Bechtel will “pursue” accelerated mPower development
I’ve relearned a valuable lesson — read press releases and other PR material closely, paying special attention to wiggle words.
On Friday, March 4, Bechtel issued a press release titled Bechtel, BWXT to Pursue Acceleration of Small Modular Nuclear Reactor Project.
In my excitement, I missed the key word in the headline and in the first paragraph — pursue.
It turns out that the agreement between Bechtel and BWXT gives Bechtel one year to pursue additional investors or funding sources. If, within that year, Bechtel is able to put together sufficient funds to submit and complete a design certification application, the involved parties will negotiate a new agreement.
Bechtel has the sole responsibility of determining if the funding commitments are adequate.
BWXT agrees to provide in kind engineering and support services to Bechtel during the search process in an amount not to exceed $10 million at labor rates that are not yet finalized. If the project does move forward, BWXT will continue to provide engineering and other support services for a total of five years at no more than $12 million/year. That limits BWXT’s additional investment commitment in the mPower project to $60 million.
If Bechtel cannot find adequate funding within one year of the agreement date, BWXT will pay Bechtel $30 million to settle all existing claims remaining from the Generation mPower partnership. GmP will be dissolved and all associated exclusivity agreements will be eliminated.
In my last post on this topic, I mentioned that the agreement announcement meant that the lawyers had finished talking. When B&W chose to dramatically slow its investment in the project, its minority partners (DOE, BPC, and TVA) were not pleased about the decision or the amount of warning they received.
According to some written sources I found but cannot point to right now, BPC had an active litigation in process with a damage claim of $120 million.
There are other specifics available from BWXT’s filing with the SEC. Since Bechtel Power Corporation is a privately held company, they are not required to make a similar filing as a result of making a materially significant agreement.
Note: If Bechtel is unable to attract the outside funds it believes it needs, that situation should not be interpreted as having anything to do with the overall prospects for smaller nuclear power plants. The BWXT mPower reactor and associated power plant as designed by GmP has both advantages and disadvantages. It is a specific product from a specific set of suppliers. It is just one of an infinite number of systems with various features, price points, customer relationship teams and potential delivery schedules.
Good analysis. I confirmed much of your post in verbal discussions with BWXT exhibitors at WM2016 this week. They characterized the agreement as a “legal settlement” and a way to resolve the remaining liability issues BWXT may have regarding their agreement with Bechtel.
I’d like to see a demonstration plant built. Small reactors were built in the 50s and 60s, some were successful demonstrations. If its simply an assembly of proven Navy technology, introducing the concept of commercial profitability and a different spectrum of capacity factor becomes necessary. The successful demonstrations resulted in commercial utility orders. It’s a large investment into unknown risk for a utility to buy first of a kind construction.
I want to know why multi-billion dollar companies like Bechtel need to “find investors” to fund their projects? Bechtel has plenty of money – especially after the Iraq war.
It reads to me like they are looking for some chump to pay the bills, who will then largely get cut out of the profits if their are any, OR like the companies involved are just looking for someone to recover their losses from, and then call the whole thing off. . .
Diversifying risk by taking on investors is not an uncommon strategy. In fact, it’s a very old strategy, and it is why companies go public.
I seriously doubt that any investors will be “cut out of the profits.”
I was part of the a major nuclear utility new build project. The vendor didn’t have detailed design complete when multiple utilities were considering construction. They actually wanted utilities to fund the accelerated completion of detailed design at + 100 M each, while having the gall to plead “Intellectual Property” when utilities sought just about any technical information. Less than two years in, the utility suspended the project.
That’s all fixed by demonstrating the technology with a turn key plant.
Tell me, Brian, if you are aware of Bechtel’s history, why would you….
“seriously doubt that any investors will be “cut out of the profits.””
(Rod, if you are going to remove this question asked of Brian, then by rights, you should remove his post as well.)
Here is a Mass. State AG’s report on the settlement reached with Bechtel and Parsons for their work on the so-called “Big Dig”.
