Portland nuclear power startup NuScale hit with investor lawsuit

By Jonathan Levinson (OPB)
Nov. 22, 2023 1 p.m. Updated: Nov. 22, 2023 4:29 p.m.

NuScale recently canceled a partnership with Utah power systems. Experts believe small modular nuclear reactors have a bright future, maybe.

Investors have hauled a Portland-based nuclear power company into federal court claiming the company misled them about a major project promised to usher in a new age of nuclear power.

NuScale Power canceled a partnership earlier this month with Utah Associated Municipal Power Systems that would have seen the first small modular nuclear reactors built in the United States. The project called for six NuScale reactors to be built at the U.S. Department of Energy’s Idaho National Laboratory. The deal collapsed earlier this month under the weight of rising interest rates and inflation, according to NuScale. The project could have delivered nuclear power to 16 states.

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An artist's rendition of the NuScale nuclear power project planned for construction in Idaho

An artist's rendition of the canceled NuScale nuclear power project planned in Idaho

Courtesy of NuScale Power

In a class-action lawsuit filed Nov. 15, investors say NuScale “made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects.” They are seeking unspecified monetary damages to recoup their losses plus interest.

While there are a number of U.S. companies trying to perfect the technology, NuScale has the only small modular nuclear reactor design approved by the U.S. Nuclear Regulatory Commission. Small modular reactors are more affordable to build and operate. They are touted as being safer than traditional nuclear power plants in part because emergencies are easier to contain.

Small modular reactors have capacities up to 300 megawatts, less than half a large reactor. Unlike large reactors, small modular reactors are constructed at central locations then shipped to their final destination. Their design means additional reactors can be added as power demand grows.

The lawsuit claims NuScale withheld from investors that the proposed Idaho project wasn’t financially viable after it failed to attract enough customers. Over the course of several investor calls in 2023, NuScale executives told investors progress acquiring the needed customer base was “looking pretty good” and that “we continue to make progress.”

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But research published in October by Iceberg Research, a short-selling firm specializing in revealing “substantial earnings misrepresentation and accounting irregularities,” contradicted that narrative, claiming no new customers had agreed to buy the nuclear power since March.

The same report suggested a second planned NuScale project supplying nuclear power to two Standard Power data centers in Ohio and Pennsylvania stood little chance of success. NuScale claimed the project would consist of 24 reactors producing 1,848 megawatts of power.

“They need the power like last year. These guys are building data centers. They need it now,” Clayton Scott, NuScale’s chief commercial officer, told investors in October. “We’re going to start work right away.”

Again, researchers with Iceberg called foul.

“This contract has zero chance of being executed as Standard Power clearly does not have the means to support contracts of this size,” the firm’s report claimed.

Based on statements on Standard Power’s website, the report said the company’s demand for electricity was dramatically lower than what NuScale said it was delivering.

In a written statement, NuScale said the research was a “baseless and self-interested attack designed solely to drive down the company’s stock price.”

Diane Hughes, NuScale’s vice president of marketing and communications, called the plaintiffs “serial litigants.”

“Repeating false and misleading claims does not make them true,” Hughes said. “The Company will vigorously defend itself in the proper forum.”

NuScale’s stock has fallen 60% since August.

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