Westinghouse Nuclear, which took over as primary contractor of four U.S. nuclear reactors from contractor CB&I earlier this month, will face tighter cost controls, increased liability and more transparency for the projects, according to a settlement agreement filed on Jan. 21 with the Georgia Public Service Commission.
Westinghouse and CB&I were jointly building two 1,100-MW AP1000 reactors at Georgia Power’s Vogtle plant and two AP1000 reactors at SCANA/Santee Cooper’s V.C. Summer plant in South Carolina.
But after disputes with the owners and each other and cost overruns of more than $700 million at the Vogtle plant alone, Westinghouse agreed, in October, to purchase CB&I’s nuclear construction business for $161 million. That business will be operated in a newly formed subsidiary, called WECTEC.
In addition to the U.S. reactors, Westinghouse assumed CB&I's responsibilities in the construction of four nuclear reactors in China.
The agreement was finalized on Jan. 4, and Fluor Corp., which Westinghouse hired as its construction subcontractor at both U.S. sites, has taken over management at the sites.
According to the settlement filed with the commission, Fluor’s takeover is not a demobilization-remobilization, and most of the resources will remain on the project, including the equipment.
Fluor said that, in the fourth quarter of 2015, it booked $5 billion in contracts for the nuclear work.
Under the settlement agreement, the engineering, procurement and construction-management costs for the Vogtle units will increase by $915 million. That hike is in addition to the $16-billion price tag recently affixed to the plant—$3 billion over the original cost.
Westinghouse affirmed in the settlement that the two units will come on line in June 2019 and June 2020, respectively.
Georgia Power is asking the commission to rule that the contract changes—and Georgia Power’s $350-million share of the increase—is prudent and reasonable.
Under the agreement, Westinghouse will be able to coordinate better with SCANA on the V.C. Summer project without violating confidentiality agreements.
Also under the settlement, a dispute resolution board has been created to resolve disputes under $25 million and delays fewer than 14 days.
The changes also clarify and tighten invoice requirements and mandate that Georgia Power and the other owners pay 100% of all invoices; however, they can take any dispute over the invoices to the resolution board.
The amendments require Westinghouse to continue work on any subject of the dispute while it is being resolved, even if Westinghouse alleges the work is new in scope and outside its obligations.