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HomeMy WebLinkAbout14 CFPP WorkshopTo: Board of Directors From: Stephen Hollabaugh Date: March 07, 2018 Subject: Discussion of Carbon Free Power Project (CFPP) Using Small Modular Nuclear Reactor 1. WHY THIS MATTER IS BEFORE THE BOARD UAMPS has been investigating a new generation resource called the Carbon Free Power Project (CFPP). This item is to discuss the Small Modular Nuclear Reactor (SMR), Power Sales Contract and nuclear fuel cycle. 2. HISTORY The Board has held several workshops and action items concerning the CFPP over the last two years. The three phases of the CFPP are Study and Siting Phase, Licensing Phase and Construction Phase. Below is a list of these meetings: • 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 4 MW site share of the CFPP; • September 12-13, 2016; Staff and two Board members attended UAMPS Informational Session concerning the project; • 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. • February 1, 2017; Workshop to discuss Small Modular Reactor (SMR) technology, CFPP licensing phase and financial and environmental performance; and • February 7, 2018; Workshop to discuss CFPP and Small Modular Reactor (SMR), why it works, project structure, tech nology, alternatives, integration, team, contract and permits, and power sales contract. Truckee Donner Public Utility District staff has been attending monthly UAMPS project management committee (PMC) meetings regarding the CFPP. The CFPP has completed the study phase and is considering participation in the licensing phase. As stated before, there remains numerous off ramps for this project going forward. 3. NEW INFORMATION This workshop will discuss the power sales contract prior to bringing a power sales contract to the Board for consideration on April 4, 2018. The power sales contract leads the project into the licensing phase including the discussion of future off ramps. UAMPS speakers will be in attendance at the April 4, 2018 workshop. Tonight's workshop will include: • Power Sales Contract • Nuclear fuel cycle • What are we asking you to do next? (April Board meeting) On February 20, 2018 the Project Management Committee (PMC) approved a resolution (attached) that created a Development Cost Cap of $6,000,000. The Development costs incurred by UAMPS through March 31, 2019 shall not exceed $6,000,000 and the Budget and Plan of Finance is amended to limit expenditures that may be made by UAMPS for Development Costs through March 31, 2019 to an amount not to exceed the Development Cost Cap, Truckee Donner PUD's development cost share is 2.1715% while its entitlement share is based on 4000 kW its entitlement share percentage is 0.667%. 4. FISCAL IMPACT There is no fiscal impact associated with this workshop item. 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. The next step will be consideration of the power sales contract and will involve participation in the licensing phase of the project that still has many off ramps. 5. RECOMMENDATION Receive and provide input on this report Stephen Hollabaugh Assistant General Manager Michael D. Holley General Manager A RESOLUTION RELATING TO THE CARBON FREE POWER PROJECT, SETTING FORTH ADDITIONAL LIMITS ON THE DEVELOPMENT COSTS THAT MAY BE INCURRED BY UAMPS AND RELATED MATTERS. WHEREAS, Utah Associated Municipal Power Systems ("UAMPS") is examining the feasibility of developing a small modular reactor electric generating facility to be located at a site within the Idaho National Laboratory near the City of Idaho Falls, Idaho, and known as the Carbon Free Power Project (the "Project"); WHEREAS, UAMPS is pursuing the development of the Project with NuScale Power, LLC ( "NuScale "), and NuScale has entered into an Assistance Agreement, Award No. DE-NE0008369, effective August 11, 2015, as amended (the "Cooperative Agreement") with the U.S. Department of Energy, Office of Nuclear Energy ("DOE"), under which DOE has agreed to fund, out of existing appropriations and not out of amounts that are subject to future annual appropriations, fifty percent of up to $33.2 million of site permitting and licensing costs with respect to the Project; WHEREAS, UAMPS and NuScale have entered into (a) an Agreement for a Cost Sharing Option dated December 21, 2015, as amended (the "CSO "), and UAMPS has exercised its option thereunAer to have a portion of the Development Costs (such term and other capitalized terms used herein without defmition