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  1. Here is how I read the tea leaves

    Three things happen at same time:
    1. CBI purchased by Westinghouse
    2. CBI replaced by Fluor
    3. Legal suites resolved against Westinghouse and CBI.

    I think CBI could not deliver modules on time and Westinghouse could not deliver AP1000 motors thru Curtis-Wright on time. The utilities basically won their suite agains Westinghouse and CBI about construction delays. Westinghouse agreed to remove CBI and bring in Fluor to satisfy the US utilities.

    However, Westinghouse needs CBI to complete Chinese work and to get new work (up to 26 possible AP1000’s in China are now in doubt). So, Westinghouse buys CBI instead of CBI going out of business.

    Suite resolved – Westinghouse better positioned for sales – big deal!

    Now let’s hope the first AP1000 fires up and runs well.

    1. Martin, probably as good a reading as any right now. And I agree it is probably a good thing for the current AP1000s, which directly affect any future for AP1000s in the US. There was a cryptic message in the press release about if CB&I would continue to be the module supplier. That is a tough read, but also a tough decision, as in who else is out there and up to speed. If CB&I is making progress, and understands their problems, it is better to stick with them on the module manufacturing. But if it is thought they are hopeless, well…
      My first thought when I read this was Fluor is the deep pockets behind NuScale. I hope for NuScale’s sake Fluor does not get stretched too thin financially. The words in the press release were Fluor has a “cost reimbursable basis” contract. Maybe that’s just semantics in the story, but the usual wording from my experience is “cost plus.”

      1. Note: I work at Westinghouse

        Many of the modules being installed today are already coming from alternative fabricators like Newport News. Like anything, they’ve had teething pains, but they came up the curve quickly and I am hearing very good things from site.

        1. Cory, thanks for that info. I’ve been saying for awhile that the only up-to-speed strict QA qualified experienced nuclear Management/Work Force that exists today is navy nuke shipyards and plant Outage/Mod support groups. If you can’t transfer that expertise/experience to a manufacturer, then transfer the manufacturing to the expertise/experience. So I’m glad to see this news.
          BTW, CB&I has a Part 21 report today on the NRC Event Report web page, in a structural module CA01 for Vogtle Unit 3.
          This type of thing has been problematic. It’s basically a resume problem; too many people who have been experiencing nuke power are claiming nuke power experience.

    2. Close Martin. If you look at the situation since CB&I bought The Shaw Group, it hasn’t been great from a financial standpoint. CB&I successfully fixed a lot of issues and made some great improvements but the new build projects were bleeding cash from the company. Additionally, the lawsuits and exposure (financially) were devastating the stock. If you look at the SEC filings, WEC is paying $0 in actual dollars. The lawsuits go away, CB&I washes their hands of all of the liability and financial obligations and so forth. This is actually good for everyone. CB&I never really seemed committed, nor really understood nuclear and it eliminates the finger pointing and back and forth between the partners. My speculation is that this sale/transfer was driven partly by the utility owners and mostly by the stock market. It’s a short term hit for CB&I but will be best in the long term for all parties.

      CB&I is walking away from nuclear engineering and construction. WEC is buying that division of CB&I. CB&I is not necessarily being ‘replaced’ by Fluor. WEC is smart enough that they know what they don’t know. They don’t know construction. So they are bringing Fluor in to take over the management of the asset (CB&I) that they just acquired until they (WEC) can get a handle on the construction business. Smart move by WEC and great for Fluor.

      Long term this is a good deal for all of the parties and for the nuclear industry as a whole.

      1. I’m wondering if this deal wouldn’t eventually set up WEC/S&W for a Rosatom-type BOO (Build-Own-Operate) arrangement? The biggest missing component would be financing, but I’m sure Toshiba could backstop that.

  2. I really hope things go better from this point forward. As a PSC regulator I was originally hoping these projects would stay on-budget and on-schedule. Since this has not happened my next best hope is that provisions in the contracts would protect the utilities and ratepayers from liability for the delays and cost overruns. I hope it goes more smoothly from this point so that the story could be we learned and improved. If there are more delays and cost overruns I am afraid the restart of the nuclear industry in the US will be short lived.

