Summary
Southern Company (SO) filed an 8-K on October 27, 2015, detailing significant developments regarding the construction of Plant Vogtle Units 3 and 4. Key news includes an agreement where Westinghouse Electric Company LLC (Westinghouse) will acquire Chicago Bridge & Iron Co., N.V.'s subsidiary, CB&I Stone & Webster, Inc. (S&W), a contractor on the project. This acquisition is a condition for a broader settlement agreement between the Vogtle Owners (including Georgia Power) and the Contractor. The settlement aims to resolve disputes and litigation related to the EPC Agreement for Plant Vogtle. Under the proposed terms, mutual releases of claims will be exchanged, and the litigation will be dismissed. The EPC Agreement will be amended to limit the contractor's ability to seek further price increases due to regulatory changes, implement enhanced dispute resolution, and adjust guaranteed substantial completion dates to align with current estimated in-service dates (June 30, 2019 for Unit 3 and June 30, 2020 for Unit 4). Delay liquidated damages will now commence from the estimated fuel loading date for each unit. Georgia Power will capitalize approximately $350 million of project costs to the Contractor, of which $120 million has already been paid. The settlement also involves terminating the parent guarantee of The Shaw Group, Inc. (subject to DOE consent) and engaging Fluor Enterprises, Inc. as a new construction subcontractor. The settlement's finalization is contingent upon Westinghouse's acquisition of S&W and regulatory approval from the Georgia Public Service Commission for Georgia Power.
Key Highlights
- 1Westinghouse to acquire S&W, a key contractor for Plant Vogtle Units 3 & 4, subject to conditions.
- 2A settlement agreement has been reached in principle between the Vogtle Owners (including Georgia Power) and the Contractor (Westinghouse and S&W) to resolve disputes and pending litigation.
- 3The settlement includes mutual releases of claims and dismissal of the Vogtle Construction Litigation.
- 4The EPC Agreement will be amended to restrict further price increase claims from the Contractor, enhance dispute resolution, and revise substantial completion dates to June 30, 2019 (Unit 3) and June 30, 2020 (Unit 4).
- 5Delay liquidated damages will now be calculated from the estimated nuclear fuel loading dates.
- 6Georgia Power will capitalize approximately $350 million in project costs related to the settlement.
- 7Fluor Enterprises, Inc. is to be engaged as a new construction subcontractor.