It IS NOT my opinion, a news report, or politically spun media fluff. It is factual information, pointing to actual legal proceedings and conclusions waged against Bechtel.
There are those here, such as Rod or Brian, that would love to simply label bechtel’s history as “off topic”, and would prefer information such as contained in this link be deleted.
But Bechtel’s history, as it applies to corporate integrity and corporate ethics, is certainly fair game in any conversation about Bechtel’s role in technology development, investor participation in that development, and the expenditure of taxpayer monies in subsidies or loans.
To those of you that manage to read this post before it disappears, ask yourself what it is that some here, including your host, would rather you do not know about Bechtel. And why they don’t want you to know it.
http://www.mass.gov/ago/news-and-updates/press-releases/2008/big-dig-4582-million-global-agreement.html
@poa
That’s better. Facts are acceptable, vitriol and potentially libelous accusations are not.
This site is not subject to “free speech.” It is not an organ of the federal government and Congress hasn’t been involved in drafting any of the unwritten rules that govern my moderation decisions.
It’s rather impolite, for example, to insist on your right to post anything you want and then to complain about my right as the host and bill payer here to delete it.
poa – I didn’t say anything about Bechtel.
Rod…in the last couple of days, you have deleted numerous factual accounts of Bechtel’s history. The so-called “Big Dig” is just one brick in the wall of Bechtel’s history. I strongly suggest, to those of you unfamiliar with Bechtel’s history, to research Bechtel’s participation in “rebuilding” Iraq. My point, in being so tenacious about attempting to get the facts out there, is that as advocates for the NE industry, you should be concerned, not elated, about the role Bechtel will play. Certainly, your energy darling, NE, does not need to provide further fuel for the public’s mistrust.
“I didn’t say anything about Bechtel.”
Brian, you directly answered Jeff’s concern about Bechtel’s probable treatment of investors by basically telling Jeff his concerns are unfounded. I doubt many here, reading the exchange, accept your denial as credible, or even anything other than obvious back pedaling.
@poa
Rod…in the last couple of days, you have deleted numerous factual accounts of Bechtel’s history.
Not true. I have deleted numerous opinionated and often profane accounts of Bechtel’s less-than-stellar record. It is a very large company with a long history in an industry that is well known to have some “ethical challenges” – large scale construction projects, especially those done in war zones or for government bodies that have inexperienced (or worse) contract managers. In some corners of the web and in books, the name is spoken with the same intense dislike as “Monsanto.”
Neither company completely deserves the vitriol aimed at it.
It’s important to recognize, on a site that plans to be respected and long-lived, that BPC is a company that has a well-earned reputation for fiercely defending its reputation; it has plenty of legal firepower on staff and on retainer.
It’s possible to be critical without risking court battles. I prefer that path and will continue to do my best to enforce my choice here.
You could establish your own website to post your facts, opinions and rebuttals on those topics you deemed important enough to address in the public sphere. That way you control the rules of discourse, just like Rod determines the rules on his site. Fair enough?
Yes, I suppose.
And Rod could have a website of adoring syncophants that never question or argue.
Fair enough?
@poa
I don’t mind people who question and argue. What becomes tiresome is people who never agree or accept the answers they are given.
More on the mPower project:
http://neutronbytes.com/2016/03/14/bechtel-bwxt-share-some-details-on-their-smr-plans/
Downsizing in-house expenditures, while going after deep pocket investors. Read that, Uncle Sam. Thats not the kinda thing one likes to see from Bechtel. But hey, they have the connections that seem to consistently open the tax payer’s wallets.
You really think, considering Bechtel’s history, that this is gonna have a happy ending? Its a no brainer I’m gonna be telling this blog “told ya so” in the not too distant future.
@poa
Here’s my prediction – Bechtel will be cashing BWXT’s $30 million check about a year from now. mPower will be officially dead.
Rod – I hate to say it, but you’re probably right.
Hope for the best, but expect the worst.