NuScale Power Corporation Form 8-K Summary
Business Context and Reporting Period
NuScale filed this current report on March 10, 2023, regarding agreements finalized March 7, 2023 and effective February 28, 2023. The agreements relate to the Carbon Free Power Project (CFPP), a proposed project using NuScale Power Modules for CFPP LLC, successor by assignment to Utah Associated Municipal Power Systems.
Material Agreements and Financial Exposure
- NuScale entered into Amendment 3 to its Development Cost Reimbursement Agreement and a Long Lead Material Reimbursement Agreement with CFPP LLC.
- The amendment increased the CFPP agreed target electricity cost from $58.00 per megawatt-hour to $89.00 per megawatt-hour, subject to contractual adjustments.
- NuScale may be required to reimburse a percentage of UAMPS’s net development costs if specified economic, regulatory, subscription, breach, or termination conditions occur.
- CFPP LLC had 120 MWe of committed subscription obligations as of February 28, 2023, compared with a required 370 MWe by February 1, 2024 under the amendment.
- NuScale may need to maintain up to $81 million of restricted cash through the end of 2023 as collateral for a letter of credit of similar value by December 31, 2023.
- Before final notice to proceed, the reimbursement cap for failure of an economic competitive test consists of amounts paid under the Long Lead Material Agreement, potentially $66 million, plus up to $60 million under the development agreement.
- For termination for cause, the cap is $120 million under the development agreement plus amounts paid under the Long Lead Material Agreement, potentially $50 million through a Class 2 project cost estimate and $66 million through final notice to proceed.
- After a qualifying refund, NuScale would have rights to the long-lead materials free of liens by UAMPS or CFPP LLC, but may owe additional amounts to the Department of Energy to obtain those materials free of DOE liens.
Material Changes, Outlook, and Risks
- The amendment provides greater flexibility in the agreed electricity-cost threshold but adds a specific subscription milestone of 370 MWe by February 1, 2024.
- Potential reimbursement obligations could materially affect liquidity and cash resources, particularly the possible $81 million restricted-cash requirement and contractual reimbursement caps.
- Additional triggers include failure to obtain NRC Standard Design Approval for the six-module, 77 MWe design within the specified period, material breach, termination for convenience, or failure to satisfy project economic tests.
- NuScale stated that it was discussing with DOE and CFPP LLC whether the long-lead materials could be used at the CFPP site or for another customer if reimbursement obligations are triggered.
- The filing does not provide revenue, profit, operating cash flow, margin, total debt, or current liquidity figures.
Important Facts for Investors to Verify
- Whether CFPP LLC secured the required 370 MWe of subscription commitments by February 1, 2024.
- Whether the CFPP obtained required NRC approvals and satisfied applicable economic competitive tests.
- The amount and duration of any restricted cash or letter-of-credit collateral actually maintained by NuScale.
- The final amount of long-lead material payments and any reimbursement obligation under the two agreements.
- Whether NuScale and DOE reached an agreement regarding liens, reuse, or transfer of the long-lead materials.
- The filing’s redacted Amendment 3 terms and their effect on the maximum potential exposure.