Toshiba said to be preparing for bankruptcy as Southern faces Vogtle deadline

Dive Brief:

Toshiba’s partners are preparing for the electronics giant for a possible bankruptcy filing in Japan, The Wall Street Journal reports, a move that would add to the uncertainty surrounding two nuclear power plants under construction in the U.S.
Toshiba holds guarantees for its bankrupt nuclear power unit Westinghouse Electric that could be key to the completion of Georgia Power’s Vogtle nuclear project in Georgia and SCANA’s V.C. Summer nuclear project in South Carolina. The company denied the bankruptcy reports, which cited anonymous sources.
The news comes Georgia Power faces the expiration of an interim construction agreement with Westinghouse on Friday, May 12, though it could be extended to allow further negotiation. A company executive told regulators the utility is preparing scenarios that include abandoning reactor construction.

Dive Insight:

Thomas Fanning, CEO of Southern Co., the corporate parent of Georgia Power, has been particularly vocal about being paid a $3.7 billion guarantee by Toshiba, saying in March that its bankrupt Westinghouse subsidiary had a "moral commitment" to complete its nuclear projects.

Even with the guarantee, however, Fanning told shareholders last month that Georgia Power and its partners might not be able to complete construction of the Vogtle project.

Vogtle’s two reactors were originally due online in 2016 and 2017 and were budgeted at $14 billion. The most recent estimates call for the reactors to be completed by 2019 and 2020 at a total cost of $21 billion. The construction delays and cost overruns ran Westinghouse into bankruptcy in March.

Now those deadlines may need to be extended again. Local TV station WSAV reports that David McKinney, vice president of nuclear development at Georgia Power, told the Georgia PSC that the 2019 and 2020 deadlines “no longer seem feasible.”

McKinney said Georgia Power is considering three different scenarios, one in which work on both reactors would be completed, one in which only one reactor would be finished and a third option in which the project would be abandoned.

On May 1, Southern reached an agreement with Westinghouse to continue construction on Vogtle until May 12 while the companies continue negotiations. The agreement could be extended again today if no decision is reached, but it remains unclear whether rumors of a Toshiba bankruptcy filing have affected the talks.

Late last month, Toshiba announced plans to spin off its four main business units as a way to safeguard them from the fallout of Westinghouse’s bankruptcy. The Journal reports that Japanese restructuring laws could allow Toshiba to keep its profitable electronics business if it files for bankruptcy as a whole, but the company denied anonymous reports that it is considering that option.

SCANA also extended its construction agreement with Westinghouse on May 1, but it has until June 26 to reach a deal with the developer.