March 29, 2017

Huge cost overruns push Westinghouse into bankruptcy

Westinghouse Electric Co, a unit of Japanese conglomerate Toshiba Corp, filed for bankruptcy on Wednesday, hit by billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast.

A Westinghouse project in Georgia remains unfinished, its future in doubt - Reuters

The bankruptcy casts doubt on the future of the first new U.S. nuclear power plants in three decades, which were scheduled to begin producing power as soon as this week, but are now years behind schedule.

The four reactors are part of two projects known as V.C. Summer in South Carolina, which is majority owned by SCANA Corp (SCG.N), and Vogtle in Georgia, which is owned by a group of utilities led by Southern Co (SO.N).

Costs for the projects have soared due to increased safety demands by U.S. regulators, and also due to significantly higher-than-anticipated costs for labor, equipment and components.

The bankruptcy could embroil the U.S. and Japanese governments, given the scale of the collapse and the $8.3 billion in U.S. government loan guarantees that were provided to help finance the reactors.

State regulators have approved costs of around $14 billion for each project but Morgan Stanley has estimated the final bill of around $22 billion for the South Carolina project and around $19 billion for the Georgia plant.

SCANA told investors on a conference call on Wednesday that 5,000 workers would continue working on its South Carolina site for 30 days while the company weighed options.

"Our preferred option is to finish the plants. The least preferred option is abandonment," said SCANA CEO Kevin Marsh.

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