India flirts with nuclear firms facing financial ruin Two of the major nuclear firms, India is dealing with, have run into financial crisis. As India looks forward to increase its share of nuclear energy in total power generation, the wavering financial condition of the firms raises some serious questions. India Today, IANS by Prabhash K Dutta New Delhi, April 16, 2017, For long a pariah in the global nuclear technology market, Indian policymakers are pleasantly discovering how the boot is on the other foot as they are furiously courted by foreign firms themselves facing financial ruin.
Apple Has Some Of the World’s Deepest Pockets
As of the end of December 2016, Apple reported a cash balance of $241 billion with 94% of it – $230 billion – overseas. It has continued to add to that growing pile of cash overseas mainly because it has not paid U.S. corporate taxes on the related earnings. Repatriating it under current provisions in the tax code would require a large payment to the federal government…..
Overseas Investments Logically Escape U.S. Taxman
Like any well-managed company, Apple is not counting on the government making any changes to current law. It’s logical to believe that the company might be seriously investigating the possibility of direct investments or acquisitions in companies that are headquartered outside the U. S…….
Direct overseas investments would deploy the cash pile into a use that might be more lucrative than collecting the tiny amounts of interest currently paid to all savers, including large, successful corporations.
Apple has a long standing working relationship with Toshiba and most likely has a number of fans within Toshiba. In 2005, during the exciting stages of the iPod era, Apple made a long term purchase commitment – which came with a substantial cash advance – that enabled Toshiba and other flash memory suppliers to make the investments that have led to a technological revolution and a reliably profitable business segment.
Both Apple and Toshiba have profited from the relationship over the years. In 2011, Apple stopped buying flash memory from Samsung, indicating that its components no longer met the company’s evolving requirements as it improved its products. That decision shifted more sales volume to Toshiba…….
How Would This Investment Help Electricity Customers In Georgia And South Carolina?
Several years ago Toshiba, as Westinghouse’s large, profitable and then stable parent company, provided substantial guarantees in the case of cost overruns for both the Vogtle and Summer projects. Each of those projects, one in Georgia and one in South Carolina involves the construction of two of Westinghouse’s flagship AP1000 nuclear power plants. According to recent document filings, the total amount of Toshiba’s guarantees is about $4 billion.
Toshiba would like to complete the projects and successfully demonstrate the value of the AP1000 technology. Even though the company has indicated that it no longer wants to be in the nuclear plant construction business, it is still very interested in being a part of the nuclear power plant engineering, manufacturing, fuel supply, and services business. That business line will have a much greater potential for future profits after the first units begin operating.
Both Southern Company’s Georgia Power unit and SCANA, as the lead utilities in each consortium building the power plants, are in an evaluation phase to determine if the plants can and should be finished…..
neither of the state utility regulators will allow project completion if the costs seem prohibitive and if the burden of the cost overruns places an excessive burden on their electricity customers.
Though the cost overrun guarantee from Toshiba will apparently survive the Westinghouse bankruptcy, it may end up near the end of the creditor line if Toshiba itself must seek bankruptcy protection…..
Nuclear power lobbyists ‘freaked out’ as crisis deepens http://reneweconomy.com.au/nuclear-power-lobbyists-freaked-crisis-deepens-22759/ By Jim Green on 13 April 2017 The nuclear power crisis escalated dramatically on March 29 with the announcement that US nuclear giant Westinghouse, a subsidiary of Japanese conglomerate Toshiba, had filed for Chapter 11 bankruptcy protection. The filing marks the start of lengthy and complex negotiations with creditors and customers and the US and Japanese governments.
Nuclear giants limp towards extinction http://climatenewsnetwork.net/nuclear-giants-limp-towards-extinction/ April 14, 2017, by Paul Brown Cost overruns and delays are pushing the nuclear industry into a financial black hole that threatens any future expansion.
LONDON, 14 April, 2017 – Any lingering hope that a worldwide nuclear power renaissance would contribute to combating climate change appears to have been dashed by US company Westinghouse, the largest provider of nuclear technology in the world, filing for bankruptcy, and the severe financial difficulties of its Japanese parent company, Toshiba.
After months of waiting, Toshiba still could not get its auditors to agree to its accounts this week. But it went ahead anyway and reported losses of nearly $5 billion for the eight months from April to December, in order to avoid being de-listed from the Japanese stock exchange.
The company admitted it too could face bankruptcy, and is attempting to raise capital by selling viable parts of its business.
In a statement, it said: “There are material events and conditions that raise substantial doubt about the company‘s ability to continue as a going concern.”
The knock-on effects of the financial disasters the two companies face will be felt across the nuclear world, but nowhere more than in the UK, which was hoping Westinghouse was about to start building three of its largest nuclear reactors, the AP 1000, at Moorside in Cumbria, northwest England.
The UK’s Conservative government will be particularly embarrassed because, in late February, it won a critical parliamentary by-election in the seat that would be home to the Moorside plant, on the guarantee that the three reactors would be built − a pledge that now seems impossible to keep.
Martin Forwood, campaign co-ordinator for Cumbrians Opposed to a Radioactive Environment, says: “I think the day of the large-scale nuclear power station is over. There is no one left to invest anymore because renewables are just cheaper, and these prices are still going down while nuclear is always up.”
Toshiba and Westinghouse are in deep trouble because the reactors they are currently building − the same design as the ones planned for Cumbria − are years late and billions of dollars over budget. Even if the companies can be re-financed, it seems extremely unlikely they would risk taking on new reactor projects.
