Two cities back out as critics line up against Utah-supported municipal nuclear power project

Warning of the potential for cost overruns and other risks, opponents are continuing to line up against a nuclear power project that has the backing of a number of Utah municipalities ahead of a Sept. 30 deadline to back out of the project.

A new report written by M.V. Ramana, director of the Liu Institute for Global Issues at the University of British Columbia in Vancouver, Canada, details a host of concerns about the small modular nuclear reactor project — from time and cost overruns to worries about safety and an uncertain regulatory environment.

For those reasons, Ramana at a news conference Wednesday encouraged members that have signed on through the Utah Associated Municipal Power Systems “to consider ending their pursuit of small modular nuclear reactors and avoid the sunk costs of a project that is very unlikely to achieve its target price or produce electricity at a cost competitive with proven alternatives.”

Ramana’s report notes that one study of nuclear power projects found 97% of the 180 that were examined had exceeded their budgets with an average $1.3 billion cost overrun. The projects also took, on average, 64% more time than had been projected.

“Pursuing cheaper, currently available solar, wind, energy storage (batteries), and energy efficiency would be a more reliable path for UAMPS to shift to a carbon-free energy future,” he argued.

Similar critiques have been lodged against the project in the past. But LaVarr Webb, a spokesman for UAMPS, said the organization continues to stand behind the Carbon Free Power Project, which it believes will be a safe and affordable investment for cities facing a future without coal.

Some of the opposition to the technology, Webb argued, is less about concern for small Utah municipalities than it is about shutting nuclear energy down altogether.

“They want to kill nuclear energy and since this is the future of nuclear energy, they want to kill this project,” he said.

Logan and Lehi back out

Amid concerns about financial risk, two of the Utah cities involved in the project have backed out in the last month, deciding not to commit further funding to this pursuit of nuclear energy.

The Logan City Council voted 4-1 in mid-August to withdraw, following a presentation from Light and Power Director Mark Montgomery that noted the risks of building the technology have recently fallen more onto the backs of the involved cities. There are also inherent “first of a kind” risks, he said, since no small modular nuclear reactor has ever been built.

Draft city meeting minutes show that several council members and city staff expressed concern about the project, including Finance Director Richard Anderson, who said he has been against the project since day one and sees higher risks than benefits of staying in the project. Councilman Jess Bradfield was the only council member who voted against withdrawing from the project, arguing that $200,000 was “not a lot of money to spend for a project such as this one” over the next three years, meeting minutes note.

Lehi, the second city to back out of the project, did so unanimously last week after a briefing from Joel Eves, city power director, who told the City Council that despite the last year of efforts, the project remains undersubscribed.

Costs have also ballooned, Eves said, from a November 2017 budget of $3.647 billion for the proposed 12-module plant — which would be located at Idaho National Laboratory in Idaho Falls and produce a total 720 megawatts of electricity — to $6.124 billion as of July.

Webb said in a recent interview with The Salt Lake Tribune that it’s true that some costs have gone up “as the project has been further refined.” But he said that, at the same time, the megawatt-per-hour rate promised to involved municipalities has decreased.

At last week’s meeting, several Lehi City Council members expressed support for the project and said they were sad to back out. But ultimately, they felt there were too many unknowns and risks involved.

“The risk that’s going to come is going to be on us, or the cities,” Councilwoman Katie Koivisto said at the meeting. “I just feel really, really uncomfortable moving forward with how they have it structured out. It just seems scary, in my opinion.”

Mayor Mark Johnson described the decision as “just another casualty of 2020.”

Cities interested in the project — which span the state from Hyrum and Kaysville to Beaver and Santa Clara — see the small modular technology as a smart investment in a future without coal, as well as a way to diversify their power supplies so the lights stay on even if other renewable energy sources fail. They also think the technology may take off, with financial rewards to those who invested early.

If they stick with the project, they aren’t expected to power their cities with nuclear energy until around 2029.

Project hits a ‘milestone’

The concerns from Logan and Lehi and the ones raised in Ramana’s new study mirror the talking points shared last month by the Utah Taxpayers Association, which has recently come out against the project from a financial standpoint, though the organization notes it has no position on nuclear power.

In a news release issued after Logan and Lehi backed out of the project, the Utah Taxpayers Association praised their decision, arguing that “municipal power companies should not be taking the financial risk that is built into this project by essentially acting as venture capital investors bearing the risk of cost overruns and delays.”

“The potential risks far outweigh the benefits,” the organization continued. “If Small Modular Reactor power produced carbon-free power at a competitive cost in the future, private industry would bear the risk to develop it. Municipal power companies could instead look to purchase power from such a project upon its completion without acting as a seed investor.”

Webb said he hasn’t heard of any other cities that are planning to leave the project, and he’s not concerned that the exit of these two could spell trouble for it, especially since a Nevada municipality recently joined UAMPS.

“It was expected that as the studies continued, that some members would not continue to participate,” he noted.

The project will continue to move forward without them, Webb said, pointing to an “important step” in making the nuclear vision a reality with the announcement last week that the U.S. Nuclear Regulatory Commission (NRC) had completed the last and final review of the Design Certification Application for NuScale’s small modular reactor technology.

That approval means that customers can move forward with plans to develop power plants “with the understanding that the NRC has approved the safety aspects of the NuScale design,” the organization said in a news release.

NuScale Chairman and Executive Officer John Hopkins said in the release that the approval was a “significant milestone not only for NuScale, but also for the entire U.S. nuclear sector and the other advanced nuclear technologies that will follow.”

”This clearly establishes the leadership of NuScale and the U.S. in the race to bring [small modular reactors] to market,” he said.

Ramana noted in his report and during Wednesday’s news conference, however, that the U.S. Nuclear Regulatory Commission had flagged several unresolved issues with the design that will have to be dealt with in the future — meaning the project might not ultimately receive the regulatory approvals required, he said.

Webb noted that experts at the Nuclear Review Committee have spent years reviewing the design and ultimately gave it their stamp of approval and that UAMPS trusts its assessment of the project.

Still, he anticipates challenges against the project will continue as the process moves forward.

“‘First of its kind’ is challenging. There are critics,” he acknowledged. “But we do believe that this is the future.”