US regulator rejects subsidy plan for nuclear, coal; Canada’s Brookfield to buy Westinghouse
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US FERC rejects government’s support plan for nuclear, coal
The U.S. Federal Energy Regulatory Commission (FERC) has rejected market rules proposed by the Trump administration to support nuclear and coal-fired power generation.
Nuclear and coal-fired power plants have been under pressure from rising renewable energy capacity and sustained low gas prices.
Proposals submitted by Energy Secretary Rick Perry in September required market operators to implement rules to allow the "full recovery of costs" of plants which provide grid reliability services and have a 90-day fuel supply on site, effectively directing the support at nuclear and coal-fired generation.
The FERC has rejected these proposals, saying the Department of Energy (DOE) failed to demonstrate that existing electricity tariffs were "unjust and unreasonable," FERC said in a January 8 filing.
The commission has instead launched a new consultation “to enable us to examine holistically the resilience of the bulk power system,” calling on grid operators to submit specific grid resilience information within 60 days, it said.
"We have seen a variety of economic, environmental, and policy drivers that are changing the way electricity is procured and used...the Commission’s markets, transmission planning rules, and reliability standards should evolve as needed to address the bulk power system’s continued reliability and resilience," FERC said.
US electricity price ranges per market
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The FERC's new consultation aims to:
(1) Develop a common understanding between the FERC and the electricity industry of what resilience of the bulk power system means and requires.
(2) Understand how each Regional Transmission Organisation (RTO) and Independent System Operator (ISO) assesses resilience.
(3) Use this information to evaluate whether additional FERC action on resilience is required.
Canadian investor Brookfield to buy Westinghouse
Toshiba has agreed to sell Westinghouse to Canadian investment group Brookfield Business Partners for a price of $4.6 billion, the companies announced January 4.
Brookfield will commit to fund approximately 50% of the equity on closing using existing liquidity and may syndicate a portion of its investment to other institutional investors.
Westinghouse filed for bankruptcy protection in March 2017 following major cost overruns at nuclear plant construction projects.
In a stock market filing, Brookfield noted Westinghouse is among the world’s leading suppliers of nuclear power infrastructure services, providing sophisticated engineering, maintenance, facilities management and repair services to a global customer base.
Highlights of the company include a global, diversified customer base, long-term customer contracts and in-depth expertise of a complex regulatory and licensing environment, Brookfield said.
"The majority of [Westinghouse's] profitability is delivered through regularly scheduled services which are provided under long-term contracts. Westinghouse’s core business has generated stable margins and consistent free cash flow," it said.
“Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation,” Cyrus Madon, CEO of Brookfield Business Partners, said.
“We look forward to bringing our significant expertise and reputation as a long-term owner and operator of critical infrastructure in the U.S. and globally, as well as our deep facilities management capabilities, to enhance the Company’s position as a leading global infrastructure services provider to the power generation industry,” Madon said.
The acquisition is subject to regulatory approval.
Dominion set to buy V.C. Summer project owner SCANA
Virginia-based Dominion Energy is set to buy South Virginia's SCANA, owner of the halted V.C. Summer 2 & 3 nuclear power AP1000 construction project, for $7.9 billion, the companies announced January 3.
SCANA, owner of the South Carolina Electric & Gas Company (SCE&G), accepted a bid from Dominion valued at approximately $14.6 billion including debt. Dominion has pledged to fund a total of $1.3 billion of cash payments to all SCE&G customers and write off more than $1.7 billion in assets associated to the V.C. Summer 2 & 3 project.
SCE&G halted construction of the V.C. Summer 2 & 3 plant in July 2017 after delays and cost overruns prompted plant supplier Westinghouse to file for bankruptcy protection. In its takeover bid, Dominion has pledged to complete the purchase of the $180 million Columbia Energy Centre natural gas-fired power station to fulfil generation needs, it said. The plant has a capacity of 540 MW.
SCANA share price since summer 2017 ($)
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Source: Yahoo! Finance
Dominion's buyout of SCANA is subject to regulatory and shareholder approval. Specifically, the transaction requires clearance from federal trade and energy commissions and the parties also plan to file for review and approval from the public service commissions of South Carolina, North Carolina, and Georgia.
An agreement with regulatory authorities over the V.C. Summer 2 and 3 project is critical for the deal.
"We will seek the approval of the Public Service Commission of South Carolina for the immediate customer payments, rate refunds over time and other conditions related to resolution of the V.C. Summer Units 2 and 3 situation,” Thomas Farrell, CEO of Dominion Energy, said.
“We believe it is in the best interests of all parties to reach an agreement on this critical issue...The availability, reliability and cost of energy are often the deciding factors when businesses consider investing – and we want businesses to have every reason to continue investing in SCANA’s communities,” Farrell said.
Dominion currently operates three nuclear power stations– the 2 GW Millstone Power station in Connecticut and the 1.8 GW North Anna and 1.6 GW Surry power stations in Virginia.
Georgia Power approved to complete Vogtle 3 & 4 plant
Georgia Power has received approval from the Georgia Public Service Commission (PSC) to complete the construction of the Vogtle 3 & 4 plant, the company said December 21.
Georgia Power owns 45.7% of the project, while Oglethorpe Power Corporation holds a 30% share, Municipal Electric Authority of Georgia 22.7% and Dalton Utilities 1.6%.
The Vogtle 3 & 4 AP 1000 reactors are the only new nuclear reactors currently under construction in the U.S., following the halting of the V.C. Summer 2 & 3 project in July 2017. Vogtle 3 is currently expected online in November 2021, followed by Vogtle 4 in November 2022.
Delays to the Vogtle and V.C. Summer construction projects saw costs spiral and prompted the bankruptcy of plant supplier Westinghouse. In July, Georgia Power sought additional aid from the federal government to complete the plant. At that time, Georgia Power's latest estimates showed capital costs could increase from the $5.7 billion estimate previously approved by the Georgia Public Service Commission, to between $6.7 billion and $7.4 billion.
In September, the U.S. Department of Energy (DOE) agreed to provide an additional $3.7 billion in loan guarantees for the construction of the Vogtle 3 & 4 reactors.
Toshiba, owner of Westinghouse, is contributing approximately $2.8 billion to the project, in addition to contractual penalties, Georgia Power said in its latest statement.
The latest delivery terms include penalty payments for delays and cost increases.
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