Both the UK and Toshiba have looked to the South Korean nuclear giant KEPCOto take over the Moorside project, but the company is unlikely to want to build the Westinghouse design and would want to put forward its own reactor, the APR 1400.
“There is no one left to invest anymore because
renewables are just cheaper, and these prices
are still going down while nuclear is always up”
This would delay the project for years, since the whole safety case for a new type of reactor would have to be examined from scratch.
But the company is already under pressure from within South Korea, where Members of Parliament have urged KEPCO not to take on a risky project in the UK. Twenty-eight members of the Republic of Korea’s “Caucus on Post-Nuclear Energy” have called on KEPCO not to invest in Moorside.
The other nuclear giant present in Britain, the French-owned Électricité de France (EDF), is in serious difficulties of its own. It is already deep in debt and its flagship project to build a prototype 1,600 megawatt reactor at Flamanville in northern France is six years behind schedule and three times over budget at €10.5 billion.
Originally due to open in 2012, its start date is now officially the end of 2018, but even that is in doubt because an investigation into poor quality steel in the reactor’s pressure vessel is yet to be completed.
Despite this, the company and the UK government are committed to building two more of these giant reactors in Somerset in southwest England, and have started pouring concrete for the bases to put them on. These reactors are due to be completed in 2025, but nobody outside the company and the UK government believes this is likely.
So, with troubles of its own, EDF is in no position to help Toshiba out of its financial difficulties. In the nuclear world, this leaves only the Chinese and the Russians who might be capable of taking on such a project.
The Russians will be ruled out on political grounds, and the Chinese are already helping out EDF with a large financial stake in the Somerset project. They also want to build a nuclear station of their own design at Bradwell in Essex, southeast England – another project that looks likely to take more than a decade to complete.
Despite the fact that there are more than 430 nuclear reactors in operation worldwide and the industry still has great economic and political clout, it is beginning to look like a dinosaur – too big and cumbersome to adapt to new conditions.
Nuclear power now produces about 10% of the world’s electricity, while 40% is from coal and 23% from renewables. The rest is mainly from natural gas.
Dr Jim Green, national nuclear campaigner with Friends of the Earth Australia, says: “Nuclear lobbyists are abandoning the tiresome rhetoric about a nuclear power renaissance. They are now acknowledging that the industry is in crisis.
“The crisis-ridden US, French and Japanese nuclear industries account for half of worldwide nuclear power generation.
“Renewable energy generation doubled over the past decade, and strong growth, driven by sharp cost decreases, will continue for the foreseeable future.” – Climate News Network
Comment: Terrific article, thank you – encompassing the severe problem that nuclear power can survive only where tax-payer funds it. However, I wish that you would also consider the way in whic h this nuclear financial crisis is being cleverly used by the “new nukes” lobby. In Britain, the thorium nuclear lobby have managed to get themselves the status of a registered charity!! That’s the Alvin Weinberg Foundation (not to be confused with the genuine charity in the USA the Weinberg Foundation) Comanies like NuScale, Fluor, Transatomic, Terrestrial Energy, etc are touting their wares to government. The argument goes lik ethis. “Our reactors, (still only as bluepints), are different from the conventional ones. Therefor they must be safer cheaper, and a boon to humanity.”
Toshiba’s US nuclear problems provide cautionary tale for UK Experts say construction delays and cost problems at two plants are due to lack of experience and absence of supply chains, Guardian, Adam Vaughan, 14 Apr 17,
The roots of Toshiba’s admission this week that it has serious doubts over its “ability to continue as a going concern” can be found near two small US towns.
It is the four reactors being built for nuclear power stations outside Waynesboro, in Georgia, and Jenkinsville, South Carolina, by the company’s US subsidiary Westinghouse that have left the Japanese corporation facing an annual loss of £7.37bn.
Construction work on the units has run hugely over budget and over schedule, casting a shadow over two of the biggest new nuclear power station projects in the US for years.
Events came to a head last month when Westinghouse was forced to file for bankruptcy protection to limit Toshiba’s losses……..
Toshiba’s losses stem from Westinghouse’s acquisition in 2015 of the nuclear construction business CB&I Stone & Webster, which it hoped would solve the delays on the two sites. That deal has now backfired spectacularly, pushing Westinghouse and its parent company to the brink of financial collapse.
The regulator for one of the projects, Plant Vogtle, in Georgia, has said Westinghouse’s bankruptcy means the project will require more “time and money”.
Nephew said: “This experience may push the US into a different model, perhaps focused on smaller modular reactors, or less complicated designs.”
The US energy secretary, Rick Perry, signalled the Trump administration’s support for nuclear this week, issuing a statement at the G7 summit in which he said the US backed “advanced civil-nuclear technologies”. That suggested support for next-generation reactors rather than the sort being built by Westinghouse.
Richard Morningstar, chairman of the Global Energy Centre at the international affairs thinktank Atlantic Council, said: “What is happening to Westinghouse and Toshiba only emphasises the need to double down on research on new, safe, nuclear technologies, such as small modular reactors. If we do not do so in the US, leadership will be ceded to other countries.”
One such aspiring atomic leader is the UK, where the government wants to build a new generation of nuclear power stations to help satisfy the country’s power needs for decades to come.
But there are obvious parallels between the two countries on the issues of recent experience and supply chains. The UK has not completed a new nuclear power station since Sizewell B on the Suffolk coast started generating power in 1995………
The EPR reactor design for Hinkley is the same as that for the reactors it is building in Finland, and at Flamanville, in France, though both of those are running late and over budget.
The other new nuclear projects proposed around the UK, all by foreign companies, look less certain and all are still years from construction starting in earnest.
