Settlement terms reached in Vogtle new nuclear construction dispute

Westinghouse to become sole contractor for Units 3 and 4

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In a move that could have significant implications for the ongoing nuclear construction project, Southern (NYSE:SO) subsidiary Georgia Power announced Oct. 27 that a settlement agreement has been reached in the dispute with contractors on Vogtle Units 3 and 4.

Georgia Power said the contractors for the Vogtle nuclear expansion, Westinghouse Electric and Chicago Bridge & Iron (NYSE:CBI), have entered into a transaction that will position Westinghouse and its affiliates as the sole contractor over the project. 

CBI issued its own news release saying it has entered into a definitive agreement with Westinghouse Electric Company LLC (WEC), in which WEC will acquire all of the outstanding equity interests in CB&I's nuclear construction business. The transaction is expected to close in the fourth quarter 2015 and is subject to customary closing conditions and adjustments.

Plant owners and contractors have long been at odds over the cause of certain deadline delays and cost issues.

As a result of the change, Georgia Power and the other Vogtle co-owners (Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and Dalton Utilities) have agreed on terms to settle all claims currently in litigation with the project's contractors and to include additional protections in the engineering, procurement, and construction (EPC) contract against future claims.

The settlement is subject to completion of the Westinghouse and CB&I transaction.

"This settlement is extremely positive for the Vogtle project and now the contractors can focus 100 percent on project execution," said Georgia Power Executive Vice President of Nuclear Development Buzz Miller. "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."

Including this settlement, the project's incremental impact on customer rates will average less than 1% per year until the project is complete. Georgia Power's portion of the settlement cost is approximately $350m, which is significantly less than current litigation claims. 

The agreement also reaffirms the current in-service dates of 2019 for Unit 3 and 2020 for Unit 4. 

Construction of the new units near Waynesboro, Ga., among the first to be built in the United States in more than three decades, is progressing well and more than halfway complete based on contractual milestones.

The expansion remains the most economic choice for meeting the future energy needs of Georgia, Georgia Power said.

Once units 3 and 4 join the existing two Vogtle units already in operation, Plant Vogtle is expected to generate more electricity than any U.S. nuclear facility, enough to power more than one million homes and businesses.

 

Wayne Barber
About the Author

Wayne Barber

Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

Wayne can be reached at wayneb@pennwell.com.

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