As a U.S. Business, Nuclear Power Stinks
Regardless of one’s views of the social values of nuclear power — compelling cases can be made all around — as a business proposition nuclear stinks.
The latest evidence comes from the giant Japanese conglomerate Toshiba, which saw a third of its market value vanish in two days of trading (20% in one day, a free-fall stopped only by a limit to trading losses imposed by the Japanese stock market). Credit rating agencies promptly downgraded the company’s debt.
Toshiba’s stock crash was a result of billions in reported losses from its Westinghouse Electric subsidiary and Westinghouse’s ruinous investment last year in nuclear engineering and construction behemoth CB&I Stone & Webster, itself the product of an ill-fated merger. Toshiba’s nuclear business has been hemorrhaging money at its U.S. construction projects in Georgia and South Carolina. Westinghouse is years behind schedule and billions of dollars over budget at its two construction projects: Southern’s Vogtle and Scana Corp.’s Summer units, a total of four Westinghouse AP1000 reactors under construction. Toshiba faces the possibility that its nuclear troubles will lead the company to a negative net worth.
My colleague Aaron Larson describes the gory business details well. The bottom line is that Westinghouse threatens to bring Toshiba to its financial knees, although the firm is too large to fail entirely. It may well require a Japanese government bailout.
Then there is France’s Areva, which has been bleeding red ink for more than a decade and would have expired but for its French government owners, and a recent bailout. The company is far behind schedule and vastly over budget on construction projects in Finland and France. Late last year, discovery of quality control problems in carbon steel forgings from Areva’s Le Creusot Forge shocked the company. The allegations closed 20 of France’s 58 operating reactors, which also could jeopardize regulatory approval for extended operation at the aging plants.
In late December reports surfaced that Areva employees for decades hid problems in reactor parts it manufactured at Le Creusot Forge. Inspectors from the U.S., France,
China, and the U.K. descended on Areva to examine records and investigate the allegations. “I’m concerned that there keep being more and more problems unveiled,” Kerri Kavanagh, who leads the U.S. Nuclear Regulatory Commission’s unit inspecting Le Creusot, told the Wall Street Journal.