Westinghouse to Emerge From Bankruptcy Stronger, CEO Says

Turn to the nation's most objective and informative daily environmental news resource to learn how the United States and key players around the world are responding to the environmental...

By Rebecca Kern

Westinghouse Electric Co., which has filed for Chapter 11 bankruptcy, will emerge “quickly, better, stronger,” CEO Jose Gutierrez said in his first public speech since the company’s filing in a U.S. bankruptcy court in March.

Westinghouse is working with Southern Co. and SCANA Corp., the owners of the Vogtle and V.C. Summer nuclear plants in Georgia and South Carolina, respectively, “to find a long-term solution to complete those reactors,” Gutierrez said May 24 at the Nuclear Energy Assembly conference in Scottsdale, Ariz. The future of other new nuclear reactors being built in the U.S. likely depends on the completion of these reactors in the Southeast.

“We hope that those reactors get built. We hope they do a better job than we did,” Gutierrez said at the conference.

Westinghouse filed for Chapter 11 bankruptcy March 29 in the U.S. Bankruptcy Court for the Southern District of New York, after experiencing billions of dollars of construction cost overruns associated with the building of the four AP1000 nuclear reactors in Georgia and South Carolina. Westinghouse took over as engineering-procurement-construction contractor of the nuclear plants after it acquired the U.S. nuclear construction contractor CB&I Stone & Webster Inc. in 2015.

Southern Co. has reached an interim agreement with Westinghouse that extends to June 3 to continue construction of the Georgia reactors while the companies finalize and gain approval for a new service pact. Similarly, SCANA Corp. and Santee Cooper, South Carolina’s state-owned utility, agreed to an extension of an interim agreement with Westinghouse to ensure construction of the reactors through June 26.

Westinghouse is continuing to offer its services, while increasing productivity, to keep the projects running during the interim agreements, Gutierrez said in a May 24 interview with Bloomberg BNA and Bloomberg News.

“As soon as the customers decide if they continue, Westinghouse is going to be fully open to provide whatever type of services they want from us, except construction,” Gutierrez said. These services could include engineering and procurement, instrumentation and controls, and fuel services.

“We are very open to have in place a contract to supply all of those services,” he said.

Westinghouse is in the process of receiving an $800 million loan from Apollo Global Management LLC. However, it is barred from using any of the credit for nuclear construction at the plants, Mark Marano, Westinghouse’s chief operating officer, told Bloomberg BNA in a May 23 interview.

Future of U.S. Nuclear Dependent

Gutierrez said the future of the U.S. nuclear industry is likely going to be dependent upon the four AP1000 reactors being completed.

“I think that this country needs more nuclear power,” he said. “I cannot imagine a very industrialized and developed country like the U.S. not having a clean, safe, reliable, cheap baseload power.”

“Sooner or later, this country has to make the decision of building more nuclear reactors. Hopefully, these projects are completed with the AP1000 technologies,” he added.

“If these reactors aren’t built, it’s not that other utilities won’t go ahead, but obviously it would be more difficult,” he added.

Duke Energy Carolinas LLC has received licenses to build and operate two AP1000 nuclear reactors at the William States Lee III plant in North Carolina. Also, Florida Power & Light has expressed interest in pursuing licenses to build two AP1000 reactors at its Turkey Point nuclear plant in Florida, but the project has been delayed. Gutierrez said he expects both utilities moving forward with the projects based on the Vogtle and Summer plants being completed.

A nuclear power plant south of Shanghai is expected to be the first to use the AP1000 model. The Sanmen project in China’s Zhejiang province was scheduled to begin in 2013, but was delayed due to design problems, supply-chain bottlenecks and stricter safety measures after Japan’s Fukushima nuclear disaster.

Westinghouse Exiting Construction

Westinghouse is planning for all of its global businesses to focus on engineering and procurement and other core services, and not offer construction services.

“Construction is not our forte, and we certainly have decided from a risk perspective, never to do that again,” David Howell, Westinghouse’s president of the Americas region, said in interview May 23.

Similarly, Gutierrez said the company plans to focus on its core business services, and expand globally in North and South America, and Eastern Europe.

“We are leaders in the fuel business, in many services businesses and obviously in different markets. The focus is going to be continue leading those segments, and even growing in other markets where our presence is not so significant,” he said.

— With assistance by Mark Chediak.

To contact the reporter on this story: Rebecca Kern in Washington at rKern@bna.com

To contact the editor responsible for this story: Paul Connolly at PConnolly@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Environment & Energy Report