Westinghouse Electric Co. will take over the nuclear construction business of CB&I (NYSE: CBI) for $229 million, and Fluor (NYSE: FLR) was picked to continue building the four AP1000 reactors in Georgia and South Carolina.
Westinghouse entered a definitive agreement with CB&I to acquire all of the outstanding equity interest in the nuclear construction business, CB&I Stone & Webster Inc.. The deal is expected to close in late 2015 subject to customary closing conditions. WEC will purchase the business of engineering, construction, procurement, management, design, installation, start-up and testing of nuclear power facilities, including the V.C. Summer project in South Carolina owned by SCANA Corp., the Vogtle project in Georgia owned by Southern Co. (NYSE: SO) and nuclear projects in China.
CB&I will continue to supply discrete scopes of modules, fabricated pipes and specialty services to Westinghouse on a subcontract basis for the U.S. nuclear projects. Excluded from the deal are CB&I’s fossil power generation capability, its nuclear and industrial maintenance business, the MOX fuel conversion project at Savannah River, the federal decommissioning business, and the NetPower program for the development of projects that emit zero carbon dioxide.
When the deal closes, Westinghouse will assume and indemnify CB&I for previous, current and future liabilities associated with the AP1000 nuclear projects. CB&I expects cash payments of $229 million of which $161 million is expected to be received upon completion of the nuclear projects and $68 million upon attainment of certain milestones related to CB&I’s continued supply of discrete scopes of modules, fabricated pipe and specialty services to WEC on a subcontract basis.
South Carolina Electric & Gas (SCE&G), a unit of SCANA Corp. and co-owner of the Summer plant, said the move is a positive one for the new build projects.
“We have strengthened the language in the EPC contract defining regulatory changes which has been the basis for many of our disputes with the consortium in the past,” said SCE&G said in a statement. “We also have negotiated a fixed price option which, if exercised, would limit the construction cost of the new nuclear plants.”
The amendment revises completion dates for Summer 2 & 3 to Aug. 31, 2019 and 2020, respectively. It also says total project costs will increase by approximately $286 million over the $6.827 billion approved by the South Carolina Public Service Commission, bringing the total gross construction cost to approximately $7.113 billion.
For Vogtle 3 & 4, the units are set for completion in 2019 and 2020 as well. Georgia Power said its share of the settlement is $350 million, significantly less than current litigation claims.
“This settlement is extremely positive for the Vogtle project and now the contractors can focus 100 percent on project execution,” said Buzz Miller, executive vice president of nuclear development for Georgia Power. “The agreement resolves current and pending disputes, reaffirms the current schedule and increases efficiencies by streamlining resource deployment with Westinghouse and its affiliates as the prime contractor over the Vogtle expansion.”
The same day, Westinghouse announced that Fluor Corp. would manage construction of the expansion projects in Georgia and South Carolina. Fluor will be subcontracted in the development of transition plans and definitive agreements. Westinghouse said Fluor will manage a significant portion of the construction of the four units and will be providing project execution and direction, accountability for and management of professional staff and craft workers, and a focus on safety, quality and project delivery certainty. Fluor’s management plans for construction would become effective at the close of the deal.
Fluor said it will begin work immediately under a professional services agreement to assess the two projects, engage the workforce and plan a transition of duties and responsibilities to manage construction.
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