Investors file lawsuit against NuScale after SMR cancellation

5 December 2023

A group of investors has filed a lawsuit against Portland-based US company NuScale following the cancellation of its Small Modular Reactor (SMR) project. The complaint, filed in a class action on 15 November, alleges that throughout 15 March 2023, and 8 November 2023, NuScale made materially false and/or misleading statements, and failed to disclose material adverse facts about the company’s business, operations, and prospects.

NuScale Power cancelled 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 US 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 litigants are seeking unspecified monetary damages to recoup their losses, plus interest.

While there are several US companies trying to perfect the technology, NuScale has the only small modular nuclear reactor design approved by the US Nuclear Regulatory Commission. 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, it is claimed that NuScale executives told investors that progress acquiring the needed customer base was “looking pretty good” and that “we continue to make progress.”

But research published in October by Iceberg Research, a short-selling firm specialising 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 centres in Ohio and Pennsylvania stood little chance of success because “Standard Power clearly does not have the means to support contracts of this size”. NuScale claimed the project would consist of 24 reactors producing 1848 MWe. Clayton Scott, NuScale’s chief commercial officer, apparently told investors in October. “We’re going to start work right away.”

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.”

Image: An artist's rendition of the cancelled NuScale nuclear power project planned for Idaho (courtesy of NuScale Power)

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