[private]Georgia Power’s huge cost overruns on two nuclear reactors at Plant Vogtle have helped claim a major victim: Japanese corporate giant Toshiba.
Toshiba’s chairman resigned Tuesday as the company announced it was writing down $6.3 billion because of losses suffered by its nuclear subsidary, Westinghouse Electric Co., in building the nuclear units in Georgia and in South Carolina for Scana.
Toshiba acquired Westinghouse 10 years ago in a belief that the corporation would benefit from the rebirth of the nuclear power industry, but instead Westinghouse has been crippled by the cost overruns in the Georgia and South Carolina projects.
Toshiba said it now will try to sell all or part of its ownership of Westinghouse. One possible outcome is that Westinghouse might decide to file for bankruptcy.
What would be the potential impact of Westinghouse’s demise on the Vogtle project?
Georgia Power spokesman Jacob Hawkins said the utility’s agreement “continues to protect Georgia Power customers through its firm and fixed nature. In addition, the project owners currently possess $920 million in letters of credit consistent with the terms of that agreement.”
“While we cannot speculate on what may happen in the future with Toshiba or Westinghouse and their overall business, we will always hold them, as the contractor, accountable for their responsibilities under our agreement,” Hawkins said.
Public Service Commissioner Tim Echols contended that Georgia Power will be protected by the PSC’s recent decision to allow the utility to pass along most of its cost overruns to its customers in the form of higher rates.
“Thank God we rewrote our contracts,” Echols tweeted, referring to the PSC’s action.
“We have a fixed and firm agreement with Westinghouse that has protected our customers from a large majority of overruns,” Echols said in a statement. “We expect Westinghouse to honor the agreement and finish the units.”
On the other hand, Bobby Baker, a former PSC member, said Toshiba’s financial collapse “could be the straw that breaks the camel’s back.”
“What we need to worry about is whether Westinghouse files for bankruptcy,” Baker said. “The thing that’s dangerous for ratepayers is if Westhinghouse files for bankruptcy and the court allows them to renegotiate the contracts (in Georgia and South Carolina).”
Georgia Power might be compelled to renegotiate the construction contracts at a higher price, and then come before the PSC to argue that those higher costs should be passed along to ratepayers, Baker surmised.
“The bottom line is, there’s no backup plan,” Baker said. “If Westinghouse can’t finish the project, it’s over.”
© 2017 by The Georgia Report