Nuclear project partners SCE&G and Santee Cooper have each agreed to sell off what they’re due from the project’s lead contractor, whose bankruptcy spurred their failure this summer.
Both utilities entered an agreement in July to have Westinghouse and its parent company Toshiba pay $2 billion in settlement money. But on Wednesday both utilities announced they would sell those shares to Citibank, taking a slightly smaller guaranteed $1.8 billion Citibank payment rather than running the risk of Toshiba coming up short in the future.
“Receiving that money now takes away the risk from our customers,” Santee Cooper spokeswoman Nicole Aiello told South Carolina Radio Network. “Toshiba is in a weakened financial state and we have no guarantee that money will come with each installment. This way we have the guarantee that we’re getting this money now.”
As part of the Citibank deal, the two utilities receive $170 million less than they would have if Toshiba pays back its full guaranty over the next five years. However, the deal indicates SCE&G and Santee Cooper are either not confident the bankrupt company will meet its obligations or need the earlier cash influx to help pay off financing costs for the $9 billion on the V.C. Summer reactor.
In all, since SCE&G owns a 55 percent stake in the V.C. Summer project, it will receive $1 billion from Citibank, while Santee Cooper’s 45 percent share gets them $831 million. Those amounts do not include a $150 million payment due from Toshiba this weekend.
“This transaction allows us to ensure these payments are not subject to further credit risk,” Kevin Marsh, CEO of SCE&G’s parent company SCANA said in a statement. “As we have consistently communicated, SCE&G intends to utilize the net value of these payments to mitigate the cost of the abandoned project to customers.”
The available cash comes as SCE&G awaits word from the Public Safety Commission on the future of its rate hikes currently paying financing costs for the unfinished nuclear reactors. The energy advisory agency Office of Regulatory Staff is requesting the commission suspend the 18 percent of SCE&G customer bills dedicated towards the failed plants. SCE&G plans to oppose the request, since it hopes to recover $3.7 billion in financing costs.