Toshiba said this week it would consider selling its shares in the consortium behind another plant planned at Moorside, in Cumbria, which would utilise three of the same AP1000 Westinghouse reactors being built for the two crisis-hit US plants.
The South Korean power company Kepco last month expressed an interest in buying into the project, and the business secretary , Greg Clark, went to South Korea last week for talks on collaboration on nuclear power.
However, any rescue by Seoul is far from certain. The two leading candidates in South Korea’s elections in May said this week that they favoured rowing back on nuclear power and switching to renewable energy. Kepco would also face a regulatory delay of several years if it wanted to use its own technology at Moorside……..
While the government has argued that it has plans in place to keep the lights on if new nuclear projects do not materialise, others said the deepening crisis at Toshiba this week showed the need for ministers to consider a new energy policy.
“It’s time to come up with a new plan A,” said Paul Dorfman, of the Energy Institute, at University College London, who believes the Moorside project is dead. “It’s time for a viable strategy that talks about grid upgrades, solar, energy efficiency, and energy management.”
A report published on Thursday highlighted another alternative: a U-turn on the Conservative party’s manifesto commitment to block new onshore windfarms. Analysis for the trade body Scottish Renewables suggested wind turbines on land had become so cheap they could be built for little or no subsidy, compared to the lucrative contract awarded to EDF for Hinkley. https://www.theguardian.com/business/2017/apr/14/toshiba-us-nuclear-problems-uk-cautionary-tale
https://www.energyvoice.com/other-news/136569/nuclear-contractors-not-turning-work-amid-westinghouse-woes/ by Bloomberg – 14/04/2017The company contracted to build Scana Corp.’s two nuclear reactors in South Carolina went bankrupt. Scana’s credits ratings are, as a result, at risk of downgrades. Its shares have plunged.
And now some of the people hired to help finish the reactors aren’t showing up for work.
In a meeting Wednesday, Scana executives assured South Carolina regulators that work continues on the two reactors being installed at its V.C. Summer plant, despite Toshiba Corp.’s Westinghouse Electric unit filing for Chapter 11 last month. But the Cayce, South Carolina-based utility owner also said Westinghouse is cutting weekend and overtime work and that contractor Fluor Corp. has seen a “high incidence” of new hires failing to show up for training since Westinghouse went bankrupt.
“We’re monitoring this aspect of the project to see if that trend continues,” Stephen Byrne, a senior vice president at Scana, said, based on a transcript released by the state Public Service Commission Thursday. “Work continues on-site without substantial disruption,” he said, adding that about $120 million a month is being paid to keep up construction.
Westinghouse’s bankruptcy has thrown the fate of both Scana’s reactors and Southern’s Vogtle nuclear project in Georgia into question. Westinghouse has estimated that finishing the plants may cost another $4 billion that it can’t collect from Southern and Scana. The projects are already years behind schedule and billions of dollars over budget. Byrne identified Fluor and Bechtel as two companies capable of finishing Scana’s project should Westinghouse drop out as lead contractor.
Fluor didn’t immediately respond to a request for comment.
Scana Chief Financial Officer Jimmy Addison said during Wednesday’s meeting that the company was recently told by Westinghouse that its V.C. Summer project accounts for $1.5 billion of those estimated cost overruns. Should Westinghouse walk away from its obligations, the utility may collect about $1.7 billion worth of damages from it and could seek compensation directly from Toshiba.
“Toshiba has a number of very valuable businesses, the most prominent of which is its flash memory business — in fact, they invented the flash memory and are Apple’s principal flash memory supplier,” Addison said. “Our assessment is that there is substantial at Toshiba to support our claim for damages if Westinghouse fails to pay.”
Scana is in the middle of a 30-day evaluation period during which it’s reviewing its options for the V.C. Summer project. The company’s considering continuing construction, abandoning plans for one of the two reactors or dropping the project altogether and seeking recovery under state law.
The entire project is about one-third complete, Byrne said.
A Bankruptcy That Wrecked Global Prospects Of American Nuclear Energy, Forbes, Kenneth Rapoza The bankruptcy of Westinghouse Electric Company (WEC) has ruined its global ambitions. While the Pennsylvania-based company asserts that its March 29 filing for creditor protection doesn’t impact its businesses globally, very few seem to believe it as its Japanese parent company Toshiba Corp. warned on Tuesday that WEC may have nuked its future…….
“I see enormous difficulties ahead for Westinghouse,” says Simon Taylor, director of the Judge Business School at the University of Cambridge. Westinghouse was working on an over $20-billion Toshiba-controlled project in the north of England called Moorside, intending to build three of its pressurized water reactors known as the AP1000. Following the bankruptcy announcement, Engie, a French utility, exercised its option to sell its 40% interest to Toshiba, and quit the project. Now Toshiba is desperate to sell the fully-owned site to competitors as it doesn’t stand a single chance to raise money needed to build the plant.
Taylor thinks Westinghouse, one of the oldest names in U.S. electric power, will now have a harder time. China was their biggest hope.
“The Chinese, so far as I can tell, will never buy another AP1000 again,” Taylor says…….
[In India] . Experts doubt that any commercial contract could be signed until there is a clarity about Toshiba’s exit and Westinghouse’s own future while the calls to scrap the project altogether are gaining momentum…..
In Eastern Europe, Westinghouse prospects look even bleaker. Westinghouse has always relied in the U.S. geopolitical clout to get business there. In order to weaken Russia’s influence in the region Washington would all but force former communist countries into choosing WEC’s often untested offering or even scrapping competitors’ projects. But with all that political support the problem has always been in Westinghouse’s inability to finance its projects.
