CB&I Sells Nuclear Construction Unit to Westinghouse

Issue 11 and Volume 119.

In a move that could have significant implications for ongoing nuclear construction projects in the U.S., Westinghouse Electric Co. will take over the nuclear construction business of CB&I for $229 million. Under the agreement, Fluor will continue to build four AP1000 reactors in Georgia and South Carolina.

Westinghouse said last month it agreed to acquire all of CB&I’s outstanding equity interest in the nuclear construction business, Stone & Webster Inc. The deal is expected to close in late 2015. WEC will purchase the business of engineering, construction, procurement, management, design, installation, start-up and testing of nuclear power facilities, including the V.C. Summer project in South Carolina owned by SCANA Corp., the Vogtle project in Georgia owned by Southern Co. and nuclear projects in China.

“This settlement is extremely positive for the Vogtle project and now the contractors can focus 100 percent on project execution,” said Buzz Miller, executive vice president of nuclear development for Georgia Power. “The agreement resolves current and pending disputes, reaffirms the current schedule and increases efficiencies by streamlining resource deployment with Westinghouse and its affiliates as the prime contractor over the Vogtle expansion.”

Vogtle units 3 and 4 are set for completion in 2019 and 2020. Georgia Power said its share of the settlement is $350 million, significantly less than current litigation claims.

South Carolina Electric & Gas (SCE&G), a unit of SCANA Corp. and co-owner of the Summer plant, said the move is a positive one for the new build projects.

“We have strengthened the language in the EPC contract defining regulatory changes which has been the basis for many of our disputes with the consortium in the past,” SCE&G said. “We also have negotiated a fixed price option which, if exercised, would limit the construction cost of the new nuclear plants.”

When the deal closes, Westinghouse will assume and indemnify CB&I for previous, current and future liabilities associated with the AP1000 nuclear projects. CB&I expects cash payments of $229 million of which $161 million is expected to be received upon completion of the nuclear projects and $68 million upon attainment of certain milestones related to CB&I’s continued supply of discrete scopes of modules, fabricated pipe and specialty services to WEC on a subcontract basis.

The amendment revises completion dates for Summer 2 and 3 to Aug. 31, 2019 and 2020, respectively. It also says total project costs will increase by approximately $286 million over the $6.8 billion approved by the South Carolina Public Service Commission, bringing the total gross construction cost to approximately $7.1 billion.

Under the agreement, Fluor Corp. will manage construction of the expansion projects in Georgia and South Carolina. Fluor will be subcontracted in the development of transition plans and definitive agreements. Westinghouse said Fluor will manage a significant portion of the construction of the four units.