Investors have drawn NuScale, a Portland-based nuclear power company, into federal court. They claim that the company misled them about a major project promised to usher in a new age of nuclear power.
NuScale canceled a partnership earlier this mouth with Utah Associated Municipal Power Systems that would have been the first small modular reactors (SMRs) constructed in the U.S. The project called for six NuScale SMRs to be constructed at the U.S. Department of Energy’s Idaho National Laboratory. The partnership collapsed earlier this month under the weight of rising interest rates and inflation, according to NuScale. The project would have delivered nuclear power to sixteen states.
In a class-action filed on November 15th, investors said that NuScale “made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects.” The litigants are seeking unspecified monetary damages to recoup their losses plus interest.
There are a number of U.S. companies trying to perfect SMR technology. However, only NuScale has a SMR design approved by the U.S. Nuclear Regulatory Commission. SMRs are supposed to be cheaper to build and operate. It is claimed that they are safer than traditional nuclear power plants because emergencies would be easier to contain.
SMRs have capacities up to three hundred megawatts. This is less than half the capacity of current big nuclear power reactors. SMRs are constructed at central locations then shipped to their final destination. Their modular design means that additional SMRs can be added as power demand grows.
The lawsuit claims NuScale withheld from investors the fact that the proposed Idaho project was not financially viable after it failed to attract enough customers. Over the course of investor calls in 2023, NuScale executives told investors that progress acquiring the required customer base was “looking pretty good” and that “we continue to make progress.
Iceberg Research is a short-selling firm specializing in revealing “substantial earnings misrepresentation and accounting irregularities.” They published research in October that contradicted the NuScale narrative, claiming no new customers had agreed to buy power generated by the NuScale project since March.
The same report suggested that a second planned NuScale project to supply nuclear power to two Standard Power data centers in Ohio and Pennsylvania had little chance of success. NuScale claimed that that project would include twenty-four SMRs producing one thousand eight hundred and forty eight megawatts of electricity.
Clayton Scott is the Chief Commercial Officer of NuScale. He told investors in October that “They need the power like last year. These guys are building data centers. They need it now. We’re going to start work right away.”
Iceberg claimed that “This contract has zero chance of being executed as Standard Power clearly does not have the means to support contracts of this size.”
Based on statements on Standard Power’s website, the Iceberg report said that Standard Power demand for electricity was dramatically lower than what NuScale said it would be delivering.
Diane Hughes is the Vice President of Marketing and Communication at NuScale. She called the plaintiffs in the lawsuit “serial litigants”. She added that “repeating false and misleading claims does not make them true. NuScale will vigorously defend itself in the proper forum.”
NuScale’s stock has dropped sixty percent since last August.