Westinghouse could run out of cash in bankruptcy, utilities tell court
- Seven utilities warned a bankruptcy court this week that they believe nuclear developer Westinghouse Electric will need additional funds to continue operating, saying an $800 million bankruptcy loan will be insufficient.
- The company burned through $900 million in the first two months of this year, Bloomberg reports. Utilities are concerned the company will be unable to pay its bills if it continues to spend at that rate, putting the construction of two major nuclear projects in the U.S. at risk.
- Westinghouse, the nuclear development subsidiary of Toshiba, filed for Chapter 11 bankruptcy court protection at the end of last month, throwing the future of the U.S. nuclear sector into question.
The $800 million in third-party financing Westinghouse secured to protect its core businesses during reorganization may not be enough, a group of northeast utilities told a bankruptcy court.
Reuters reports the court filing indicates utilities saw Westinghouse's "rapid cash burn and special arrangements to protect its lawyers' fees" as signs cash could run out.
Law 360 says the utilities party to the filing include: Commonwealth Edison, Public Service of New Hampshire, Connecticut Light & Power, FirstEnergy Solutions, Metropolitan Edison, Pennsylvania Power, West Penn Power and PECO Energy.
Westinghouse's development of two nuclear facilities — Southern’s Vogtle plant in Georgia and SCANA’s V.C. Summer project in South Carolina — is largely to blame for the company's financial issues. Both plants are years behind schedule and billions over budget.
Last month, the Atlanta Journal Constitution reported Vogtle is likely to miss another deadline in the upcoming months. Westinghouse took over as the contractor on the Vogtle project in January 2016 and since then delays at both projects have dogged its parent company.
If Westinghouse cannot pay its bills, it may be unable to honor its commitments to finish construction on the Vogtle and Summer plants. In that case, analysts told Utility Dive that the utilities would likely not attempt to complete construction themselves without “complete and irrefutable assurance from their respective regulators that they will be able to recover all costs that are incremental to the amounts currently certified.”
Toshiba acquired a majority stake in Westinghouse in 2006, but last February was forced to take a $6 billion write off because of problems with the projects. The situation has also put federal loan guarantees in jeopardy: Southern was awarded $8.3 billion loan guarantees issued under the Obama administration for the construction of the Vogtle plant.
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