.