Toshiba to pay $2.2bn to Summer project owners

28 July 2017

Japan’s Toshiba Corporation has agreed to pay South Carolina Electric & Gas Company (SCE&G) and Santee Cooper, the owners of the VC Summer 2&3 AP1000 project in South Carolina, $2.168 billion, in relation to its guarantee on Westinghouse's contract to build the units.

The parent company guarantee obligation was agreed by and between Toshiba and the VC Summer project owners in 2008, when Westinghouse received an order for the construction of two AP1000 units. Westinghouse filed for bankruptcy protection in March 2017, casting uncertainty on the future of the project.

Under the agreement, SCE&G will receive $1.192bn for its 55% stake in the project, with Santee Cooper entitled to $976 million. The payments will be made in instalments between October 2017 and September 2022. They are guaranteed regardless of whether one or both Summer units are completed, or the project is abandoned, the companies said.

If the units are completed and their actual construction costs, net of payment from Toshiba, are less than the specified maximum amount payable under the engineering, procurement and construction (EPC) contract, Toshiba will have the right to receive part of the difference.

However, the project owners said that the additional costs to complete Summer 2&3 are expected to “materially exceed” previous estimates. They also stated that the units are not expected to go online before the December 2020 deadline to receive production tax credits.

“Based on these considerations, the alternatives of completing both units or one unit are subject to significant challenges,” SCE&G and Santee Cooper said in a joint statement.

The companies are expected to announce their decisions on the future of the project soon.

In June, Toshiba came to a similar agreement to pay Georgia Power $3.7bn in relation to the Vogtle 3&4 EPC contract.

Toshiba said in a statement, 28 July, that the maximum guarantee for all four US nuclear power construction projects had been determined and that it has now “eliminated the risk of additional payment related to its parent company guarantee.”

 



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