UAMPS’ CHIEF EXECUTIVE OFFICER/GENERAL MANAGER

RESPONSE TO ENERGY STRATEGIES HEAL STUDY

JULY 3, 2019

Healthy Environment Alliance of Utah (“HEAL”) requested Energy Strategies to prepare

an economic analysis of UAMPS’ Carbon Free Power Project (“CFPP”), which resulted in the
study entitled “Analyzing the Cost of Small Modular Reactors and Alternative Power Portfolios”
(the “Study”). The Study is flawed in many respects, some of which are cryptically
acknowledged in the Study itself. With that said, it is important to appropriately frame why
UAMPS is pursuing the CFPP as a resource option for its members to understand the value
proposition of this resource relative to other generation alternatives. The Study does not
actually support HEAL’s suggested conclusion that the CFPP is an uneconomic pursuit. Rather,
the Study reaffirms the value proposition of continued exploration of the CFPP for the UAMPS
participating members.

At the highest level, the CFPP, utilizing NuScale’s small modular nuclear reactor
technology, will provide UAMPS with a flexible carbon free baseload resource to complement
other member resources that comprise individual resource portfolios. The following objectives
are being pursued as part of UAMPS’ investigation into the CFPP:

1. Replacement for Retiring Coal: UAMPS initiated the exploration of the CFPP to
investigate a resource that has the ability to provide long term carbon free baseload
power as replacement for retiring generation while being immune from future
greenhouse gas regulation (“GHG”) and compliance costs. NuScale’s technology meets
this objective.
2. Cost Competitiveness: The second objective is to develop the CFPP as a resource option
at cost that is no greater than a comparable combined cycle natural gas plant. At
$55/MWh (2018$), the CFPP meets this objective.
3. Flexible Generating Capabilities: The third objective is to have a flexible baseload
resource that can provide ancillary support services such as integrating variable
renewable generation and be available on a more traditional 24/7 basis. While UAMPS
sees renewable generation playing an ever-increasing role in the decarbonization of the
electric grid, the reality is that renewable generation does not generate all the time and
baseload generation, that is, generation that is available 24/7 irrespective of weather
conditions is needed. The NuScale technology has the ability to accommodate
variations in renewable generation while also generating in a more traditional 24/7
fashion.
4. Zero Carbon Emitting: The fourth objective was adopted by the UAMPS Board of
Directors in 2018 directing the organization to pursue and present its members with
zero carbon emitting resource options to decarbonize their electric generation
portfolios. The CFPP stands as one zero carbon emitting resource to meet this
objective; it should also be noted that UAMPS is pursuing other zero carbon resources
in addition to the CFPP.

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The following chart helps illustrate why UAMPS is investigating the CFPP.

Figure 1

Figure 1 illustrates the cost benefit of including nuclear as part of a decarbonization strategy. Forgoing nuclear in
favor of solely pursuing wind, solar, and batteries is projected to result in an electric generation portfolio that is
much more costly; the above projection is from the Nuclear Energy Institute and adopted from a MIT Study. Other
decarbonization studies show similar cost benefits of including nuclear as part of decarbonization strategies. It
should also be noted that the CFPP pricing falls beneath the light blue line at $55/MWh; further supporting, the cost
competitiveness of the CFPP as the cornerstone resource in a decarbonized electric portfolio. The above chart does
not reflect any additional cost benefits associated with the ability of the NuScale technology to adjust up and down
for intermittent renewable generation, but this benefit further supports the business case for the project .

While there are many flaws in the attempted comparative analysis in the Study, the
following highlights the fundamental flaws that are worthy of conveying to your communities
and reaffirm the value proposition of the UAMPS members’ pursuit of the CFPP.

1. The Study does not actually conduct a resource portfolio analysis. Consequently, any
“findings” of the Study as to the cost competitiveness of the CFPP relative to other
resources portfolios are very dubious at best. For example, the Study asserts that the
CFPP is more expensive than portfolios comprised of: (1) wind/solar; (2)
wind/solar/battery storage; and (3) heavy wind/solar/natural gas turbines. These
portfolios are not comparable to the CFPP and specifically its annual generation
portfolio. The Study grossly simplifies its cost comparison analysis by merely examining
a levelized cost of electricity (“LCOE”) comparison of the resources comprising these

