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SCANA makes contingency plans for reactor project in case contractor bails

Chuck Crumbo
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SCANA executives said Thursday they started putting together contingency plans in case Westinghouse Electric can’t finish the job of building two reactor units at V.C. Summer Nuclear Station near Jenkinsville.

During an 86-minute conference call with analysts, SCANA’s top leaders offered a variety of scenarios that could happen if Westinghouse, and its financially hobbled parent Toshiba Corp., default or stop construction.


SCANA’s comments were the first remarks indicating that the company was seriously preparing to take over the project if necessary.

Toshiba announced Tuesday that it’s writing off $6.3 billion in business because of losses incurred by Westinghouse in new nuclear construction projects in the United States and China. However, Toshiba and Westinghouse indicated they’re still committed to completing two reactor units under construction at the Summer plant.

Besides the S.C. project, Westinghouse is the contractor for two reactor units under construction at Southern Co.’s nuclear plant near Waynesboro, Ga.

Westinghouse has provided SCANA’s principal subsidiary, S.C. Electric & Gaswith revised in-service dates of April 2020 and December 2020 for Units 2 and 3, respectively, SCE&G said in a news release.

SCE&G is partnering with state-operated Santee Cooper in the $13.9 billion project.

In December 2015, Toshiba’s credit ratings slipped into speculative grade, triggering a provision in SCANA’S contract requiring Westinghouse to establish a surety bond in the form of a letter of credit ranging up to $100 million, said Kevin Marsh, CEO of the Cayce-based energy provider.

Additionally, SCANA began to escrow intellectual property and software for the reactor units, Marsh said. Should SCANA need access to the design and software, the ability to call on the letter of credit would help in transitioning to a new construction team, he said.

“Under this scenario, we could 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 the engineering support ourselves or through a third-party engineering firm,” Marsh said.

State law also would allow SCANA to abandon the project.

Abandonment is not “high on our list,” Marsh said. “We would certainly like to finish these projects; they are critical to us over the long term and meeting customers’ needs and the growth we expect to see in the state of South Carolina.”

Company officials also said all major equipment has been procured, has been received on-site or is in fabrication. They added that “substantial progress” is being made on the two new units, each expected to generate up to 1,117 megawatts of electric power.

“While we are pleased that Westinghouse and Toshiba have reaffirmed their commitment to completing the project, we continue to look for ways to mitigate project risk for our customers and shareholders,” Marsh said. “If for any reason Westinghouse exits the project, we will evaluate the facts and circumstances at that time to determine the most prudent action for our company and customers.”

Steve Byrne, COO of SCE&G and executive vice president of SCANA, said the workflow has become more efficient as lessons learned while building the first new unit are being applied to the third.

“In some cases, it's a matter of hours; in other cases it's double or triple the efficiency factor for the second unit,” Byrne said. “So, we're learning the lessons from the first unit and applying them to the second unit, and it's going much, much more smoothly.”

SCANA staff members will look at the new schedule proposed by Westinghouse for completion of the units and the company expects “to report out our level of confidence in that probably the next quarterly call,” Byrne said.

Reach Chuck Crumbo at 803-726-7542.

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