BERKELEY COUNTY, S.C.–South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (SCANA) (NYSE:SCG), and Santee Cooper, have entered into a definitive agreement with Toshiba Corporation (Toshiba) for Toshiba to pay $2.168 billion ($1.192 billion to SCE&G for its 55% and $0.976 billion to Santee Cooper for its 45% project ownership) in full satisfaction of its guaranty of obligations of Westinghouse Electric Company, LLC (WEC) under the engineering, procurement, and construction contract (the EPC Contract) for the two new nuclear units at the V.C. Summer Nuclear Station in Jenkinsville, SC.
In the agreement, Toshiba commits to make payments in a series of installments over a period beginning in October 2017 and ending in September 2022. Certain of these payments may be satisfied by distributions through the bankruptcy court process from WEC to SCE&G and Santee Cooper.
These payments (which are subject to reduction if WEC pays creditors holding liens on project assets) are payable regardless of whether both or either of the two nuclear units are completed, or the project is abandoned. If the units are completed and upon completion actual construction costs, net of payment from Toshiba, are less than the specified maximum amount payable under the EPC Contract, Toshiba will have the right to receive part of the difference.
The project owners are continuing their efforts to determine the most prudent path forward for the nuclear project. However, the project owners anticipate that the additional cost to complete both units beyond the amounts payable in connection with the EPC Contract will materially exceed prior WEC estimates as well as the anticipated guaranty settlement payments from Toshiba. Additionally, the units would need to be online before January 1, 2021 to qualify for production tax credits, under current tax rules.
At this point, the project owners believe that the units could not be brought online until after this date. The project owners are considering these factors, as well as their future generation needs, in their evaluation of the project. Based on these considerations, the alternatives of completing both units or one unit are subject to significant challenges. The owners expect to announce their decisions soon.
“We are committed to making a financially responsible decision for our customers and other stakeholders,” said SCANA Chairman and CEO, Kevin Marsh. “We are close to completing our analysis of the various options to determine the most prudent path forward.”
Lonnie Carter, Santee Cooper President and CEO, said, “We appreciate our customers’ patience while the analysis on cost and schedule for the project is being completed. Ultimately, we will make a decision that is in the best interests of our customers.”