SO Southern Co

By Russell Gold 

The chief executive of Southern Co. on Wednesday said the utility will need $3.7 billion and cooperation from Toshiba Corp. to complete a nuclear power plant in Georgia that was being built by bankrupt Toshiba unit Westinghouse Electric Co.

But even if it obtains those commitments, Southern isn't sure it can finish the half-built Georgia reactors, Thomas A. Fanning, Southern's chairman and chief executive, said in an interview with The Wall Street Journal.

"We are working with Toshiba to receive complete assurance as to the $3.7 billion guarantee that they owe us, whether we finish the project or not," said Mr. Fanning.

Efforts to reach Toshiba on Wednesday morning were unsuccessful. A Westinghouse spokeswoman didn't immediately respond to questions.

Toshiba has said it has about 650 billion yen ($5.8 billion) in parent-company guarantees made on Westinghouse's behalf, including guarantees to make payments that would be required if Westinghouse can't complete the nuclear-reactor projects. Toshiba has said it plans to take write-downs to account for these guarantees when it reports results for the year ended March 2017. It hasn't released those results yet but says it is likely to report a net loss of about Yen1 trillion for that year.

Toshiba hasn't specified which portion of the Yen650 billion is owed for which project. Toshiba has said it intends to exit from the overseas nuclear business and doesn't want to make any further commitments to the U.S. projects.

Toshiba has already booked billions of dollars in losses due to delays and cost overruns from the Georgia project and another half-finished project in South Carolina that Westinghouse was building for Scana Corp.

Southern, however, doesn't want to let Toshiba go until a deal can be struck. And the utility has begun to indicate that if its conditions aren't met, it would find it very difficult to continue work. That sets up the possibility that the nuclear power plant might never be finished.

The future of the Vogtle Electric Generating Plant -- the first new nuclear plant built in the U.S. in three decades -- was thrown into doubt in late March, when Westinghouse declared bankruptcy as costs to finish the plant escalated, generating billions of dollars in losses.

Since then, Southern and several other owners of the facility have agreed to pay construction costs until a long-term solution can be worked out.

Mr. Fanning said he expects to conclude negotiations with Toshiba in the next couple of weeks. Southern has only agreed to continue paying for construction through May 12, but that could be extended.

"If we need to extend, we will," he said. "I think that gives us enough time to reach closure on these important issues."

He also said Southern needs a deal with Westinghouse to "have the complete ability -- technical, operational and intellectual-property resources -- to complete the plant." Southern unit Georgia Power has objected to a proposed $800 million bankruptcy loan to Westinghouse, arguing that the lender could end up with the ability to put a lien on the power plant.

Mr. Fanning made clear that even if Toshiba agrees to pay the $3.7 billion and to the other conditions, Southern still hasn't decided whether it would finish building the plant. He said Southern will recommend to its co-owners and state regulators whether to proceed "in a month or two."

The recommendation will depend on ongoing negotiations with Toshiba and an assessment of how much time and money it will take to finish the project.

Southern owns 45.7% of the plant. Three smaller utilities, Oglethorpe Power, MEAG Power and Dalton Utilities, own the rest.

Write to Russell Gold at russell.gold@wsj.com

(END) Dow Jones Newswires

May 04, 2017 02:47 ET (06:47 GMT)

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