  3. @Rod Adams

    So another company is divesting from nuclear construction (because investment, management resources, earnings quality, and liability risks are too high). CB&I, once obligations are fulfilled, will turn it’s business to “liquefied natural gas, petrochemicals and fossil fuel power construction projects” (here). It sounds to me like you think consolidation of very large capital projects in a single company is a good thing for nuclear in the US (citing Admiral Rickover in this regard). It stands to be seen how consolidation of responsibility (i.e., risks) in a single entity helps the industry, and recruits new participants to make the same fateful first step (with the stakes so much higher as a result). This was an innovative model and it appears to have failed. While this places key stakeholders on firmer footing to complete the Vogtle and VC Summer projects (a good thing), I’m not sure this is a positive sign for the industry in the US (and future prospects for expansion). Do you really see it that way? The loss of a construction partner and a business model are two notable casualties (among the more positive indications that some very large debts and liabilities will no longer stand in the way of one company’s focus on markets “more strategic to our future growth,” as CB&I has indelicately put it).

    1. @EL

      Not surprisingly, we can both look at the same information and read it in completely different ways.

      As Danny Roderick has often stated, and Westinghouse is now more clearly stating in real commercials, Westinghouse is focused on nuclear energy. That is all they do. In my opinion, nuclear projects will be more successful when they are attempted by corporations or isolated segments of corporations that have no internal competing interests.

      That is not really any different than what happens in other industries where disruptive products get developed. It is the solution to the “innovator’s dilemma” that results when the cash flow from an established product is threatened by a better product.

      It’s not difficult for people whose careers are tied to the cash-flow producing, but potentially obsolete product to sabotage development of the replacement if they sit in the same meetings and compete for investments from the same decision makers. That behavior is perfectly understandable if you know human nature, but it often results in the innovation being developed by a different company.

      Too many of the big, established construction firms that dabble in the EPC side of the nuclear business are irrevocably saturated with people that specialize in building pipelines, tanks, combustion power plants, and other projects that have little utility in the nuclear business.

      One more thing – the solution to the issue of needing to be extremely large to succeed is to build expertise and organizational strength systematically, starting with small power plants.

      1. @ Rod

        “In my opinion, nuclear projects will be more successful when they are attempted by corporations or isolated segments of corporations that have no internal competing interests.”

        Exactly. My company, SCE, had oil/gas fired plants along the coast of CA, Mojave Coal plant and I believe the first solar project, Solar 1; they appear to be mainly in the power distribution business now. Anti-nukes are often complaining about this or that in the nuclear industry and I have to wonder, who IS the nuclear industry if many companies who operate nuclear plants also have their fingers in other pies?

      2. Rod,

        While you could be right with the “internal sabotage” idea, EPC contractors are in it for the money and not any loyalty to a power generation source. Hereis a simpler explanation instead.

        Companies that work on both the fossil and nuclear sides of the power business are often dominated by the fossil side (there is more money to be made there) and, as a result, those companies simply don’t have enough people with the right experience to do the nuclear projects. The nuclear project teams are a composite of nuclear experience and fossil experience, but the fossil experience is never enough. The result is the nuclear experienced people try to mitigate the continuing disasters caused by lazy or ignorant fossil experienced team members. So, everything goes slowly and when the project is done the fossil experienced people never what to go back to a nuclear project because of all the hassle. Repeat. Repeat. Repeat.

        Unless you have a critical mass of nuclear experience on a nuclear project, you get stuck in that negative cycle. That’s been my experience.

  4. For the last 8 years I have been saying that the Nuc;ear industry should not put all its eggs into the Generation III+ basket. I always thought that the AP-100 and the ESBWR were very promising designs, but costs were the potential killer problem. The AP-1000 looks like it will work for Asia, but its future in the United States and Europe is open to question. This is why the Molten Saltr Reactor is so promising. It offers a number of paths to cost lowering. I agree with Robert Hargrave, that MSRs can lower nuclear costs at least to the point where it will compete in manufacturing costs with coal fiered power plants, and perhaps even natural gas powered generators. I would be happy to see the AP-1000 suceed in North America and in Europe. But if it fails, or falls short of the market need for low cost nuclear, MSRs are still promising, Terrestrial Energy, ThorCon, and Transatomic all appearto aiming at developing marketable products within the next 10 years.

