Westinghouse files for bankruptcy, in a blow to nuclear power industry
Westinghouse, one of the most storied names in the nuclear energy business, filed for bankruptcy Wednesday, dealing a blow to the future of the nuclear power industry and leaving questions about the fate of four reactors under construction in the United States.
The filing also ends the marriage of Westinghouse and Toshiba. When the Japanese giant — maker of products such as medical devices and home appliances — bought the Westinghouse nuclear business in October 2006, it declared “the dawn of a new era for nuclear energy.” Together the companies would make a “powerful combination,” Toshiba said.
A decade later, that combination has melted down. Toshiba has written off more than $6 billion in losses connected to its U.S. nuclear business, citing accounting problems, delays and cost overruns. And it has pulled back from new nuclear projects under discussion in India and Britain.
[Chaos at Toshiba: $6.3 billion write-down, chairman resigns, bankruptcy looms]
The bankruptcy filing Wednesday will trigger a host of legal questions about whether Toshiba remains responsible for losses at Westinghouse and whether the utilities that own the reactors under construction will have to eat more of the cost of completing them. That could mean higher rates for consumers in those areas. In seeking protection under Chapter 11 of the bankruptcy act, Westinghouse could still finish building those plants.
Westinghouse said it has arranged $800 million in debtor-in-possession financing so that it can continue to serve customers while restructuring its business.
The collapse of Westinghouse also reverberates through the global nuclear business. The company supplied the world’s first commercial pressurized water reactor 60 years ago, and half the world’s 430 nuclear power reactors have Westinghouse technology.
Moreover, Westinghouse had claimed that its new AP1000 model reactor had passive technology and modular design that was safer, cheaper and faster to build. Many U.S. lawmakers and nuclear industry officials say the AP1000 could augur in a “nuclear renaissance” in the United States.
Westinghouse is in charge of constructing four of these new model reactors at two sites. The first two are being built by SCANA at the Virgil C. Summer Nuclear Generating Station, about 20 miles northwest of Columbia, S.C. The other two, backed by Energy Department loan guarantees, are being built at Southern Co.’s Vogtle facility.
Yet Westinghouse ran into trouble on both sites. Although the AP1000 was supposed to be a standard design, changes were made in South Carolina. Moreover, Westinghouse plans included modules built in Lake Charles, La., that were supposed to fit together “like pieces of Lego,” a former regulator said. But Nuclear Regulatory Commission files say that the Lake Charles plant was shipping faulty modules, forcing Westinghouse to reweld them at the reactor sites. An entire extra building was erected to do the welding because there was so much of it, said one person familiar with the construction.
Angry about the delays and cost overruns, the owners of the nuclear plants filed claims against Westinghouse. A settlement was reached, but now the legal battles will begin again.
Both South Carolina and Georgia allow utilities to charge ratepayers for power-plant construction still in progress. In most states, ratepayers don’t pay until they’re receiving some of the benefits. But the utilities must still get approval from their public service commissions, which have forced the utilities to absorb some of the costs.
Southern Co. subsidiary Georgia Power, one of the co-owners of the Vogtle reactors, said that it has been preparing for a Westinghouse bankruptcy and that it was “working with Westinghouse to maintain momentum at the site.” It said it is still assessing the impact of the bankruptcy and will consult with the Georgia Public Service Commission and its partners “to determine the best path forward.” It added that it would seek to hold Toshiba and Westinghouse accountable.
