It remains unclear whether the four partially-built Westinghouse AP1000 reactors in the US will be completed ‒ and it will probably remain unclear for some months. Westinghouse CEO Jose Gutierrez said the company is working with the owners of the Vogtle and V.C. Summer nuclear plants ‒ Southern Co. in Georgia, and SCANA Corp. in South Carolina ‒ "to find a long-term solution to complete those reactors".1 Gutierrez said he hopes more reactors get built in the US and that "we hope they do a better job than we did".1
Southern Co. CEO Thomas Fanning said a decision may not be made on the Vogtle project in Georgia until August.2 A decision on the Summer project in South Carolina might be made by the end of June3 ‒ but none of the deadlines associated with the crisis are being met and it's unlikely the fate of the Summer project will be decided this month.
Work is proceeding on the Vogtle and Summer projects, albeit without Westinghouse funding, under interim agreements. The latest agreement to continue work on the Vogtle project expired on June 5 (an agreement extending to June 3 was extended for 48 hours). Presumably there will soon be another announcement extending the interim agreement ‒ or possibly a more significant, decisive announcement on the future of the project. The interim agreement to keep the South Carolina project moving ahead ends on June 26.
Anya Litvak summarized some recent developments in the Pittsburgh Post-Gazette on June 6:4
"On May 16, Westinghouse reached a tentative agreement with Southern Co., the parent of the utility that commissioned the Plant Vogtle AP1000 projects in Georgia. The deal called for Southern to take over responsibility for completing the construction. The two parties were supposed to finalize a path forward by Sunday, but they were still negotiating Monday.
"Parallel discussions are ongoing between Westinghouse and Scana Co., which owns the two AP1000 units under construction at V.C. Summer in South Carolina.
"It has been rumored for months that Fluor Corp. and Bechtel Corp., two of the country's largest engineering and construction firms, might be preparing bids to take over the projects in Georgia and South Carolina. Fluor was brought in by Westinghouse more than a year ago to straighten things out after the nuclear firm's ill-fated takeover of the nuclear construction firm that was previously in charge of that effort, Stone & Webster. Bechtel, according to the recently filed financial statements, has also been on the job since at least January, as evidenced by two "staff augmentation contracts," one at each site."
Westinghouse is expected to break its construction contracts with the owners of the Vogtle and Summer projects but would gladly remain involved in some capacity if asked to do so. The owners must estimate the costs required to complete the reactors and then decide whether (and how) to proceed. Possible funding sources include contractual guarantees from Westinghouse's parent company Toshiba, further government subsidies, and ratepayers.
The extension of a federal government tax credit program has been seen as the most likely way of securing federal support for the Vogtle and Summer projects. The extension could translate into about US$2 billion in funding support for each of the projects. But Congress has not supported an extension to date, and if it arrives it may be too late to save the projects.5
Toshiba is reportedly prepared to pay about US$3.6 billion towards the completion of the Vogtle plant, payable over at least three years. The agreement is not final and is said to be contingent on a similar agreement between Toshiba and the owners of the Summer plant.6 But that US$3.6 billion may not be enough to complete the Vogtle plant.7 Likewise, Toshiba's commitment to pay about US$1.7 billion towards the completion of the Summer plant isn't set in stone, and it may not be sufficient to complete the plant.3
There has been speculation that Toshiba may seek bankruptcy protection in Japan, just as Westinghouse has in the US, which would probably be the final straw for the Vogtle and Summer projects ‒ but it remains nothing more than speculation.3
Another possible source of funding to help complete the reactors would be to once again increase power bills in Georgia and South Carolina. Ratepayers are paying in advance for the Vogtle and Summer projects. Georgia Power had collected almost US$1.2 billion by the end of 2016 to pay for Vogtle.8 Power prices in South Carolina have increased by 20% since 2009 to pay for the Summer reactors3 and at least US$1.4 billion has been collected.9
Public utility commissions would need to approve further rate increases. Numerous increases have been approved as the cost of the reactor projects has escalated time and time again. Ratepayers are fed up, and politicians or commissioners proposing further increases might find themselves out of a job. The Atlanta Journal-Constitution said that funding the two AP1000 reactors in Georgia "may become the most volatile issue of the 2018 campaign for governor, lieutenant governor, Congress, the state Legislature, and perhaps dogcatcher."10
Given the history of state utility commissions repeatedly approving further imposts on ratepayers, no-one would be surprised if power bills are increased yet again. But there is some push-back. Public Service Commissioner Bubba McDonald said Georgia Power should voluntarily stop billing ratepayers for Vogtle costs, and the Public Service Commission has asked the state attorney general's office for advice as to whether it would be legal for Georgia Power to remove the charge.11 In circumstances where existing charges are being challenged, it will be difficult to increase those charges.
