Should the County of Los Alamos continue its participation into the next phase of the Carbon Free Power Project?
At the direction of the Board of Public Utilities, DPU is exploring whether to add a next-generation nuclear power facility to the County's energy generation portfolio to meet a 2040 goal to be carbon neutral. Through its membership with UAMPS (Utah Associated Municipal Power Systems), DPU is specifically looking at the Carbon-Free Power Project , which will utilize small modular nuclear reactor technology developed by NuScale. (visit DPU's webpage on the Carbon-Free Power Project website to see presentations made in December 2016 and January 2017 about the technology and the project itself.)
Idaho National Laboratory is the where the CFPP will be located and if it proceeds, it could be generating power by 2027.
DPU held a public meeting on January 25, 2018 at 6 PM in Council Chambers, followed by a joint Board of Public Utilities and County Council meeting, for discussion only.
March 6, 2018 Joint BPU and County Council meeting
The Board of Public Utilities will join the County Council at its March 6, 2018 meeting to discuss the project (no action will be taken). The March 6 meeting will be held at 6 PM in Council Chambers at 1000 Central Avenue, Los Alamos, NM.
March/April 2018 Decision Point:
The Board of Public Utilities and the Los Alamos County Council will be approaching a decision point in the near future. BPU will decide on March 21st and Council will decide on April 3rd as to whether the County should continue into the next phase of the project. This decision point will require a financial commitment from the County, which would be in the range of $500k to $3.6M, depending on a number of factors such as receipt by the project of additional grant funding from DOE or additional subscription share from other participants. There will be future decision points, for which the County can decide to take an off ramp should it decide that the project no longer appears to be viable or a good fit for Los Alamos County, but all funds committed on the project up to that “off ramp” point would be forfeited.
What Needs to Be Decided?
The Board of Public Utilities and the County Council will be deciding on the
1. Purchase Sales Contract* between the project participants and UAMPS,
2. Project budget, broken down by phases (subject to review by the Project Management Committee (PMC) after each phase and re-approval by Governing bodies before moving to construction)
- Initial development costs
- Development of the Combined Operating License Application (COLA)
- Submittal of the COLA and NRC review
- Acquisition and construction
3. Plan of Finances.
If BPU and Council approve, DPU will also need the BPU and Council to approve a budget and plan of finance as discussed above, for DPU to participate in the licensing phase of the project.
(*Note that the link to the Power Sales Contract is a draft).
What is in the Power Sales Contract and what is the County agreeing to?
The decision to proceed with signing the Power Sales Contracts for the CFPP is not a decision to construct the CFPP utilizing NuScale’s small modular reactor technology; rather, the decision to sign the Power Sales Contracts gives the member the ability to preserve the option to participate in this project if further development demonstrates the prudence of doing so. In the immediate development term, the first $6 million of additional development costs will be subject to 100% reimbursement by NuScale. These moneys will be spent only on additional development work on the project, and this work will help the PMC evaluate whether further development of the project is in the best interest of UAMPS’ participating members. The PMC plans to reassess the viability of the project before exceeding this 100 percent reimbursement threshold, and will make a decision on UAMP’s continued participation in the project. Once that “go/no go” decision on the project is made, the decision to submit the NRC license application will be dependent upon the level of contractual cost certainty NuScale and Fluor are able to provide. If the level of contractual cost certainty is not sufficient in the eyes of an individual UAMPS member participating in the project, then that member will have the option to discontinue its participation in the project, with no obligation for further development costs, at the time that the NRC license application is submitted. The Power Sales Contracts provide contractual caps to a Participant’s cost exposure during this development period.
Cost Overruns Risk
How will the CFPP not suffer the same cost overruns as experienced by the two AP1000 nuclear reactor projects in Georgia and South Carolina?
UAMPS is taking a phased development approach to the project that address cost overrun risk in two ways. First, the two AP1000 reactor projects were developed in a parallel fashion, where the utilities shouldered NRC licensing risk by making contractual and financial commitments to build these projects prior to the resolution of major design and licensing issues. UAMPS’ decision on whether to submit its NRC license application will be made after the NRC has spent over three years evaluating NuScale’s design application, which will allow UAMPS to assess any licensing issues that may have arisen prior to submitting its license application to the NRC. Second, UAMPS is requiring contractual cost certainty from Fluor and NuScale before UAMPS makes its decision to submit its NRC license application. To meet this demand, Fluor and NuScale will need to complete significantly more engineering work than was completed for the two AP1000 projects.
What is the County's Cost Exposure by Signing the Power Sales Contract?
The County, like each UAMPS member, will be responsible for costs associated with its Entitlement Share for the developing the project. The Budget and Plan of Finance includes a cap on the amount of development costs that can be incurred during the first phase of the development and licensing period, and will include a cap on the amount of development costs that can be incurred during the second phase of the development and licensing period , which will be set before the beginning of the second phase. Accordingly, a Participant’s cost exposure for each phase will be a fixed amount that is based on these caps and that participant’s Entitlement Share. It is important to keep in mind that for the near term development the UAMPS and the participants have the ability to terminate the project for any reason and seek 100% reimbursement from NuScale, subject to a cap of $6 million dollars, as discussed above.
What is the Cost of the Resource?
The projected cost of the resource is $45-$65/MWh in 2017 dollars. UAMPS and NuScale have agreed to a price ceiling of $65/MWh. The cost of the resource will be continually evaluated as development proceeds in order to evaluate this resource option against other alternatives.
Who are the partners in the project outside of the UAMPS members?
The Department of Energy is a key partner in the developing the project. DOE is currently paying for 50% of the cost to develop the NRC license application for the project. In addition, the DOE is investigating leasing the first two modules out of the facility for research and development purposes. UAMPS and the DOE are also investigating other funding pathways to reduce UAMPS’ participant cost exposure to further developing the resource. UAMPS is also working with Energy Northwest, a public power entity that operates the Columbia Generating Station—an 1100 MW nuclear generating station located in Washington that has been in operation since 1984—to be the operating agent for the CFPP. UAMPS is also working with the Tennessee Valley Authority, which is also pursuing a small modular reactor project, to assist UAMPS’ development of the CFPP.
What happens next?
Please share with the Department of Public Utilities any questions or concerns that you may have, and if you support or don't support the Board of Public Utilities and the County Council moving on to the next phase of the Carbon Free Power Project.
February 22, 2018 at 11:59 PM: The DPU will close the Open Forum and share all comments with the BPU and Council.
March 6, 2018 at 6 PM: A second joint BPU and Council meeting will take place to discuss comments from the Open Forum and discuss any remaining concerns about the project with staff.
March 21, 2018 at 5:30 PM (Regular BPU meeting): BPU to make a recommendation to the Council as to whether the County should continue into the next phase of the CFPP.
April 3, 2018 at 6 PM (Regular Council meeting): County Council meeting to approve or disapprove participation in the next phase of the CFPP, including approval of the budget and plan of finance, and commitment of the participant cost share of between $500k and $3.6M.
April 3, 2018
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