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 three portfolios. (See below in #2 for more issues with the Study’s use of LCOE
comparison numbers from different sources.) In doing so, the Study fails to recognize
the value of the CFPP as a carbon free baseload resource that will be online irrespective
of weather conditions affecting the intermittent non-carbon emitting generation
resources analyzed in the study. This flaw is further exemplified by the significant
amount of incremental capacity, reflected in Figure 2 of Study, required to produce the
same generation as the CFPP. Simply put, the Study’s cost competitiveness findings
rely on the simplified assumption that a MWh generated, regardless of when it is
generated, is the same as MWhs generated from the CFPP. The Study fails to mention
the potential for renewable generation curtailment when the energy is not needed;
again, making the Study’s findings irrelevant as to the cost competitiveness of these
three portfolios. This gross assumption warrants discarding any finding related to the
generation analyzed in the Study. This flaw in the Study’s assumption does highlight
one of the benefits of the CFPP by having a dispatchable zero carbon emitting resource
that can meet load demands irrespective of weather variability affecting wind and solar.
Again, the fact that the CFPP will have full capacity to generate when electric demand is
greatest and for all hours of the year is the value that the CFPP represents.
2. The Study’s analysis of carbon emitting portfolio alternatives does not meet UAMPS
objective for a flexible baseload zero carbon emitting resource. The Study’s analysis of
carbon emitting resource alternatives is not relevant to UAMPS’ pursuit of the CFPP,
because the members are pursuing this resource as part of a strategy to pursue
decarbonization options and present those opportunities to their respective
communities. For the sake of argument, the comparative combined cycle relied upon in
the Study is a brownfield site and is not an apples to apples LCOE comparison to the
CFPP. With that said, UAMPS takes issue with many of the LCOE resource comparisons
being made; for example, one key consideration is that, to UAMPS knowledge, none of
the resources considered in the Study contain decommissioning costs while UAMPS’
LCOE costs for the CFPP contain decommissioning costs. The Study also cherry-picks
certain LCOE numbers from varying sources to produce the desired economic case;
choosing LCOE numbers from different sources is very problematic as not all LCOE
assumptions from these sources are the same, making any comparison inconclusive.
Furthermore, the CFPP is just one such decarbonization opportunity being analyzed for
its members; UAMPS is not pursuing developing new carbon emitting resources at this
time for its members. The Study does concede the point that it assigns no value to the
ability of the NuScale technology to provide ancillary services such as the integration of
renewable generation; as discussed above, UAMPS does find value in this attribute of
the CFPP. The Study’s decision to pass over this resource attribute belies the
misleading framing of the Study to make “findings” that the CFPP is not competitive
relative to other resources. Such “findings” only stand scrutiny when the framework for
analysis is manufactured by a funding organization such as HEAL that has predisposed
the outcome of the analysis.

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 3. The Study is too high level to provide any substantive value and the Study itself
recognizes its lack of value especially given that decarbonization objectives are being
considered by UAMPS’ members. UAMPS has stated publicly in over 100 public
meetings related to the CFPP how this resource option serves as the cornerstone to a
future western market that is deeply penetrated with renewables, be it renewables
procured by its members or by its members on a market saturated with renewables.
HEAL has participated in the meetings, but apparently failed to share this key aspect of
UAMPS development of the CFPP with Energy Strategies to help shape the Study to
provide actual independent value when analyzing the CFPP—a purported goal of HEAL
in engaging Energy Strategies. UAMPS notes Energy Strategies in the Study references
its own firm’s work analyzing renewable and battery portfolio scenarios to achieve 80-
100% decarbonization generation portfolios that resulted in costs that are higher than
$65/MWh (the projected CFPP costs in the Study); suggesting that the CFPP does in fact
have value when properly framed within UAMPS development objectives for the CFPP.
Had HEAL requested Energy Studies to actually perform a resource portfolio analysis,
then such an analysis would have recognized the value proposition of the CFPP
alongside renewables.
.
UAMPS finds the actions of HEAL as highly unfortunate given that UAMPS has met with
HEAL in good faith on several occasions in the past. HEAL, as noted above, has heard
UAMPS explain why it is pursuing the project—making many of the fundamental flaws
contained in the Study inexcusable and evidence of HEAL’s bias towards nuclear energy.
HEAL has not reached out to UAMPS to request information to inform the analysis
performed by Energy Strategies; the Study is misleading at best when it claims to have
received information from NuScale and UAMPS. Seemingly all of the errors noted above
and UAMPS’ internal review could have easily been eliminated had UAMPS been consulted.
The reality is that HEAL chose not to engage in an open dialogue but, instead, chose to
create a biased and inaccurate view of the CFPP due to its predisposition against nuclear
energy.

UAMPS continues to believe that the CFPP is a prudent resource investigation for the
UAMPS members as their communities explore how to decarbonize their electric
generation portfolios or, in the case of some members, maintain decarbonized electric
generation portfolios. The CFPP is a cost competitive resource addition that recognizes
that the future of the energy industry will be much different than today. UAMPS has
thoroughly evaluated and continues to monitor the economics of the CFPP. UAMPS would
never mis-portray the costs or any other aspect of the CFPP. The CFPP cost of $55/MWh is
based upon extensive research and will continue to be reviewed by UAMPS independent
owner engineer. The $55/MWh is the Levelized Cost of Electricity for a forty-year period.
The $55/MWh is all inclusive, development, licensing, construction, transmission,
operations and decommissioning, there are no hidden costs. Finally, the decision that any
UAMPS member participating in the CFPP has made is not irrevocable; each community has
the power to decide on its continued participation and how this resource fits within the

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community’s decarbonization objectives. The CFPP contract with UAMPS members allows
for withdrawal under a myriad of mechanisms.

Your representative to UAMPS participates in the CFPP Project Management Committee

(“PMC”), which meets on a monthly or more frequent basis. They represent your
community’s interest in this project and have a full understanding of the risks as well as the
benefits of the CFPP. If you have questions regarding your community’s participation in the
CFPP, then we recommend you contact your UAMPS representative.