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Home My WebLink About12 SMR Workshopenda Item # To: Board of Directors From: Stephen Hollabaugh Date. February 01, 2017 Subject: Discussion of CFPP Regarding Small Modular Reactor (SMR) Technology, Financial and Environmental Performance, and Outreach Plan 12 1. WHY THIS MATTER IS BEFORE THE BOARD UAMPS has been investigating a new generation resource called Carbon Free Power Project (CFPP). This item is to discuss the Small Modular Nuclear Reactor (SMR) technology, CFPP financial and environmental performance. 2. HISTORY The Board has received several workshop and action items concerning the CFPP. The three phases of the CFPP are Study and Siting Phase, Licensing Phase and Construction Phase. There have been a number of meetings with the Board already. Below is a list of these meeting: • April 15, 2015; Introduced the project to the Board; • August 19, 2015; Board approved to enter into an agreement with UAMPS for the study phase of the project and a 4000 kw site share of the CFPP; • September 12-13, 2016; Staff and two Board members attended UAMPS Informational Session concerning the project; and • January 19, 2017; Workshop to discuss carbon -free hedge,outreach plan, and the start of the Licensing Phase of the project and the three sub -phases of the Licensing Phase. 3. NEW INFORMATION SMR Technology: What does the next generation of energy sourcing look like? We'd like to see maximum safety, carbon free emissions, economic, ultra reliability and powerful enough to supply a consistent baseload supply and do it with an extremely minimal environmental impact. SMR's may be the future. These SMR's are small technologically advanced and can't be compared to the old reactors of the past. SMR's emits no carbon pollutants while producing stable reliable baseload energy. The NuScale SMR's are entirely new, highly advanced, small scale, self contained and below grade plant that can produce baseload energy. The CFPP will consist of 12 x 50MW reactors. Each power module (50 MW) sits in its own containment vessel and operates independently within a water filled pool. The reactor operates using the principles of Natural Circulation and Natural Physics including: ® Convection ® Conduction; and ® Gravity. To provide the ability to safely shutdown and self cool indefinitely with no operator action, no ac/dc power and no additional water. The simplicity of design lends the power modules to be factory built, faster and cheaper to construct and operate. This all adds up to be a safe, clean, emission free, economic and reliable baseload power source. CFPP Licensing phase and financial and environmental performance: BUDGET AND PLAN OF FINANCE ® The initial Budget and Plan of Finance covers the first phase of Licensing Period and is approved by PMC and Participants' governing bodies at the same time as the Power Sales Contracts are approved; ® The BPF is updated and approved by the PMC before each of the second and third phases of the Licensing Period; and ® The "definitive" (i.e., complete) BPF is approved by PMC as a part of its determination of the Completion of Development. Following PMC approval, the definitive BPF will then be submitted to the Participants' governing bodies for approval before the Project proceeds to the Construction Period under the Power Sales Contracts. ® The BPF will include the following information: ® The initial BPF and the first and second updated BPFs, will include an estimate of and a cap on the Development Costs that can be incurred during the applicable phase of the Licensing Period; ® The estimated total Development Costs to the Completion of Development; ® The estimated total Cost of Acquisition and Construction of the Project; ® The estimated Commercial Operation Date of the Project; ®A pro forma analysis of the expected costs of financing and operafing the Project, including a target price ($/MWh) for Project output sold to the Participants under the Project; • The proposed funding and financing arrangements for all Development Costs during the Licensing Period; and • The proposed funding and financing arrangements for the Cost of Acquisition and Construction during the Construction Period. • PARTICIPANT RISK MANAGEMENT • Upon the PMC's approval of the updates to the BPF for the second and third phases of the Licensing Period, UAMPS sends a copy of the update to the Participants, together with a notice that they may elect to either withdraw from the Project or reduce their Entitlement Shares; • If the PMC determines that it is necessary to amend the BPF to increase the cap on Development Costs during any phase of the Licensing Period. UAMPS sends a copy of the amendment to the Participants, together with a notice that they may elect to either withdraw from the Project or reduce their Entitlement Shares; • If Participants exercise their right to withdraw or to reduce their Entitlement Shares, and the cumulative effect of the withdrawals or reductions (and any new or additional Entitlement Shares) would increase the remaining Participants' payment responsibility for Development Costs ("Development Cost Shares'), UAMPS will give notice of the increased Development Cost Shares to the Participants, together with a request that they consider increasing their Entitlement Shares by an amount that would cover the Entitlement Shares of the withdrawing/reducing Participants (the "Orphan Entitlement Shares'). If less than all of the Orphan Entitlement Shares are accepted by the Remaining Participants. UAMPS will give notice of the increased Development Cost Shares to the Participants, who then have an option to withdraw from the Project or reduce their Entitlement Shares; • Upon the PMC's approval of the definitive BPF at the Completion of Development, UAMPS sends a copy of it to the Participants for approval by their governing bodies. If a Participant's governing body does not approve the definitive BPF, it has the option to withdraw from the Project or reduce the Participant's Entitlement Share; • Participant also has the option of giving notice to UAMPS at any time during each phase of the Licensing Period that it elects to withdraw from the Project or reduce its Entitlement Share, in each case effective at the end of the current phase of the Licensing Period; • Withdrawals and Entitlement Share reductions are effective at the end of the current phase of the Licensing period, except in the case of an amendment to the BPF to increase Development Costs in which case the withdrawal/reduction is effective on the effective date of the BPF amendment; • A withdrawing Participant has no responsibility for the payment of Development Costs incurred or financings undertaken after the effective date of its withdrawal; • A withdrawing Participant remains liable for the repayment of its Development Cost Share of Development Costs incurred or financings undertaken before the effective date of its withdrawal; • A withdrawing Participant must repay its Development Cost Share of financings undertaken before the effective date of its withdrawal; • Repayment must be made within 12 months after the effective date of a Participant's withdrawal; • This 12-month period is intended to enable withdrawing Participants to refinance and extend the repayment period for their Development Cost Shares. • Following the approval of the BPF updates for the second and third phases of the Licensing Period and the completion of Participant withdrawal/reduction elections, UAMPS delivers a report to the Participants on the updated BPF, all withdrawals/reductions and the resulting Development Cost Shares. Outreach Plan: Staff is updating an outreach plan to target both an internal and external audience. The objective of this outreach plan is to educate our rate payers, community, and partners on the new SMR technology, the CFPP project details, and the conditions under which the District may choose to participate. 4. FISCAL IMPACT The CFPP is a hedge against a base load generation cost and a hedge against carbon dioxide regulation that may impose cost burdens on existing fossil fuel resources and/or to provide greater diversification in our resource portfolio. 5. RECOMMENDATION Receive and provide input on this report Stephen Hollabaugh Assistant General Manager Michael D. Holley General Manager