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The sorry story of Westinghouse’s nuclear financial misadventures

With Westinghouse Bankruptcy, the Nuclear Energy Story Nearly Over The much touted nuclear renaissance is now over. News Click  Prabir Purkayastha  07 Apr 2017

“…………The Westinghouse story is no different. Under the Bush administration, the US government declared certain subsidies for new nuclear plants. This was continued by Obama, It was to kick-start the US nuclear industry’s revival, and help GE and Westinghouse sell their “advanced” reactors. The GE had developed its ESBWR and Westinghouse its AP1000 that they claimed were 3rd generation designs. Utilising the government subsidies, two sets of plants were ordered from Westinghouse, two units in South Carolina, and two units in Georgia, at an estimated cost of $14 billion and $10 billion respectively.

Westinghouse faced enormous problems right from the beginning. A huge number of modifications had to be done, a number of vital pieces of equipment were found to be faulty, all of which led to serious cost and time over runs. This picture is no different from the other two sets of orders that Westinghouse was executing in China. It had secured two orders of two units each for AP1000 reactors for Sanmen and Haiyang plants. While the impact of the rework for the four AP1000 units in China are not known, the time overruns are clear. Instead of 2013 and 2014, these units are now scheduled for commissioning in 2018.

The two US utilities ordering the Westinghouse reactors had observed one caution. Given the nuclear industry’s history of inability to control its prices, they had signed fixed price contracts with Westinghouse. With a fixed price contract, Westinghouse could not pass on the cost of faulty equipment and its rectification to the utilities. Toshiba, which had bought a majority share in Westinghouse, was forced to take huge losses, leading finally to its withdrawal and Westinghouse filing for bankruptcy.

Westinghouse’s bankruptcy means that the utilities have now to see how these projects can be completed. They have already sunk too much money to scrap the plants. If they want to commission the plants, they will have to start absorbing the increase in costs. The utilities are already paying huge amounts for capital that has been locked up during construction and the interest charges for the loans they have taken. With the projects taking almost twice the time that Westinghouse had promised, these add up significantly in what finally the consumers have to pay for the cost of electricity…….http://www.newsclick.in/westinghouse-bankruptcy-nuclear-energy-story-nearly-over

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April 8, 2017 - Posted by | business and costs, USA

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