have the meanings set forth in the hereinafter defined Power Sales Contracts) incurred by UAMPS with respect the Project reimbursed by NuScale, and (b) a Subaward Agreement dated December 21, 2015, as amended (the "Subaward Agreement "), under which NuScale has agreed to reimburse UAMPS for a portion of the Development Costs paid by UAMPS; WHEREAS, collectively, the Cooperative Agreement, the CSO and the Subaward Agreement provide for DOE, NuScale and DAMPS to pay 50%, 25% and 25%, respectively, of up to $33.2 million of site permitting and licensing costs with respect to the Project; CFPP PMC Funding Resolution (final) WHEREAS, a Project Management Committee has been established for the Project (the "PMC"), and the PMC has approved the form of the Carbon Free Power Project Power Sales Contracts (the "Power Sales Contracts ") and the initial Budget and Plan of Finance which sets forth the maximum amount of Development Costs, including but not limited to the costs paid or incurred under the Study Agreement and the permitting and licensing costs described above, that may be incurred by DAMPS during the first phase of the Licensing Period; WHEREAS, the initial Budget and Plan of Finance provides that the gross amount of the Development Costs during the first phase of the Licensing Period shall not exceed $89,499,764 ($67,343,086 net of expected cost sharing and reimbursement payments): WHEREAS, the Power Sales Contracts provide for (a) the continued development of the Project during the Licensing Period, and (b) if the PMC determines that the Project is feasible, the acquisition, construction and operation of the Project, and various members of DAMPS are now considering whether to enter into the Power Sales Contracts with DAMPS; WHEREAS, the Power Sales Contracts will become effective upon (a) their approval and execution by members and other power purchasers (the "Participants ") that have requested at least 150 MW of capacity in the Project, and (b) the declaration of the PMC, and if the Power Sales Contracts become effective, the Study Agreement will terminate on the Effective Date of the Power Sales Contracts; WHEREAS, if the Power Sales Contracts become effective, the Participants will be responsible for the payment of their respective Development Cost Shares of all Development Costs paid or incurred by DAMPS, as and to the extent provided in the Power Sales Contracts; WHEREAS, the PMC believes that, notwithstanding the maximum amount of Development Costs that may be paid or incurred during the first phase of the Licensing Period pursuant to the Budget and Plan of Finance, the amount of such Development Costs that may be paid or incurred -3- r. fund Development Costs and enable the development of the Project to continue under the Participant Cost Share Cap and the Development Cost Cap; NOW, THEREFORE, BE 11 RESOLVED BY THE BOARD OF DIRECTORS OF UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS, AS FOLLOWS: Section 1. Development Cost Cap. (a) Until the conditions set forth in (b) below have been satisfied: (i) the Development Cost Cap shall be $6,000,000 (i. e., the amount of Development Costs that may be incurred by DAMPS through March 31, 2019 shall not exceed $6,000,000); and (ii) the initial Budget and Plan of Finance is hereby amended to limit the expenditures that may be made by DAMPS for Development Costs through March 31, 2019 to an amount that shall not exceed the Development Cost Cap. (b) The Development. Cost Cap shall remain in effect until such time as the PMC approves a resolution that finds and determines that: (i) DAMPS has received additional cost sharing, reimbursement, funding and/or grant agreements for Development Costs to be incurred during the first phase of the Licensing Period as set forth in the initial Budget and Plan of Finance (the "Funding Condition "); and/or (ii) DAMPS has entered into Power Sales Contracts, Excess Power Sales Agreements, Joint Ownership Agreements or other arrangements that collectively provide for the purchase and sale or ownership of an amount of Project Capability of the Project the "Subscription Condition"). -5- Section 4. Effective Date. This resolution shall be effective immediately upon its approval and adoption. ADOPTED AND APPROVED by the Board of Directors of Utah Associated Municipal Power Systems, this 20th day of February, 2018. [SEAL] ATTEST: Assistant Secretary UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS Chairman -7-