Westinghouse signed a contract in Bulgaria in 2014 for the construction of an AP1000 power plant at the Kozloduy site. There has been little progress since then as neither the client nor the vendor are capable of finding money for the project.
Back home, both of the two nuclear power plants being built in the U.S are AP1000s. Both are a combined $17 billion over budget.
Over the next 12 years, the U.S. has around 15 nuclear power plants on paper. Of those 12, five have been suspended, including Westinghouse’s planned 2029 project with Duke Energy in Florida to build two reactors. Their other Duke project, in South Carolina, is now delayed by at least three years and with this bankruptcy, will probably never get built. WEC’s two new AP1000 projects are licensed by Duke. “We’ve been monitoring Westinghouse and their other projects here and across the world…but we are not making any decisions to build and not going to speculate on that right now,” says Rita Sipe, a spokesperson for Duke Energy.
The Economist magazine speculated on April 1 that there would be ugly lawsuits in South Carolina and Georgia, adding that the future of the AP1000 “looks bleak”. Sadly, it was not an April Fool’s joke.
While it is certainly common in nuclear power plant construction to witness delays and cost over-runs, WEC seems to have carved out a niche of notoriety here. It’s finally bankrupted them.
“It’s hard to see who would be able, willing and permitted to buy WEC,” says Taylor. The Trump Administration says it is seeking a non-Chinese owner of Westinghouse. WEC is not yet talking about selling assets……https://www.forbes.com/sites/kenrapoza/2017/04/13/a-bankruptcy-that-wrecked-global-prospects-of-american-nuclear-energy/#608e8b7e17a1
Toshiba considers sale of Moorside nuclear project in Cumbria as own survival in doubt in wake of £7bn losses http://www.telegraph.co.uk/business/2017/04/11/toshiba-questions-survival-warns-losses-could-hit-7bn/ 11 APRIL 2017
Toshiba is considering selling a stake in its nuclear project in Cumbria after warning it could struggle to remain in business as a result of expected annual losses of more than 1trn yen (£7bn).
The Japanese conglomerate, which makes everything from flash memory drives to laptops and semiconductors, admitted it is considering selling some or all of nuclear specialist NuGeneration to keep itself afloat.
NuGen currently owns 100pc of the Moorside site, after buying 40pc back from France’s Engie for $138.5m (£111m) earlier this month.That sale followed the Chapter 11 bankruptcy filing of Westinghouse, another Toshiba-owned company which is set to provide reactors for Moorside.
Asked what it would do with NuGeneration, a Toshiba spokesman said while no final decisions have been made “we would like to explore alternatives, including the sales of shares.”
He went on to explain that Toshiba is “carefully monitoring the situation in consultation with other stakeholders including the British Government.”Separately NuGeneration said it had been looking for investors prior to Westinghouse’s troubles and emphasised that the construction of Moorside was always going to be done by a third party.
But a spokesman acknowledged “there is no certainty” with regards to Westinghouse’s involvement in the development stage of the project.
Theoretically, Westinghouse’s AP1000 reactors, which have received regulatory approval, remain attached to the project but if a new investor were to come on board, it is unclear if different reactors may be proposed, potentially delaying the already behind schedule project yet further.
Samira Rudiga an energy fund manager at Guinness Asset Management, said the news was another nail in the coffin for the UK’s nuclear hopes.
“Nuclear does not make sense in the UK,” she said. “It takes 10 years to build and can take as long if not longer just to come to a decision to build a plant.”However, she expects the Government to still consider nuclear projects and thought there would be companies in Europe and Asia able to take on Toshiba’s stake in Moorside.
Greg Clark, the Business secretary, travelled to South Korea earlier this month in a bid to save the project, appealing to Korean nuclear giant Kepco to invest.
“For the reasons stated above, there are material events and conditions that raise the substantial doubt about the company’s ability to continue as a going concern,” Toshiba said.
At the end of 2016, the impending multi-billion-dollar write down triggered one of the worst-ever share fallsfor a major Japanese company, with ratings downgrades and investor pessimism erasing almost all of its 87pc rally so far that year. Toshiba delayed publication of its annual results twice prior to publication, and the company took the unusual step of publishing its accounts without sign-off from its auditor, PriceWaterhouseCoopers Aarata.
Toshiba said that while it had not yet fully determined the full cost of restructuring Westinghouse, its calculations suggested net income would fall by roughly 620bn yen.
Toshiba casts doubt on ability to stay in business after nuclear power push falters, Tampa Bay Times, New York Times, April 11, 2017 Toshiba, a pillar of the modern Japanese economy whose roots stretch back to the country’s industrial stirrings in the 19th century, warned on Tuesday that a disastrous foray into nuclear power may have crippled its business beyond repair.
In a stock-market filing in Japan, Toshiba said losses associated with Westinghouse Electric, its troubled U.S. nuclear power subsidiary, had created “substantial uncertainty” over its ability to continue as a going concern. The declaration lifts the stakes as Toshiba seeks outside investors for its coveted microchip business, a portion of which it is selling off to raise cash and stave off disaster.
Westinghouse’s woes have a strong tie to Florida.
Plans for two reactors that were supposed to be built by Westinghouse in Levy County, north of the Tampa Bay market, were shelved in 2014 by owner Duke Energy after early construction delays and massive run-ups in the anticipated price tag that approached $25 billion to complete the nuclear power plants.
