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SCE&G wants more time before briefing PSC on nuclear project

Chuck Crumbo
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South Carolina Electric & Gas has asked state regulators to reschedule a briefing on the status of two reactor units under construction at V.C. Summer Nuclear Station until next week.

In a filing with the S.C. Public Service Commission, the company requested a continuance until Tuesday. The session, set for 10-11:30 a.m., had been scheduled for Friday.

At the meeting, SCE&G executives plan to update commissioners about the project, which has been hobbled by cost overruns, construction delays and most recently the bankruptcy filing of the contractor and designer of the new reactor units – Westinghouse Electric.

SCE&G did not say in the filing why it needed more time. The briefing would come two days before the company’s parent, Cayce-based SCANA Corp., announces second quarter financial results.

It also would follow a board meeting of Westinghouse’s parent, Toshiba, which may announce the sale of its lucrative chip business to a group of investors that include U.S.-based Bain Capital. The deal, reportedly worth $18 billion, could provide Toshiba with the cash to make good on promises to cover some of the losses Westinghouse suffered building reactor units at V.C. Summer as well as Georgia Power’s new nuclear project that’s in progress near Waynesboro, Ga.

In June, Toshiba agreed to pump $3.68 billion into Georgia Power’s Plant Vogtle project to finish it. Following Westinghouse's bankruptcy filing, Toshiba  offered $1.7 billion to support the V.C. Summer project, but no final figure has been announced.

In another development, a bankruptcy court handling the Westinghouse bankruptcy case on Monday approved plans allowing Georgia Power and Southern Nuclear, a subsidiary of Atlanta-based Southern Co., to take over management of the Plant Vogtle project. The agreement, though, still needs approval from the U.S. Department of Energy.

A similar scenario could play out at V.C. Summer.

In December 2015, when the credit ratings for Toshiba Corp., parent of Westinghouse, slipped into speculative grade, a provision in SCE&G’s contract with Westinghouse was triggered in SCANA’S contract requiring Westinghouse to establish a surety bond in the form of a letter of credit ranging up to $100 million.

In addition, the provision allowed SCE&G to escrow intellectual property and software for the reactor units. 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, said Kevin Marsh, CEO of SCANA.

“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.

As far as proceeding with the project, SCE&G and its partner, state-operated Santee Cooper, are mulling a range of options including:

•             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 SCE&G and Santee Cooper have said abandonment is the least-preferred option because both will need to add generation capacity to serve their growing customer base.

At least two companies appear interested in taking over Westinghouse’s role as contractor, according to Bloomberg.

San Francisco-based Bechtel Corp., and Fluor Corp., of Irving, Texas, reportedly were preparing bids to serve as contractor on both the V.C. Summer and Plant Vogtle projects. Plant Vogtle is Georgia Power’s nuclear facility.

Bechtel and Fluor are major engineering and construction firms and Fluor already is working as construction manager on the Summer and Vogtle projects.

When filing for Chapter 11 protection, Westinghouse said it was getting out of the nuclear construction business. However, it has agreed to stay on the project until Aug. 10 as SCE&G and Santee Cooper weigh their choices.

Reach Chuck Crumbo at 803-726-7542.

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