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CRS: Westinghouse Bankruptcy Filing Could Put New U.S. Nuclear Projects at Risk
Westinghouse Bankruptcy Filing Could Put New U.S. Nuclear Projects at Risk
April 19, 2017 (IN10689)
Mark Holt, Congressional Research Service
Specialist in Energy Policy (mholt@crs.loc.gov, 7-1704)
Westinghouse Electric Company, a major nuclear technology firm that supplied nearly half of the 99 currently operating U.S. commercial reactors, filed for bankruptcy reorganization on March 29, 2017. The bankruptcy filing raised fundamental questions about the future of the U.S. nuclear power industry, and particularly whether four new reactors that Westinghouse is constructing for electric utilities in Georgia and South Carolina will be completed. The four reactors are the first to begin construction in the United States since the mid-1970s, and the nuclear industry had hoped they would pave the way for many more.
Because the Georgia two-reactor project, whose lead owner is Georgia Power, received $8.3 billion in loan guarantees from the Department of Energy (DOE), concerns have also been raised about potential federal liability should the borrowers default. The South Carolina project, with lead owner South Carolina Electric and Gas (SCE&G), did not receive DOE loan guarantees.
The Japanese industrial conglomerate Toshiba Corporation bought the majority of Westinghouse in 2006. In 2008, Westinghouse signed fixed-price contracts to build two 1,150 megawatt AP1000 reactors at the Vogtle nuclear plant in Georgia and two more at the V.C. Summer plant in South Carolina. The fixed-price nature of the contracts meant that Westinghouse and Toshiba were to bear most of the risk for schedule delays and cost overruns. The four reactors were originally scheduled to be completed by 2016-2018 at a cost (excluding interest) of about $4.8 billion per unit at Vogtle, according to Georgia Power's most recent progress report, and $5.7 billion for each of the new Summer units, according to a recent SCE&G regulatory filing. (Cost estimates by the two states differ in scope and methodology.)
Schedule delays and rising costs occurred at both plants soon after major construction began. Resulting lawsuits were settled at the end of 2015 with the utilities agreeing to pay for some of the rising costs but with Westinghouse and Toshiba agreeing to pay for any future delays and cost overruns. Toshiba announced February 14, 2017, that the cost estimates for completing the four units had risen another $6.1 billion since the 2015 settlements. Westinghouse filed for bankruptcy six weeks later. In a statement released with the bankruptcy filing, Toshiba said total debt accrued to Westinghouse and related companies was $9.8 billion, including the nuclear cost overruns...
April 19, 2017 (IN10689)
Mark Holt, Congressional Research Service
Specialist in Energy Policy (mholt@crs.loc.gov, 7-1704)
Westinghouse Electric Company, a major nuclear technology firm that supplied nearly half of the 99 currently operating U.S. commercial reactors, filed for bankruptcy reorganization on March 29, 2017. The bankruptcy filing raised fundamental questions about the future of the U.S. nuclear power industry, and particularly whether four new reactors that Westinghouse is constructing for electric utilities in Georgia and South Carolina will be completed. The four reactors are the first to begin construction in the United States since the mid-1970s, and the nuclear industry had hoped they would pave the way for many more.
Because the Georgia two-reactor project, whose lead owner is Georgia Power, received $8.3 billion in loan guarantees from the Department of Energy (DOE), concerns have also been raised about potential federal liability should the borrowers default. The South Carolina project, with lead owner South Carolina Electric and Gas (SCE&G), did not receive DOE loan guarantees.
The Japanese industrial conglomerate Toshiba Corporation bought the majority of Westinghouse in 2006. In 2008, Westinghouse signed fixed-price contracts to build two 1,150 megawatt AP1000 reactors at the Vogtle nuclear plant in Georgia and two more at the V.C. Summer plant in South Carolina. The fixed-price nature of the contracts meant that Westinghouse and Toshiba were to bear most of the risk for schedule delays and cost overruns. The four reactors were originally scheduled to be completed by 2016-2018 at a cost (excluding interest) of about $4.8 billion per unit at Vogtle, according to Georgia Power's most recent progress report, and $5.7 billion for each of the new Summer units, according to a recent SCE&G regulatory filing. (Cost estimates by the two states differ in scope and methodology.)
Schedule delays and rising costs occurred at both plants soon after major construction began. Resulting lawsuits were settled at the end of 2015 with the utilities agreeing to pay for some of the rising costs but with Westinghouse and Toshiba agreeing to pay for any future delays and cost overruns. Toshiba announced February 14, 2017, that the cost estimates for completing the four units had risen another $6.1 billion since the 2015 settlements. Westinghouse filed for bankruptcy six weeks later. In a statement released with the bankruptcy filing, Toshiba said total debt accrued to Westinghouse and related companies was $9.8 billion, including the nuclear cost overruns...
Full 3 page report here: https://fas.org/sgp/crs/misc/IN10689.pdf