As approved by state legislators and regulators, Duke Energy is able to charge its Florida ratepayers for about $1.5 billion in early construction costs for the Levy plant even though it will probably never be built. Duke Energy spent just enough on the plant site to receive a federal license last fall to proceed with the Levy facility, though the odds of restarting its construction appear slim and will further fade in time.
Florida Power & Light, a giant utility which serves most of southern Florida, has also delayed its planned Westinghouse nuclear expansion at its Turkey Point site near Miami…
“We will do what we can to avoid being delisted from the stock exchange,” Satoshi Tsunakawa, Toshiba’s chief executive, said at a news conference after apologizing to shareholders for Toshiba’s latest worrying turn.
The company reported financial details for the quarter that ended in December after multiple delays and disputes with its auditors.
The financial problems are mounting.
The auditors have refused to certify Toshiba’s accounts — a highly unusual signal of doubt about the company’s ability to recover its financial health.http://www.tampabay.com/news/business/energy/toshiba-casts-doubt-on-ability-to-stay-in-business-after-nuclear-power/2319917
Toshiba warns over its survival as it forecasts £7bn losses Crisis creates concern about future of UK’s Moorside nuclear plant, in which subsidiary Westinghouse is a key player, Guardian, Angela Monaghan, 12 Apr 17, Toshiba, one of the biggest names in consumer electronics, has warned it is facing annual losses of more than £7bn and the future of the company is in doubt as a result of financial turmoil at its nuclear power plant construction business.
The Japanese company finally released third quarter results, after twice delaying publication while auditors attempted to quantify the scale of the problems at Toshiba’s US nuclear engineering subsidiary Westinghouse, which filed for bankruptcy last month.
Toshiba took the unusual decision to publish them on Tuesday without the approval of auditor PricewaterhouseCoopers Aarata. The company said PwC Aarata had been too uncertain about the financial impact of Westinghouse’s takeover of nuclear construction company CB&I Stone and Webster in 2015.
Westinghouse’s plight stems from a $6.1bn (£4.9bn) writedown because costs have overrun on the two plants CB&I is building in Georgia and South Carolina, the first new US nuclear power stations for decades.
The unaudited results showed Toshiba’s total losses widened by 53bn yen to 532bn yen (£3.9bn) in the nine months ending December 2016, adding that losses for the full year ending March could amount to more than 1tn yen (£7.3bn). It would be one of the biggest losses in Japanese corporate history.
Failure to file audited results fuelled speculation that the company could be forced out of the Tokyo Stock Exchange. Toshiba’s president, Satoshi Tsunakawa, called the auditor’s decision not to approve the figures “truly regrettable” and said he hoped the company would not be delisted.
The company’s escalating crisis also heightened fears about the future of Toshiba’s planned Moorside nuclear plant in Cumbria. Earlier this month it was forced to take full control of the venture behind the project, Nugen, after its previous partner, the French utility Engie, exercised the right to sell its 40% stakeunder an option triggered by Westinghouse’s bankruptcy filing.
Unite, Britain’s largest trade union, said it was fearful about what the latest developments at Toshiba would mean for the Moorside plant, and repeated its call on Greg Clark, the business and energy secretary, to intervene to safeguard the future of the project…….. https://www.theguardian.com/business/2017/apr/11/toshiba-losses-uk-moorside-nuclear-plant-westinghouse
Nuclear boondoggle http://www.connectsavannah.com/savannah/nuclear-boondoggle/Content?oid=4465661 Westinghouse bankrupty adds yet another setback to the already-problematic Plant Vogtle expansionBy Jim Morekisjim@connectsavannah.com@jimmorekis A PAIR of new nuclear reactors at Georgia Power’s Plant Vogtle, about an hour north/northwest of us on the Savannah River, were supposed to be up and running two weeks ago and sending electricity to the regional grid.
Instead, the project is still less than 40 percent complete.
Originally budgeted at about $14 billion, the expansion at Plant Vogtle is now by some estimations least $6 billion over budget and counting, with no real end in sight.
That much we already knew. But the big news last month was that the manufacturer of the reactor units themselves, Toshiba-owned Westinghouse, has put its North American operations into Chapter 11 bankruptcy.
That’s right — the company making nuclear reactors upstream of us is going bankrupt. Sweet dreams!
None of this stopped the chief executive of Georgia Power’s parent firm, Southern Company, from getting a 34 percent pay raise last week. Thomas A. Fanning is now up to $15.8 million a year.
In the meantime, since 2011 almost ten percent of your monthly power bill goes not just to pay for the Vogtle expansion, but to pay for the financing costs. That’s thanks to special legislation, the Nuclear Financing Act, passed by the state legislature and then-Gov. Sonny Perdue in 2009.
See the line on your bill that says, “Nuclear Construction Cost Recovery?” That’s what you’ve been paying to finance the Vogtle expansion in advance.
(It comes to 9.7 percent of your billed kilowatt usage, not your whole monthly charge. In South Carolina they’ve got it even worse — a planned expansion of the V.C. Summer plant north of Columbia is costing each SCE&G customer more than double what we pay each month, and they don’t even get an itemized bill.)
The Nuclear Financing Act essentially stripped rate increase oversight of this project from elected regulators at the Public Service Commission (PSC). And customers are relieving Georgia Power of virtually all financial risk of its $6.1 billion share of the project cost, including interest on borrowed funds.
It’s quite a sweetheart deal for the subsidiary of Atlanta-based Southern Co., the nation’s second-largest utility.
It gets sweeter: As we reported back in 2010, the legislation has no cap for cost overruns, and doesn’t even have a way to refund customers if the project doesn’t even get completed at all.
