Southern Co. Chief Executive Tom Fanning said the utility is “closely monitoring” financial turmoil at Toshiba Corp. stemming from losses on construction contracts for nuclear power plants in Georgia and South Carolina.
Top executives at the Atlanta utility told investors this week they expect the Tokyo technology giant to weather huge losses and complete the construction of Plant Vogtle units 3 and 4. Southern subsidiary Georgia Power is the lead partner in the project near Augusta.
“We have every reason to believe Toshiba will remain viable,” said Art Beattie, Southern’s chief financial officer.
Critics fear Toshiba's troubles could lead to more costly delays or bigger problems for the project. It's also unclear how Georgia Power's preliminary plans for another new nuclear plant near Columbus will be affected if Toshiba is getting out of the business of building such plants.
Atlanta-based Southern has grappled with delays and overruns at its two most ambitious projects: the "clean coal" Kemper plant being built by its Mississippi Power unit, and the Vogtle expansion.
Toshiba recently reported more than $6 billion in losses at its nuclear construction firm building the Plant Vogtle expansion and a similar nuclear plant in South Carolina owned by SCANA.
Toshiba’s chairman resigned last week, and the company said it won’t build any more nuclear plants. It’s also selling off its computer chip business and seeking help from the Japanese government.
Southern executives said they consider a Toshiba bankruptcy unlikely, given expected government backing. But if Toshiba’s construction arm can’t complete the project, the Southern executives added, the company can claim roughly half of $920 million in financial guarantees Toshiba was required to obtain from banks as its financial condition slipped.
Fanning said Georgia Power has agreements in place and hundreds of people at the Vogtle site and at suppliers who could take over management of the construction project if needed. “We are primed and ready to go,” he said.
The executives made their comments after Southern reported Wednesday that a $200 million-plus loss on the troubled Kemper plant took a big bite out of its fourth-quarter profit.
Southern said delays in getting the Mississippi plant running properly cost the company $206 million during the fourth quarter.
Net income fell 27 percent to $197 million in the quarter, despite a $110 million boost from Southern’s acquisition of Atlanta natural gas utility AGL Resources, completed last year. For the full year, Southern had a profit of $2.45 billion, up 3 percent from 2015.
Kemper, a new type of plant, is designed to use so-called “gasifiers” to turn low-grade coal into cleaner-burning gas. But the gasifier units are still having problems with clogging from coal ash, officials said. The project has prompted a Securities and Exchange Commission probe into possible improper disclosures by Southern.
“We’ll get Kemper started up,” Fanning said.
