AECOM aims to soon divest its stake in the decommissioning contractor for the retired San Onofre Nuclear Generating Station (SONGS) in California, an executive said Tuesday.
“We are … continuing to progress on our plan to exit our remaining self-perform at-risk construction businesses,” Chief Financial Officer Troy Rudd said during AECOM’s conference call on its latest quarterly earnings. “We are actively negotiating with a potential buyer for our share of the San Onofre nuclear decommissioning project, which would result in a substantial milestone in our de-risking strategy.
Rudd did not identify the buyer, nor did AECOM in a statement issued Thursday.
The Los Angeles-based engineering and infrastructure giant is partnered with Salt Lake City-headquartered nuclear services firm EnergySolutions in SONGS Decommissioning Solutions. The joint venture was hired in 2016 by SONGS majority owner Southern California Edison as general contractor for the $4.4 billion decommissioning job.
EnergySolutions on Wednesday declined to say whether it is buying out its partner, or generally to discuss the situation. There was also no word from other major players in the domestic nuclear decommissioning industry, Holtec International and Orano, which theoretically might also be interested in taking on the business.
Reactor Unit 1 at the San Diego County facility closed in 1992 and has been mostly decommissioned. Its reactor pressure vessel will soon be shipped to EnergySolutions’ low-level radioactive waste disposal facility in Clive, Utah.
Southern California Edison permanently closed Units 2 and 3 in 2013 after faulty steam generators were placed in each.
Major decommissioning operations for the two reactors began in February, but have been limited to asbestos removal and select other operations by the COVID-19 pandemic. The job is scheduled to be completed by 2028, covering removal of equipment and above-ground structures, along with partial extraction of offshore conduits that were used for cooling.
“Southern California Edison values the work that AECOM has done, and continues to do, as a partner with Energy Solutions in decommissioning the San Onofre Nuclear Generating Station. We understand AECOM is evaluating business decisions it believes are in its best interest,” the utility said in a statement Wednesday. “Any sale by AECOM must fully comply with the terms of the agreement between SONGS Decommissioning Solutions … and SCE, which are designed to ensure that SDS will continue to have the technical and financial capability to fully perform all of its decommissioning obligations.”
The SONGS contract represented roughly one-third of the present backlog for AECOM’s at-risk construction work, Chief Operating Officer Randall Wotring said during the earnings call. Executive said last year they intended to move the company away from this type of contracting, in which the vendor sets a price cap for its client and then must pay out of pocket for expenses above that level, the Los Angeles Business Journal reported.
“Consistent with AECOM’s transformation to a higher margin and lower risk professional services business, the Company is committed to achieving its goal of exiting certain businesses and markets that are not aligned with the Company’s strategy,” according to AECOM’s statement Thursday. “This goal includes exiting the decommissioning of the San Onofre Nuclear Generating Station, which we will advance in compliance with the terms of our agreements and in a way that helps to ensure this important project’s long-term success.”
In January, AECOM completed the sale of its Management Services branch to two New York City investment firms. The new company, branded Amentum, owns AECOM’s contracts with the Department of Energy and other federal agencies.
For the fiscal second quarter 2020, AECOM recorded $49 million in net income, or $0.31 per share. That compared to $51 million and $0.33 per share during the second quarter of fiscal 2019, the company said Tuesday in an earnings release.
