Kepco loses preferred bidder status for NuGen

01 August 2018

Toshiba Corporation has informed Korea Electric Power Company (Kepco) that it is no longer the preferred bidder to acquire 100% of its UK nuclear power development company, NuGeneration (NuGen). However, the Japanese company has said it will continue to negotiate with Kepco, along with other companies, to acquire NuGen.

The proposed Moorside plant, featuring three AP1000 units (Image: NuGen)

NuGen - which was formed in 2010 as the UK joint venture between Toshiba and France's Engie - planned to build a nuclear power plant of up to 3.8 GWe gross capacity at the Moorside site in West Cumbria, using AP1000 nuclear reactor technology provided by Westinghouse. That reactor design completed the UK regulatory assessment process in March 2017. Toshiba owns Westinghouse, which filed for Chapter 11 protection with US courts that same month. In July, Toshiba became the sole owner of NuGen, after Engie exercised its right to require the Japanese conglomerate to purchase its stake.

In December, Toshiba announced that Kepco had been selected as the preferred bidder for NuGen. At that time, then Kepco CEO Hwan-Eik Cho said the company intended to "progress negotiations to a positive conclusion" to achieve a target closing of the proposed acquisition early this year.

However, South Korea's Ministry of Trade, Industry and Energy (MOTIE) announced today that Toshiba notified Kepco on 25 July that it had terminated its status as preferred bidder. The ministry said Toshiba had made the decision in order to "have opportunities to negotiate with Kepco as well as other companies due to excessive operating expenses" created by the delay in selling its stake in NuGen.

In response to concerns of the costs of the Hinkley Point C project, the UK government announced in June that it is considering alternative funding models for future power reactors planned for the country. One such model under consideration is the regulated asset base (RAB) model, which allows government regulators to ensure stable returns and finance through government support.

MOTIE said that Toshiba understands that Kepco needs further time to review the new business model and will "continue to negotiate with Kepco as its top priority".

The ministry noted that Kepco had held a joint working group meeting with the UK's Department for Business, Energy and Industrial Strategy on 30 July to discuss "the profitability and risk management plan". A joint feasibility study was launched that will consider the profitability and risk when applying the RAB model. Once this study is completed, the ministry said, Kepco will "pursue in-house deliberation procedures and government funding for business participation through close consultation with the government".

Westinghouse-related assets

Meanwhile, Toshiba announced today that it has completed the sale of its shareholding in Toshiba Nuclear Energy Holdings (UK) Limited, the holding company for Westinghouse group operating companies outside the USA. The sale completes its divestment of all its previously-held Westinghouse-related shares.

Westinghouse filed for Chapter 11 bankruptcy protection to enable it to undergo strategic restructuring. The filing affected only its US operations, which included projects to construct four AP1000 reactors at two sites, Vogtle in Georgia, and VC Summer in South Carolina.

On 4 January, it was announced that Brookfield Business Partners, together with institutional partners - collectively known as Brookfield - had agreed to acquire 100% of Westinghouse from Toshiba for about USD4.6 billion.

Toshiba announced on 18 January it had signed a share purchase agreement under which it would sell to Brookfield all shares it holds in Westinghouse-related assets - Toshiba Nuclear Energy Holdings (US) and Toshiba Nuclear Energy Holdings (UK) Limited - for USD1.

In April, Toshiba completed the sale to Brookfield of its shareholding in Toshiba Nuclear Energy Holdings (US) Inc - the indirect holding company of Westinghouse Electric Company.

Researched and written by World Nuclear News