If Toshiba Can’t Finish Nuclear Job, Scana May Find Another

Scana Corp. may end up seeking a new contractor to complete two nuclear reactors it’s building in South Carolina if Toshiba Corp., plagued by financial woes, can’t finish the job.

The utility owner could also step in to complete the work itself at the V.C. Summer nuclear station should Toshiba’s Westinghouse Electric Co. unit drop out, Scana’s Chief Executive Officer Kevin Marsh said Thursday during a call with investors. The company said it expects Toshiba to foot the bill for any additional costs resulting from the latest project delays based on an existing agreement. Toshiba shares in Tokyo fell 10 percent to an 11-month low on Friday.

Thursday’s call was the most detailed discussion Scana has held since Toshiba disclosed a $6.3 billion writedown related to Westinghouse, which is contracted to build the two V.C. Summer reactors and another two in Georgia for Southern Co. Scana could be exposed to an additional $1.7 billion in cost-overruns based on the latest Toshiba disclosures, Morgan Stanley analysts led by Stephen Byrd wrote in a research note Friday.

Scana dropped 2.2 percent to $65.87 at 10:45 a.m. in New York. The shares have tumbled 10 percent since Jan. 1, making the company the worst-performing member of the S&P 500 Utilities Index so far this year.

“Given the unprecedented nature of the recent developments concerning Toshiba and Westinghouse,” Scana has to consider all possible contingencies, said Paul Patterson, a utilities analyst for Glenrock Associates LLC.

Should the nuclear project ever have to be abandoned, Marsh said, Scana could ask state regulators for permission to recover costs through an existing law.

For a look at how Toshiba’s nuclear woes wind back to a Louisiana swamp, click here.

To protect itself, Scana said it has secured a letter of credit for $45 million of a possible $100 million from Toshiba, as well as rights to intellectual property related to the design of the reactors. The company said it’s only paying Westinghouse once certain construction milestones are hit.

Toshiba told Scana it was committed to completing the reactors, but the completion date of the first reactor has been delayed eight months to April 2020. The second reactor was delayed four months to December 2020. Additional costs related to the setbacks would be covered by Toshiba under a renegotiated fixed-price contract, Scana said.

“They were clear with us that they wanted to finish,” Marsh said during Thursday’s call.

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