Vogtle agreement caps Toshiba obligation
Toshiba Corp is the parent company of Westinghouse - contractor for the project to build the two AP1000s at Vogtle in Georgia - which filed for Chapter 11 bankruptcy in March. A parental guarantee obligation was agreed by Toshiba and Vogtle's owners - Southern subsidiary Georgia Power (45.7%), Oglethorpe Power (30%), MEAG Power (22.7%) and Dalton city (1.6%) - when Westinghouse received the order for the units in 2008.
The new agreement fixes Toshiba's maximum obligation under the parental guarantee to $3.68 billion, with payments to be made in instalments during the period from October 2017 to January 2021. According to Toshiba, the agreement specifies that the agreed maximum cannot be subjected to any further increases or claims by the plant's owners "even in the event of future increases in construction costs".
The maximum amount has already been incorporated into Toshiba's financial outlook for fiscal 2016, announced on 15 May, as part of a JPY980 billion ($8.9 billion) provision for parent company guarantees and a reserve for losses against loans. It will therefore have no additional impact on Toshiba's financial results, the company said.
If actual construction costs are less than the specified maximum amount, Toshiba will have the right to receive "part of the benefit of the difference" as Westinghouse's creditor.
Toshiba said it was still in negotiations with the owners of the VC Summer plant in South Carolina- Scana Corporation and Santee Cooper - in respect of its parent company guarantee obligations and payment schedule.
"Toshiba aims to finalise the total maximum amount of the parent company guarantee for all four nuclear reactors under construction in the US, and will ensure prompt disclosure of information related to this matter as and when it becomes available," it said.
Service agreement finalised
Construction work at Vogtle and Summer has been continuing under interim assessment agreements with the plants' respective owners since Westinghouse's bankruptcy filing. In May, Georgia Power announced that it, together with Southern Nuclear, would take over project management for Vogtle. The interim assessment agreement for Vogtle has now been extended to 22 June.
The new service agreement finalised by Georgia Power and Westinghouse will allow for the transition of project management at Vogtle from Westinghouse to Southern Nuclear and Georgia Power and will take effect after approval of the bankruptcy court it granted, and the rejection of the current engineering, procurement and construction contract by Westinghouse. The conditional agreement, which also requires approval by Westinghouse's board of directors, includes engineering, procurement and licensing support as well as access to intellectual property needed for the project.
Georgia Power president and CEO Paul Bowers said the "positive developments" with Toshiba and Westinghouse allowed momentum to continue at the site during the project management transition process.
"We are continuing to work with the project's co-owners to complete our full-scale schedule and cost-to-complete analysis and will work with the Georgia Public Service Commission to determine the best path forward for our customers," he said.