What the hell is going on? Sadly, not much that wasn’t predicted over ten years ago when all this began.
“Most all the concerns previously brought to the Public Service Commission are now playing out in real time,” says Stephen Smith, executive director of Southern Alliance for Clean Energy (SACE). “The utilities have totally lost credibility and now we need regulators to do their jobs.”
In 2006, Southern Co. began seeking approval to double the number of reactors at Plant Vogtle. (The first duo, Units 1 and 2, was online by the late ‘80s.)
It was to be the first expansion of nuclear energy since the Three Mile Island nuclear disaster in 1979.
By 2009 the expansion plan had received approval from the PSC. If completed, the Vogtle expansion would make it the largest nuclear plant in the United States.
In 2012 — just a year after the nuclear disaster at Fukushima, Japan — the federal Nuclear Regulatory Council approved the planned use of two Westinghouse AP1000 reactors, a design the parent company says has greater safety parameters than the General Electric reactors at Fukushima.
As of this writing, not a single AP1000 has gone online yet; the first is set to go live at a Chinese plant later this year.
Project and reactor construction delays, and Westinghouse’s financial woes, are slowing new projects in China as well.
Since the Vogtle expansion was approved, the project has experienced one setback after another, all of them underwritten by Georgia Power customers, and almost all of them predicted by environmental watchdogs and media outlets such as this one.
In a grimly symbolic incident, in 2012 a reactor vessel set to contain one of the AP1000s literally fell off a train on the way to Burke County.
News of the accident, which involved no radioactive materials, didn’t reach the public until about a month later.
“Once again PSC staff time after time predicted delays well in advance of Southern Company admitting to them,” says Sara Barczak, High Risk Energy Choices Program Director for SACE.
“Once again there are revised commercial operation dates that represent another delay in the project.”
Originally, Unit 3 was supposed to be online April 2016. Then it was moved to July 2019. Completion for Unit 3 is now estimated to be Dec. 2019. Unit 4 was supposed to be online April 1, 2017. Then it was moved to July 2019. Completion for Unit 4 is now estimated to be to Dec. 2019.
The extreme delay, combined with a complicated pending litigation issue, prompted a new settlement agreement in the closing days of 2016, to reflect the new economic reality of the ballooning financing cost to ratepayers.
“There’s been a slight change in the financing situation because of the settlement reached at the end of the year,” explains Barczak.
“Interest is still going to be collected. But once the certified capital cost is reached, instead of being collected in advance it will go into a different type of accounting process,” she says.
“But customers will still be paying for financing costs far longer than expected, and ultimately will pay far more.”
Because of the huge delay, “Financing costs ended up representing the largest cost increases,” says Barczak.
“It’s like the longer you have a credit card not paid off, the higher the interest is. The interest ends up being what kills you.”
That’s why Barczak and other environmental watchdogs are frustrated with the settlement.
“Ratepayers are just going to pay for financing longer,” she says. “Because by 2017 both reactors were supposed to be operating by now, that advance payment will not be collected. There are no capital costs in the legislation.”
The 2016 settlement now targets a completed project date of Dec. 31 2020, but few observers have much trust in that target.
“This represents a 45-month delay. PSC public interest advocacy staff testified that even using a 45 month delay date, it was unlikely the new completion date can be achieved. It would require a threefold increase in productivity,” Barczak says.
“This forces customers to continue to pay for a facility where the utility cannot accurately predict the cost, and when or even if the facility will be completed, adds Stephen Smith of SACE.
Georgia Power originally said the financing plan would save customers over $300 million in the long run. But that was based on the original, now-obsolete timeline. Any savings realized are now more than outweighed by the cost overrun.
The Westinghouse bankruptcy adds yet another, and potentially very serious, layer of uncertainty to an already very uncertain project.
“Toshiba purchased Westinghouse in 2005-2006. They had developed a reactor design that most facilities across the country decided to go with,” Barczak explains.
“What panned out just recently is that Toshiba started losing big on these projects. They lost $6.3 billion on two projects combined,” she says.
“This bankruptcy has created a worst case scenario for electric power customers in Georgia and South Carolina. There are more questions than answers at this point,” says Smith.
“We see no path forward without some additional financial pain for customers.”
The bankruptcy is particularly tricky, says Tom Clements, executive director of SRS Watch.
“The loan guarantees for the Vogtle expansion run through Southern Co., not Westinghouse. Southern is not directly related to the bankruptcy,” says Clements.
“Once the bankruptcy court starts shifting costs around, you can’t predict what will happen,” he says.
Adding a twist is the fact that most of Westinghouse’s overseas operations aren’t included in the bankruptcy proceeding — raising suspicions that they are looking for a way to back out of the Vogtle deal.
“It’s pretty clear from their filings that they’re looking to us to take over this project,” said SCANA CEO Kevin Marsh, whose company is also contracting with Westinghouse for AP1000 reactors.
All of this is a far cry from the so-called “Nuclear Renaissance” at the turn of the 21st Century, when advances in technology were supposed to relieve the world of what at the time were high fossil fuel costs and an assumption of severe future scarcity.
With the Energy Policy Act of 2005 — a Bush-era initiative enthusiastically endorsed and enhanced during the Obama administration through generous loan guarantees — the future of U.S. energy looked to be a heavily nuclear one.
“After the Energy Policy Act of 2005 passed, over 30 new reactors were proposed, more than half in the Southeast,” Barczak says.
Then came the great recession of 2008, followed by a little thing called fracking.
Seemingly all of a sudden, the fossil fuel industry experienced a huge boom, both financially and in projected availability.