Georgia Power spokesperson Jacob Hawkins said the pay-in-advance model "saves customers hundreds of millions of dollars by reducing financing and borrowing costs"11 ‒ but Georgians and South Carolinians have paid over US$1 billion for reactors that may never be completed. Georgians are paying about US$23 million each month ‒ not far short of US$1 million per day ‒ for reactors that may never be completed.12
Kennedy Maize, contributing editor at Power magazine, thinks the projects will be abandoned: "My guess – and it's just that, based on my reading of U.S. nuclear history – is that both Vogtle and Summer eventually will crater. While both utilities enjoy supine state regulators and the ability to earn on construction costs as they are incurred, that will trigger rate shock and political backlash, killing the projects. That's what we saw in the 1980s."13
The Atlanta Journal-Constitution summarized some of that unhappy history: "[C]onstruction of Plant Vogtle's first two reactors had provided a vivid example of the potential complications. Plant Vogtle was conceived around 1970, with an original cost estimate of about $660 million. Construction was expected to take about eight years. Then, Three Mile Island happened. Regulations tightened. Demand for materials and interest rates shot up in the 1980s. Construction took 13 years. The final price tag: around $9 billion."8
AP1000 reactor plans in the UK
NuGen's plan for three AP1000 reactors at Moorside in the UK has descended into farce. Tom Samson, chief executive of the NuGen consortium, insists the project has "100 per cent backing" from Toshiba14 and he is "110% certain" the reactors will be built.15 But Toshiba is 100% committed to selling its stake in NuGen and has no intention of building reactors in the UK or anywhere else ... for reasons that must be all too obvious. The likelihood of the Moorside project going ahead is closer to 10% than 110%. French company Engie recently exited the Moorside project, forcing Toshiba to acquire its 40% stake based on contractual agreements, and previously Iberdrola and SSE exited the project.16
Samson says there is a "universe of options ... to progress this phenomenal project of national significance".14 South Korea's Kepco is the most likely saviour, but South Korean interest in NuGen dates from 2013, if not earlier, yet nothing has been agreed ‒ and the recent election of Moon Jae-in as President may complicate South Korean involvement in NuGen. A delegation from China's State Nuclear Power Technology Corporation (SNPTC) visited the UK in May, reportedly to meet NuGen. The Carlisle News and Star reported that "both organisations have not denied that such a meeting will take place."17 Chinese involvement has raised national security concerns18 that could scupper any such involvement.
NuGen has set up a 'strategic review' to assess whether the Moorside project can be revived.19
Meanwhile, David Wright, a director at UK's National Grid, says he is "sure" that the NuGen project will go ahead ‒ his confidence based on discussions with Tom Samson (!). But National Grid recently suspended its £2.8bn (US$3.6bn) project to provide a transmission link to the Moorside site.20
Oliver Tickell and Ian Fairlie wrote an obituary for Britain's nuclear renaissance in The Ecologist on May 18.21 They concluded: "[T]he prospects for new nuclear power in the UK have never been gloomier. The only way new nuclear power stations will ever be built in the UK is with massive political and financial commitment from government. That commitment is clearly absent. So yes, this finally looks like the end of the UK's 'nuclear renaissance'. Not with a bang, nor even with a whimper, but with a deep and profoundly meaningful silence. Not a moment too soon."21
AP1000 reactor plans in India
World Nuclear News reported on June 2 that six AP1000 reactors planned for the Mithi Virdi plant in the Bhavnagar district of India's northern Gujarat state will now be constructed at the Kovvada site in the southern state of Andhra Pradesh.22 But there's precious little chance of AP1000 reactors being built anywhere in India. Both Toshiba and Westinghouse are exiting the reactor construction industry, and it's doubtful whether another company or utility would take over the project.
No binding contracts have been signed. No-one has any idea where the money might come from to pay for the AP1000 reactors. India's liability law remains an obstacle. And public opposition is still a major obstacle ‒ public opposition goes a long way to explaining the decision to abandon the Mithi Virdi AP1000 project and opposition will be keenly felt in Andhra Pradesh.23 That is, opposition will be keenly felt if the Andhra Pradesh project gathers any momentum, which seems unlikely for the foreseeable future.
