In a widely expected move, Westinghouse Electric Co., the U.S. nuclear unit of Japan’s Toshiba Corp., on Wednesday filed for Chapter 11 bankruptcy protection in New York, in a bid to restructure after huge losses at some of its nuclear projects under construction.
The filing affects Westinghouse operations in the Charlotte area and could produce losses for area creditors. The move also calls into question the future of a number of billion-dollar nuclear projects under construction, including one in South Carolina.
The utilities building a new nuclear power plant in South Carolina, however, said they hope to complete the $14 billion project despite Westinghouse’s bankruptcy filing.
The troubles at a company long associated with nuclear power add to the industry’s problems. Nuclear power is cleaner than generating electricity with coal or natural gas, but building a nuclear reactor is much more complex and prohibitively costly. After the March 2011 nuclear disaster in Fukushima, public sentiment turned against nuclear power in countries such as Japan and Germany.
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Westinghouse said in a statement Wednesday that it obtained financing to maintain its operations and made arrangements to continue work on the projects in South Carolina and Georgia while it assesses their viability. Westinghouse also said it will continue projects in China, and that its operations in its Asia and Europe, the Middle East and Africa aren’t affected by the bankruptcy filing.
Westinghouse is based in Cranberry Township, Pa., but has some of its operations in Charlotte. In 2015, Toshiba formed a new company called Toshiba America Energy Systems Corp., headquartered here and led by CEO Ali Azad, that combined parts of three existing units, including a Westinghouse Electric Co. nuclear power business.
Sarah Cassella, a Westinghouse spokeswoman, said Charlotte operations fall under the scope of the bankruptcy filing.
“We are not going out of business,” Cassela said. “Chapter 11 protection gives Westinghouse the exclusive right to develop a plan of reorganization – which is the path we will take to resolve our financial challenges.”
WEC Carolina Energy Services, which has a Rock Hill, S.C., address, was among the entities filing for bankruptcy protection, according to court filings. Westinghouse’s 30 largest creditors also include two Charlotte companies, the filings show.
Defense and power company Curtiss-Wright is owed $7.8 million for “trade debts,” while steel fabricator Steelfab is owed $3.2 million also for trade debts, according to court documents.
In the U.S., nuclear power still generates about one-fifth of the nation’s electricity. But some older nuclear plants are being shuttered and the four nuclear reactors Westinghouse is helping to build in South Carolina and Georgia are behind schedule and billions of dollars over budget.
Toshiba acquired Westinghouse in 2006 with much fanfare, making nuclear power an important part of its business strategy. Instead, Westinghouse has saddled the Japanese company with mounting losses. Toshiba said Westinghouse had racked up debt of $9.8 billion. Wednesday, Toshiba said it could post a loss as big as 1 trillion yen ($9 billion) for the fiscal year ending March 31. It previously said Westinghouse lost 712.5 billion yen ($6.2 billion) from April to December of last year.
SCANA, a utility that serves the Carolinas and Georgia, has a 55 percent stake in the two nuclear reactors Westinghouse is in charge of building at the V.C. Summer power plant northwest of Columbia. State-owned Santee Cooper owns the other 45 percent.
The utilities said in a statement that, anticipating a bankruptcy, they have worked with Westinghouse on an agreement to continue work at Summer while the utilities decide how to move forward.
“Our commitment is still to try to finish these plants; that would be my preferred option,” SCANA Chairman and CEO Kevin Marsh told financial analysts Wednesday. He added: “It’s early in the process (and) way too premature to say this is the option we’re going to end up with.”
If the plant is canceled, he said, the utility will still need the electricity the reactors would have generated. The Summer plant is about $3 billion over budget and years behind schedule, Columbia’s State newspaper reported.
Westinghouse, whose nuclear reactors are used worldwide, is also leading construction of two reactors at the Vogtle power plant in Georgia that is owned by Southern Co.
Both would use the new Westinghouse AP1000 reactor, which was touted as a safer, cheaper option to older designs. Duke Energy had also planned to use the AP1000 if it moves forward with the Lee nuclear plant in Cherokee County, S.C.
The industry had hoped the designs would usher in a nuclear renaissance to replace the aging U.S. fleet.
The Associated Press contributed