“We’ve seen the demise of the so-called nuclear renaissance,” says Barczak. “A lot of license applications for new nuclear plants were withdrawn.”
But not at Plant Vogtle.
At the time, the Congressional Budget Office was prophetic in its assessment of the state of the nuclear industry.
“If construction costs for new nuclear power plants proved to be as high as the average cost of nuclear plants built in the 1970s and 1980s or if natural gas prices fell back to the levels seen in the 1990s, then new nuclear capacity would not be competitive, regardless of the incentives provided by Energy Policy Act,” said a CBO report from 2008.
“Every single thing we said might happen did happen,” says Barczak. “Then Fukushima happened.”
The tsunami-induced failure of a reactor at the Fukushima Daichi plant, a disaster of such scope that its impacts aren’t fully measured six years later, wasn’t even a speed bump for the Vogtle expansion.
“We are committed to the project and completing the units on schedule and on budget,” said Southern Nuclear Co. spokesperson Beth Thomas at the time. “We’re certainly monitoring the events in Japan and our thoughts and prayers are with the people there.”
A lot of this momentum, Barczak says, it due to the unique situation of a utility building nuclear power plants with all the regulatory burden on the government, and most of the financial risk on ratepayers.
The Southeast, she says, “is in a weird situation in that we’re a regulated market but very weak on consumer protections. States like Georgia, Florida, and South Carolina all had legislators passing legislation to put extra burdens on consumers.”
The nuclear power industry, Barczak says, “isn’t exactly what you’d call a nimble industry. It can’t react to changes that sometimes happen very quickly. It’s based on the old model of, ‘OK you’re gonna have more people, so build a bigger power plant,’” she says.
“For the Southeast, if the coal paradigm seems to be going by the wayside, then we’re still in the nuclear paradigm.”
Noboby knows what happens next, though all eyes are on the bankruptcy court. With the precedent set for ratepayers to stay on the hook regardless of how much sunk cost is going into the Vogtle expansion, there is vanishing hope of a win/win solution for ratepayers.
Donald Trump personally profited from missile-maker Raytheon’s stock jump after his Syria attack http://www.rawstory.com/2017/04/donald-trump-personally-profited-from-missile-maker-raytheons-stock-jump-after-his-syria-attack/ TOM BOGGIONI 08 APR 2017 As noted by the Palmer Report, Trump owns stock in Raytheon, which was reported by Business Insider in 2015.
According to Trump’s financial disclosure reports filed with the FEC in 2015, his stock portfolio includes investments in technology firms, financial institutions and defense firms, including Raytheon.
On Thursday, Trump launched an attack on the al-Shayrat military airfield, used by both Syrian and Russian military forces, hitting it with 59 Tomahawk missiles manufactured by Raytheon. Trump’s attack on Syria was reportedly in response to a deadly gas attack launched by Syrian President Bashar al-Assad against his own people earlier in the week.
While the Tomahawk attack did little damage to the airfield — with the Syrian air force continuing to launch assaults from the same base on Friday — investors, sensing an increasing escalation in tensions between two countries and the possibility of war , pushed Raytheon stock up.
Since taking office, Trump has refused to divulge all of his financial information — including his income taxes — and refused to place his business and financial holdings in a blind trust allowing Trump and his family to move money and investments around as they see fit.
‘R1 trillion nuclear deal will guarantee SA junk status’ http://www.iol.co.za/news/politics/r1-trillion-nuclear-deal-will-guarantee-sa-junk-status-8565844 9 April 2017 ANA Reporter Cape Town – It is an undeniable fact that South Africa cannot afford, and does not need, government’s planned nuclear energy deal, the Democratic Alliance said on Sunday.Media reports on Sunday that the nuclear deal was going full-steam ahead were extremely concerning and would essentially guarantee that South Africa would be downgraded by more ratings agencies and make recovering from this status even more difficult, DA spokeswoman Natasha Mazzone said.
Fitch Ratings stated in no uncertain terms on Friday that a key driver behind the decision to downgrade SA’s long-term foreign currency debt and long-term local currency debt to “BB+”, or “junk status”, was that “Eskom has already issued a request for information for nuclear suppliers and is expected to issue a request for proposals for nuclear power stations later this year.
The Treasury under its previous leadership had said that Eskom could not absorb the nuclear programme with its current approved guarantees, so the Treasury will likely have to substantially increase guarantees to Eskom”.
Just days before, S&P Global also downgraded South Africa to sub-investment level – “junk status”. Mazzone said the DA would ask public enterprises portfolio committee chairwoman Dipuo Letsatsi-Dub for an urgent meeting of the committee to ensure that Parliament, as a key oversight body, would fully interrogate all aspects related to the nuclear deal.
“The undeniable fact is that South Africa cannot afford, and does not need, the nuclear deal. Indeed, international ratings agencies agree and this deal has been repeatedly cited as a cause for great concern and a key factor in downgrades not only for Eskom, but the country as a whole.
“These downgrades have already and will continue to have a devastating effect on our economy. Jobs will be lost and the cost of living will increase, which will hurt the poor,” Mazzone said.
Earlier on Sunday, City Press reported that a confidential document reveals that South Africa’s nuclear-build programme kicks off in earnest in June when Eskom issues a formal request for proposals from companies bidding for the estimated R1 trillion contract.
The nuclear deal – for which Russian company Rosatom was widely considered to be the front runner – was, according to senior National Treasury officials, “directly related” to President Jacob Zuma’s axing of finance minister Pravin Gordhan and his deputy Mcebisi Jonas, the newspaper reported.