Nuclear Engineering International reported on May 9 that India has asked Toshiba to offer ways to resolve the issue of reactor sales following the bankruptcy of its subsidiary Westinghouse.24 A firm agreement on AP1000 reactors was meant to be concluded by the end of June 2017, but that deadline will come and go without any agreement. Nuclear Engineering International also reported that India is seeking a loan of around US$8‒9 billion from the US Export-Import Bank to part-fund the AP1000 reactors.24 But there is very little likelihood that the Export-Import Bank will provide the funding.
According to a recent Reuters report, India's Cabinet has decided that foreign reactors will not be bought unless such reactors are already in operation elsewhere.25 Likewise, Sekhar Basu, secretary of India's Department of Atomic Energy, said in May that potential foreign reactor suppliers "have to sort out their financial issues before anything can come on the table" and India "will not buy a reactor unless a plant is operating in their own country."26
Some long-delayed AP1000 and EPR projects may be completed in the next couple of years; but even so, plans for AP1000 and EPR reactors in India will likely be scrapped.
In May, India's Cabinet approved a plan to build 10 indigenous pressurized heavy water reactors (PHWR). That decision clearly reflects doubts about the ability of Westinghouse to deliver AP1000 reactors and French utilities to deliver EPR reactors. The plan for 10 new PHWRs faces major challenges27 but suffice it here to note that the PHWR program has more chance of success than the AP1000 or EPR plans.
Suvrat Raju and M.V. Ramana wrote in The Hindu on June 7:28
"Both Areva and Westinghouse had entered into agreements with the Indian government to develop nuclear plants. Areva had promised to build the world's largest nuclear complex at Jaitapur (Maharashtra), while last June, Prime Minister Narendra Modi and U.S. President Barack Obama announced, with great fanfare, that Westinghouse would build six reactors at Kovvada (Andhra Pradesh).
"The collapse of these companies vindicates critics of these deals, who consistently pointed out that India's agreements with Areva and Westinghouse were fiscally irresponsible. If these projects had gone ahead, Indian taxpayers would have been left holding the bag ‒ billions of dollars of debt, and incomplete projects. This narrow escape calls not only for a hard look at the credibility of those members of the nuclear establishment who advocated these deals for a decade, but for a comprehensive re-evaluation of the role of nuclear power in the country's energy mix.
"Therefore, the government's recent decision to approve the construction of ten 700 MW Pressurised Heavy Water Reactors (PHWRs) deserves to be scrutinised carefully. Strictly speaking, there is little that is new in this decision. A list of all the sites where the PHWRs are to be constructed had already been provided to Parliament by the United Progressive Alliance government in 2012. But delays with the first 700 MW PHWRs already under construction, the changed international scenario for nuclear energy, and the ongoing reductions in the cost of renewable energy all imply that these earlier plans are best abandoned."
References:
1. Rebecca Kern, 25 May 2017, 'Westinghouse to Emerge From Bankruptcy Stronger, CEO Says', www.bna.com/westinghouse-emerge-bankruptcy-n73014451517/
2. Peter Maloney, 26 May 2017, 'Southern CEO: Decision on Vogtle's fate not likely until late summer', www.utilitydive.com/news/southern-ceo-decision-on-vogtles-fate-not-likel...
3. David Wren, 11 May 2017, 'Reports of impending Toshiba bankruptcy raise new doubts about S.C. nuclear project', www.postandcourier.com/business/reports-of-impending-toshiba-bankruptcy-...
4. Anya Litvak / Pittsburgh Post-Gazette, 6 June 2017, ''We, Westinghouse, cannot fail': CEO gives fuller picture of business in new documents', http://powersource.post-gazette.com/powersource/companies/2017/06/06/Wes...
5. Sammy Fretwell, 22 May 2017, 'Could losing tax break sink SCE&G's nuclear project?', www.thestate.com/news/local/article151956352.html
6. Tom Hals and Jessica DiNapoli, 15 May 2017, 'Power plant owners limit Toshiba's Westinghouse liabilities: sources', www.reuters.com/article/us-toshiba-accounting-southern-co-idUSKCN18A120
7. Matt Kempner, 25 May 2017, 'Kempner: Radioactive question looms over Georgia's nuclear mess', www.myajc.com/business/kempner-radioactive-question-looms-over-georgia-n...
