DOE Overpaid a Terminated Nuclear Reactor Project by $143.5M

The Department of Energy's Office of Nuclear Energy committed $1.36 billion to help build a first-of-a-kind small modular reactor at Idaho National Laboratory.▸ A DOE Inspector General audit released March 24, 2026⧉ found the agency front-loaded its payments so aggressively that it had already paid $182.5 million -- more than four times its actual agreed share -- by the time the project collapsed in 2023 without ever generating a watt of power. OIG says the project's company may now owe DOE $143.5 million back.

The Carbon Free Power Project⧉ was supposed to prove that NuScale Power's small modular reactor technology could compete commercially.▸ Instead, auditors found DOE's Office of Nuclear Energy skipped basic risk evaluation before signing the award, never structured the deal to catch warning signs as they emerged, and paid out taxpayer money years ahead of schedule on a bet that the private sector would eventually catch up. It never did.

In October 2020, Nuclear Energy finalized a 10-year, $1.36 billion sole-source, non-competitive cost-share award⧉ to the Carbon Free Power Project, LLC (CFPP) -- a company wholly owned by Utah Associated Municipal Power Systems (UAMPS), an interlocal agency that supplies wholesale electricity across the Intermountain West.▸ The goal was to build and operate a six-module NuScale small modular reactor plant at Idaho National Laboratory, with total estimated project costs of $8.03 billion. Construction was expected to start in October 2026, with the first power module running by 2029 and the full plant operating by 2030.

None of that happened.▸ In November 2023, CFPP and NuScale mutually agreed to terminate the Project⧉ -- years before construction was even due to begin. By then, OIG found, Nuclear Energy had already disbursed approximately $183 million of the $1.36 billion award⧉, and the Project's key objective, an operating, grid-connected reactor meeting its own economic success criteria, was never met.

The Project needed private utilities to sign subscription agreements committing to buy the plant's power before DOE would release the bulk of its funding.▸ OIG found that subscription never came close to target⧉: at the October 2020 award, DOE required 720 megawatts-electric (MWe) of signed capacity, but only 118 MWe was actually subscribed. By February 2024 -- months after the Project was already dead -- the target had been cut to 462 MWe, and actual subscription had crept up to just 120 MWe.

Auditors found Nuclear Energy's own merit review, the process meant to screen applicants before an award, never rated subscription as a risk at all⧉, despite Nuclear Energy officials telling OIG that an entity's ability to obtain the necessary subscription is one of the largest risks to new nuclear deployment today.▸ Once the award was signed, DOE didn't require any interim reporting on subscription progress either -- it didn't plan to formally check the Project's viability until 2026, six years into a project that had already died by 2023.

The core mechanism behind the overpayment was what auditors call front-loading: DOE agreed to cover a disproportionate share of costs in the Project's early years, on the expectation that CFPP would cover a higher share later.▸ DOE's Table 2 lays out the math⧉: Nuclear Energy's actual agreed cost-share, calculated against $230.8 million in estimated total project costs at its 16.9% share, came to $39,005,681. But Nuclear Energy had already paid $182,510,163 -- leaving a $143,504,482 gap that OIG says CFPP may now owe the Department back.

OIG found the front-loading arrangement offered little real protection.▸ Nuclear Energy told auditors it built in safeguards -- primarily the cost-share structure itself, plus the option for CFPP to transfer project assets like studies, licenses, and data to help rebalance the books. But OIG concluded the cost-share can't function as a sufficient safeguard⧉, because if CFPP can't combine cash, in-kind compensation, and asset transfers sufficient to cover the full $143.5 million, the government has no way to recover the money it already paid. Whether the assets CFPP has offered actually have that much value is still being worked out.

OIG also flagged a structural reason DOE may have pushed the Project forward despite the warning signs: Nuclear Energy had a long history of financial support for NuScale itself⧉, separate from the Carbon Free Power award, totaling approximately $586 million in obligations aimed at bringing NuScale's reactor technology to commercial deployment.▸ Auditors concluded that history created inherent pressure to make this deployment succeed, even as there was a documented lack of industry interest in NuScale's technology and stiff competition from other power sources -- and that Nuclear Energy never formally evaluated whether that pressure was biasing its award and risk decisions.

The report notes this isn't DOE's first time here: OIG's own prior reports found similar dynamics on the Texas Clean Energy Project⧉, a coal-carbon-capture demonstration DOE also eventually moved to terminate, after accelerating stimulus funds and cutting the developer's required cost-share to keep it afloat -- both of which put more taxpayer money at risk before that project, too, collapsed.

OIG made five recommendations, three aimed at Nuclear Energy's leadership on evaluating risk and enforcing award terms going forward, and two aimed at the contracting officer at DOE's Idaho Operations Office: determine whether roughly $8,876 in legal costs OIG questioned in a sample review were allowable, and resolve the $143.5 million in unresolved cost-share amounts.▸ Management concurred with four of the five recommendations⧉ but pushed back on the audit's overall conclusion, calling it "a flawed and overly critical assessment" of Nuclear Energy's project management, and formally nonconcurred with the recommendation to enforce the award's substantial-involvement oversight terms, arguing those terms were expectations rather than requirements.

OIG rejected that pushback, writing that it reviewed Nuclear Energy's oversight activities against the responsibilities written into its own award and found the agency simply didn't fulfill them -- including never monitoring subscription performance, the risk the report says ultimately killed the Project.▸ Resolution of the questioned $143.5 million and the $8,876 in legal costs is now in the hands of the Idaho Operations Office contracting officer; the report gives no timeline for when that determination will be complete.