“It is well known that Gordhan was against the project as he said the country couldn’t afford it.Eskom will be issuing a request for proposals in June and that really is the beginning of procurement. Gordhan had to go because he was going to block it again,” a senior official reportedly said.
The internal Eskom document dated three days before Gordhan and Jonas were axed revealed a tight timeline for the programme that would see four plants built to provide 9600 megawatts of electricity to the country.
After the request for proposals was issued in June, the deadline for bids was September, for evaluation in December. The winning bidder would be decided in March 2018 and the contract signed between December next year and March 2019, City Press reported.
The document also revealed that most of the major nuclear contracts would be implemented through “turnkey” procurement, which Treasury officials were concerned about.
“While Treasury allows for turnkey procurement, we know that it is often used to hide corruption. Companies that are asked to deliver turnkey projects are accountable to themselves. They appoint whoever they like, however they like,” a senior official reportedly said.
Turnkey projects were when a single company was appointed to manage and deliver an entire project. The management company became responsible for appointing all contractors and service providers. This was different from an open tender that was spread over a range of different contractors appointed by the state, City Press reported.
Nuclear plant owners expand search for financial rescue, http://www.pennlive.com/news/2017/04/nuclear_plant_owners_expand_se.html By April 09, 2017 HARRISBURG, Pa. (AP) — The natural gas boom that has hammered coal mines and driven down utility bills is hitting nuclear power plants, sending multi-billion-dollar energy companies in search of a financial rescue in states where competitive electricity markets have compounded the effect.
Fresh off victories in Illinois and New York, the nuclear power industry is now pressing lawmakers in Connecticut, New Jersey, Ohio and Pennsylvania for action. Lobbying efforts are bubbling up into proposals, even as court battles in Illinois and New York crank up over the billions of dollars that ratepayers will otherwise foot in the coming decade to keep nuclear plants open longer.
Perhaps nuclear power’s biggest nemesis is the cheap natural gas flooding the market from the northeast’s Marcellus Shale reservoir, the nation’s most prolific gas field. Meanwhile, electricity consumption hit a wall after the recession, while states have emphasized renewable energies and efficiency.
“You put all of this together and it’s a perfect storm,” said John Keeley, a spokesman for the Nuclear Energy Institute, an industry group.
Opposition to a so-called nuclear bailout is uniting rivals and the natural gas exploration industry. The potential for a hit to utility bills is drawing pushback from the AARP and manufacturers.
Subsidizing nuclear power could chill investment in lower-cost energy sources and erode competitive markets, critics say, and, with natural gas prices expected to stay low for some time, shutting down nuclear plants may have no impact on electricity bills.
For steel companies, paper companies, food processors and pharmaceutical makers whose electric bill might be their biggest expense, “a mil of an increase in a kilowatt hour turns into a lot of money,” said David Kleppinger of the Industrial Energy Consumers of Pennsylvania.
In Pennsylvania, the nation’s No. 2 nuclear power state after Illinois, it could mean propping up five nuclear plants to help feed the sprawling mid-Atlantic power grid that stretches from New Jersey to Illinois.
The owners of the 11 nuclear plants in Connecticut, New Jersey, Ohio and Pennsylvania are no small potatoes: Exelon, PSEG, FirstEnergy and Dominion, among them.
The plant owners’ strategy is similar to that in Illinois and New York: give nuclear power megawatts the kind of preferential treatment and premium payments that are given to renewable energies, such as wind and solar.
The industry’s pitch is part economic, part environmental. A plant shutting down would devastate a local economy, they say. And, nuclear waste and water consumption issues aside, zero-carbon nuclear plants are better suited than natural gas or coal to fight climate change, they say.
The claim to environmental credentials has drawn jeers from nuclear power’s traditional critics.
“When did highly carcinogenic toxic waste become green?” said Eric Epstein, a longtime nuclear power watchdog in Pennsylvania.
The most vulnerable nuclear plants are those with just one unit — such as Exelon’s Three Mile Island in Pennsylvania, where a second unit was destroyed in a partial meltdown in 1979 — or those in need of expensive upgrades, analysts say.
FirstEnergy says it could decide next year to sell or close its three nuclear plants — Davis-Besse and Perry in Ohio and Beaver Valley in Pennsylvania — unless states make them more competitive.
Exelon is warning that it could close Three Mile Island and PSEG says it won’t operate nuclear plants — it owns all or parts of all three in New Jersey and part of Peach Bottom station in Pennsylvania — that are long-term money losers.
Should nuclear power disappear, it can be replaced.
“The question is, at what cost and whether or not you can find other resources that have the same emission characteristics,” said Joe Dominguez, an Exelon executive vice president.
In the mid-Atlantic grid, it likely would be natural gas. Some 190 natural gas power projects comprising roughly 59,000 megawatts are being studied or built, according to PJM Interconnection, the grid operator. That dwarfs the grid’s nuclear capacity.
Ohio lawmakers weigh bailout for FirstEnergy nuclear plants, April 9, 2017 TOLEDO, Ohio (AP) – A bailout proposed for Ohio’s two nuclear plants would keep alive a big source of jobs and tax money but end up increasing electricity rates for FirstEnergy Corp.’s customers in the state.
26 September – International Day for the Total Elimination of Nuclear Weapons
PLEASE OPPOSE HR 8255 AND S.3639 – bills would accelerate satellite deployment, with no environmental review or safeguards – https://ncstd5li.quorum.us/campaign/169331/
To see nuclear-related stories in greater depth and intensity – go to https://nuclearinformation.wordpress.com