8. Russell Grantham and Johnny Edwards, 19 May 2017, 'Plant Vogtle: Georgia's nuclear ‘renaissance' now a financial quagmire', www.myajc.com/business/plant-vogtle-georgia-nuclear-renaissance-now-fina...
9. Sammy Fretwell, 3 June 2017, 'Once-secret records reveal pattern of costly mistakes at troubled nuclear project', www.thestate.com/news/local/article154261279.html
10. Jim Galloway, 26 April 2017, 'The first suggestion of a federal rescue for Plant Vogtle', http://politics.blog.ajc.com/2017/04/26/inside-the-envelope-was-the-firs...
11. Molly Samuel, 6 June 2017, 'Ga. PSC Delays Nuclear Vote, Asks Attorney General To Step In', http://news.wabe.org/post/ga-psc-delays-nuclear-vote-asks-attorney-gener...
12. Pam Wright, 23 May 2017, 'Sinking Into the Vogtle Vortex', http://features.weather.com/us-climate-change/georgia/
13. Kennedy Maize, 20 May 2017, 'Nuclear Farewell?', www.powermag.com/blog/nuclear-farewell/
14. 16 May 2017, 'NuGen chief says Cumbrian new nuclear has Toshiba's '100 per cent' backing', www.newsandstar.co.uk/news/business/NuGen-chief-says-Cumbrian-new-nuclea...
15. ITV, 3 May 2017, 'Exclusive: NuGen CEO 'certain' Moorside will go ahead', www.itv.com/news/border/story/2017-05-03/exclusive-nugen-ceo-certain-moo...
16. Nuclear Free Local Authorities, 4 April 2017, 'As Engie becomes the seventh international energy utility to give up on UK new nuclear build, NFLA say now is the time to move towards a decentralised, renewable energy alternative policy', www.nuclearpolicy.info/news/as-engie-becomes-the-seventh-international-e...
17. Carlisle News and Star, 23 May 2017, 'Chinese investors linked with £10bn Moorside nuclear plant, www.newsandstar.co.uk/news/business/Chinese-investors-linked-with-10bn-M...
18. Matthew Gunther, 15 August 2016, 'Chinese investor in Hinkley Point faces nuclear espionage charges', www.chemistryworld.com/news/hinkley-point-investor-faces-espionage-charg...
19. Cumbrians Opposed to a Radioactive Environment, 17 May 2017, 'NuGen's investment turmoil sparks pylon delay for Moorside new-build', http://corecumbria.co.uk/briefings/nugens-investment-turmoil-sparks-pylo...
20. Jane Gray, 23 May 2017, 'Transmission chief ‘sure' that Moorside will go ahead', http://utilityweek.co.uk/news/Transmission-chief-%E2%80%98sure%E2%80%99-...
21. Oliver Tickell and Ian Fairlie, 18 May 2017, 'Conservative election manifesto signals the end of new nuclear power', www.theecologist.org/News/news_analysis/2988965/conservative_election_ma...
22. WNN, 2 June 2017
http://mailchi.mp/world-nuclear-news/wnn-daily-russia-india-plan-for-kud...
23. 2 June 2017, 'Green clearance for nuclear project in Gujarat withdrawn by NGT, but Govt shifts it to Andhra!', www.dianuke.org/green-clearance-nuclear-project-gujarat-withdrawn-ngt-go...
24. Nuclear Engineering International, 9 May 2017, 'Westinghouse will miss deadline for India deal', www.neimagazine.com/news/newswestinghouse-will-miss-deadline-for-india-d...
25. Geert De Clercq, 3 June 2017, 'France, India to cooperate in fighting climate change', http://in.reuters.com/article/france-india-modi-macron-climatechange-idI...
26. Douglas Busvine, 18 May 2017, 'Foreign suppliers urged to step up as India backs own nuclear design', www.cnbc.com/2017/05/18/reuters-america-foreign-suppliers-urged-to-step-...
27. Dan Yurman, 23 May 2017, 'India Sets New Course for Nuclear Energy with 10 700 MW PHWR', http://neutronbytes.com/2017/05/23/india-sets-new-course-for-nuclear-ene...
28. Suvrat Raju and M.V. Ramana, 7 June 2017, 'Nuclear power: Expensive, hazardous and inequitable', www.thehindu.com/opinion/lead/nuclear-power-expensive-hazardous-and-ineq...