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Commitments and Contingencies
6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
In the regular course of business, the Company is involved in various legal proceedings and claims incidental to the normal course of business. Other than as disclosed immediately below, the Company does not believe that any legal claims are material to the Company. Management does not believe that resolution of any of these matters will materially affect the Company’s financial position or results of operations.

On September 19, 2022, thirteen purported members of NuScale LLC filed suit in the U.S. District Court for the District of Oregon against NuScale LLC, Fluor Enterprises, Japan NuScale Innovation, Inc., and Sargent & Lundy Holdings, LLC. The plaintiffs purport to represent a class of individuals who held common units or options to purchase common units in NuScale LLC and seek declaratory relief and damages based on breach of contract and other common law claims. The claims are based on amendments to the operating agreement of NuScale LLC in connection with the Merger between NuScale LLC and Spring Valley Acquisition Corp. Plaintiffs claim, among other things, that such amendments breached NuScale LLC’s 5th Amended and Restated Operating Agreement and required the consent of holders of common units in NuScale LLC voting as a separate class. NuScale LLC filed a motion to dismiss the complaint on November 21, 2022. Plaintiffs filed a response on January 17, 2023, and NuScale LLC filed a reply on February 14, 2023. A hearing for oral argument regarding various motions to dismiss took place on May 17, 2023, and on August 3, 2023, the Court denied NuScale LLC’s motion to dismiss. While no assurance can be given as to the ultimate outcome of this matter, the Company does not believe it is probable that a loss will be incurred and the Company has not recorded any liability as a result of these actions.
In conjunction with DOE Office of Nuclear Energy Award DE-NE0008935 with UAMPS’ wholly owned subsidiary, CFPP LLC, the Company entered into a DCRA, under which it is developing the NRC license application and performing other site licensing and development activities. Under the DCRA, the Company may be obligated to reimburse to UAMPS a percentage of its net development costs up to a specified cap, which varies based on the stage of project development, if certain performance criteria are not met. As of June 30, 2023, the cap was $83,500 and the reimbursement amount would have been $36,970, of which $25,777 consisted of long-lead materials for which we have an agreement in principle that would allow these long-lead materials to become the property of NuScale Corp, which would also own other intangible assets, the value of which cannot reasonably be estimated at this time. Based on this information, we believe the maximum expense to the Company would be $11,193 for the DCRA and an additional $4,100 for a separate agreement with CFPP LLC (a total of $15,293). While it is reasonably possible we will be required to pay these amounts, no accrual has been recorded in our financial statements.

Under the DCRA, the Company is required to have credit support to fund the amount of its potential reimbursement of these net development costs. In order to obtain a letter of credit for net development costs and a separate letter of credit for long-lead materials, the Company must segregate funds from the operating bank accounts as collateral. $60,192, identified as restricted cash on the accompanying condensed consolidated balance sheet, acts as collateral for the $59,000 in letters of credit outstanding at June 30, 2023. These letters of credit are based on forecasted spend for net development costs and long-lead materials through end of the following quarter, when new letters of credit will be issued.

In December 2022, the Company and Fluor provided CFPP LLC with the results of an economic competitiveness test (“ECT”) comparing the calculated levelized cost of electricity (“LCOE”) for the Carbon Free Power Project (“CFPP”) with the price target of $58.00/MWh as provided for under the amended DCRA. The LCOE exceeded the price target, meaning there was an ECT failure. As a result of the ECT failure, UAMPS members participating in the CFPP had the right to exit the Project. CFPP LLC had until March 1, 2023 to deliver notice that it intended to terminate its participation in the Project. If CFPP LLC had issued notice that it intended to terminate its participation in the Project by March 1, 2023, the Company could have been liable to pay CFPP LLC. However, on March 1, 2023, UAMPS notified the Company confirming that sufficient project participants had opted to continue with CFPP development notwithstanding the ECT failure.

The next ECT is scheduled to be run in conjunction with the submission of the Class 2 Project Cost Estimate, which is projected to be completed by the end of the calendar year. Should the results of the test exceed the new price target of $89.00/MWh or should CFPP subscription be less than 370 MWe, as provided under Amendment 3 of the DCRA, UAMPS members participating in the CFPP will have another opportunity to exit the Project. As of June 30, 2023, we had $59,000 in letters of credit, collateralized by restricted cash in the amount of $60,192 to cover the net development costs and long-lead materials projected through August 31, 2023.