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Nuke project owners reach extension agreement with Westinghouse

Energy
Chuck Crumbo
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Westinghouse Electric Company, contractor for the nuclear construction project underway at V.C. Summer Nuclear Station has agreed to stay on the job through Aug. 10.

SCANA and Santee Cooper, partners in the project to add two 1,117-megawatt reactor units to the Fairfield County power station, announced in a press release Monday the agreement to amend the interim assessment period, adding that the deal is subject to bankruptcy court approval.

In late March, Westinghouse filed for Chapter 11 protection, citing financial losses suffered in building the reactor units at V.C. Summer and at Plant Vogtle, near Waynesboro, Ga. The Vogtle project also involves construction of two 1,117-megawatt units for Georgia Power.

SCANA and Santee Cooper said the agreement “allows for a transition and evaluation period” that will allow the project to continue while they weigh a range of options “to determine the most prudent path forward.” The goal is to reach a decision in the third quarter, the release said.

Texas-based Fluor, which has offices in Greenville, will remain project manager while South Carolina Electric & Gas, principal subsidiary of Cayce-based SCANA, and Santee Cooper continue to make payments totaling between $120 million to $160 million a month for work performed during the interim assessment period.

As far as proceeding with the project, SCE&G and Santee Cooper are mulling a range of options. Those include:

•           Continue with construction on both units.

•           Focus on construction of one unit and delay work on the other.

•           Continue with one unit and abandon the other, seeking recovery of money spent on the project under the state Base Load Review Act.

•           Abandon the project altogether and seek recovery under the state law.

Executives of both utility companies have said abandonment is the least-preferred option because both will still need to add generation capacity to serve their growing customer base.

If SCE&G and Santee Cooper proceed with building the reactors, they’ll need to decide on who will be the contractor since Westinghouse has announced plans to get out of the construction business.

In December 2015, when the credit ratings for Westinghouse’s parent, Toshiba, slipped into speculative grade, a provision in the new nuclear construction contract was triggered allowing SCANA to escrow Westinghouse’s intellectual property and software for the reactor units.

Under this scenario, SCE&G and Santee Cooper can evaluate options of serving as a general contractor, entering into a new EPC (engineering, procurement and construction) contract for the remainder of construction, or entering into a procurement and construction contract and supply their own engineering support through a third-party engineering firm.

There appears to be interest from other companies to step into the contractor’s role.

San Francisco-based Bechtel Corp., an engineering and construction firm, is preparing a bid to take over Westinghouse projects at V.C. Summer and Plant Vogtle, according to business media report. In addition, Fluor, which is already working on the V.C. Summer and Vogtle projects, is putting together a bid to take over as contractor.

Both bids, according to reports, are expected to be ready in August.

Presently, the South Carolina project at the Fairfield County nuclear power plant is estimated to cost $13.9 billion, more than $2 billion over the original budget approved by regulators in 2009, and is about four years behind the original schedule.

Officials estimate about $8.9 billion has been spent on the project, which began in 2009.

  

Reach Chuck Crumbo at 803-726-7542.

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