    1. There is also development for our favorite, LFTR, and Flibe Energy: http://www.epri.com/abstracts/Pages/ProductAbstract.aspx?ProductId=000000003002005460

      I am a proponent of “all of the above – nuclear power” but MSRs and particularly LFTR remain my favorites. With that said, I am very hopeful that the EPRI’s tech assessment will help move along small modular reactors that use molten salts and the Th-U fuel cycle. I can see the AP1000 being deployed in the near term, with these other reactors following on, just after them. Perhaps the future has the AP1000 as most of the base load power and SMR LFTRs picking up the rest of base load and also peaking power.
      I must be feeling optimistic….

    2. What basket is there currently besides the Gen III+ basket? Nuscale is the only SMR that is even talking about license applications right now, and they are at least a year away from submitting their application, which will then likely take 3-4 years at a minimum to complete at an unknown expense. There is currently no clear avenue for how licensing alternative designs not based on light water technology. The designs you mention are all promising concepts, but how can they be brought to the market or even further developed in the United States. Someone will have to pay NRC $270+/hour just so they can understand the technology, then spend a few years writing rules (likely with the help of many NGO’s and “concerned citizens” who’s only intent will be to slow the process and make it cost more money. Only then can designers make sure their designs meet those rules and apply for licensing approval.

      1. The DOE’s Office of Nuclear Energy has hosted workshop(s) on Licensing Initiative for Advanced Reactors – Advanced Reactors Design Criteria, such as one April 15-16 2014. This will slow process, but every journey starts with the first steps.

    3. The current plants are cost-effective, if you know where to build them. $2B and 6 years (or less) for the first few new Chinese plants that they are completing now (not the AP1000 or EPR). They will get that down, as they ramp up, either with CAP1400’s or the Hualong One design (that seemed to have been invented partly as a hedge after the delay in the AP1000’s).

      More cost-effective plants (molten-salt probably as you suggest, and/or sodium fast reactors) are coming, but we CANNOT wait for them. Anything that delays the rollout of AP1000, ESBWR, etc. is bad.

  5. Westinghouse, a major player in the nuclear industry for decades, has had its reputation tarnished recently due to revelations of accounting problems.

    An independent audit requested by Westinghouse’s parent, Toshiba Corp., turned up irregularities, including overstated profits in the nuclear division, according to Reuters. Toshiba released the audit in July.

    The Nikkei reported that Toshiba might sell all or part of its stake in Westinghouse, although a Toshiba spokesman denied it.


    Most of the blame for the $1.2 billion profit-padding scandal at the computer-to-nuclear group has been pinned on its senior management following a review into its accounts by a panel of independent accountants and lawyers.

    Japan’s financial regulator is expected to investigate the audit in the coming months …


    1. @jaagu

      Thank you for being honest enough to include the links. I read both stories; I think you are wrong to interpret them as tarnishing Westinghouse’s reputation instead of recognizing that the problem seems to be a few conglomerate headquarters people who want to buff up their earnings reports by not fully accepting the loss estimates from a subsidiary company. As I read it, Westinghouse executives honestly and completely provided required financial statements to headquarters but the numbers in those reports were not acceptable to people who wanted better looking financials.

      There is no doubt that progress at Vogtle and Summer has been difficult and more costly than initially estimated. That’s really no surprise given the fact that the first unit at both sites is a first of a kind and that both sites are in states where the entity that will own the facility is a regulated monopoly electricity supplier with an obligation to serve its customers. Under that regulatory model, the public utility commission takes responsibility for contingencies and requires the regulated utility to come back at regular intervals with a rate case explaining why they have spent more than initially estimated.

      People who do not have much experience with big construction projects often misunderstand the concept of “contingencies.” Here is a best practice guide that helps provide some of the basics http://www.aia.org/aiaucmp/groups/secure/documents/pdf/aiap026970.pdf

      In the case of monopoly electric utility companies, the “public” is also a party in the contract. The PUC represents the public. The normal policy is to prevent contingencies from being included in the initial budget because they can be the source of very rich rewards. Instead, the PUC makes a commitment to cover the reasonable costs associated with unexpected items and allows a fair, but not excessive profit.

      The system, when operated by competent, responsible people works well, even though it lends itself to sensational headlines about cost and schedule overruns planted by professional opponents.

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