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Yahoo
19-03-2025
- Business
- Yahoo
Indiana utilities want ratepayers to fork out for small nuclear reactors
Indiana legislators are considering multiple bills to promote small modular nuclear reactors, including a controversial provision that would let utilities charge ratepayers for projects that may never be built. Such allowances, referred to as 'cost trackers,' are widely used by utilities to recover early-stage project costs as well as variable or unexpected expenses between rate cases, such as fuel costs or grid repairs. But critics argue that with a technology as untested and expensive as SMRs, utilities could charge customers hundreds of millions of dollars for a reactor before they even file concrete plans to deploy one. At a state House committee hearing last week, supporters of SB 424 argued that Indiana needs nuclear to meet voracious power demand from planned data centers and to reduce emissions. Opponents of the bill argued that regardless of one's opinion on nuclear power, the cost recovery provision unfairly saddles ratepayers with expenses for a nascent and untested technology. 'This bill has absolutely, absolutely nothing to do with one's feelings about nuclear power and where energy is going,' Kerwin Olson, executive director of the Citizens Action Coalition, the state's primary consumer watchdog organization, said during the hearing. 'This has everything to do with who we believe should assume the risk of something that is so risky.' Aerospace manufacturer Rolls-Royce, with a major plant in Indianapolis, is among the companies developing SMRs, but they are still considered years away from deployment. A federally funded SMR project in Idaho was canceled in late 2023, as the company NuScale Power said the cost of building the reactors had soared to over $9 billion. Indiana Michigan Power (I&M) President and Chief Operating Officer Steve Baker said the utility hopes to locate an SMR on the site of a coal plant in Rockport, Indiana, that is scheduled to close by 2028. 'That site checks all the boxes,' he said, noting that the utility has applied for a $50 million federal grant in partnership with the Tennessee Valley Authority that would be used for permitting and pre-construction costs of an SMR. 'If you think about where the utility industry is headed, you think about customers' desires for sustainable power, you think about the resource adequacy needs that we have on the grid, all roads point you toward nuclear.' Cost trackers allow utilities to recoup dollars as they are being spent rather than wait for the lengthy processes where commissions review and approve rates every few years. At the hearing, Baker said I&M needs this real-time cost recovery throughout the planning process instead of after SMR construction is actually approved or underway. Without this provision, he said, the utility would have to rely on bonds and pass the interest payments on to ratepayers. A 2024 report by the Edison Electric Institute, a utility trade group, said cost trackers have been used or permitted in 38 states, including Indiana. The Edison report notes, 'Cost trackers have been used for many years to recover large volatile costs like those for generation fuels. In recent years, they have also been used to compensate companies for rapidly rising costs such as those related to capital expenditures.' The practice has faced opposition in other states when relied on for constructing large, expensive power plants, but advocates say that such cost recovery for an SMR is especially problematic given the massive and potentially ballooning costs. Duke Energy — which serves Indiana — pushed for a law allowing cost trackers in North Carolina in 2021, while a citizen watchdog group argued the measure could cause massive rate increases. At the March 11 hearing in Indiana, Rep. Matt Pierce — a Democrat who voted against the bill — expressed concern that if the utility spent $100 million investigating the technology and decided not to go forward, the ratepayer would bear the whole burden of the failed project while utility shareholders bore none. 'Is it a problem where a corporation can go do something, and there's no downside if they're making bad decisions?' he asked. Pierce also asked Baker if the utility would object to an amendment saying that funds would be returned to ratepayers if an SMR project was ultimately not pursued. Baker said the utility would not support such an amendment. The chair of the House utilities committee, Republican Rep. Edmond Soliday, said that utilities should be able to keep costs recovered during the planning process even if an SMR is never built, noting the possibility that 'the antinuclear community will kill all these projects.' Baker and Soliday argued that the bill contains safeguards for ratepayers, including that the utility cannot earn a rate of return on the SMR planning costs if the project is canceled, unless certain conditions are met. For example, a utility could still turn a profit if it is needed 'to avoid harm to the public utility and its customers' or if the decision to scrap a planned SMR 'was prudently made for good cause.' Olson railed against these conditions, saying he couldn't see how a utility would be harmed by foregoing profit for an SMR that was never built. 'It's one thing to have a tracker for construction costs when an actual project is planned,' Olson told Canary Media. 'But it's another to basically give utilities a cost tracker to even think about SMRs. That could be hundreds of millions or billions of dollars for something that may never ever happen.' He added that since the recent push for SMRs is driven by energy demand from planned data centers, 'not only are the utilities getting this, they're getting it at the behest of these big tech billionaires.' Under the Indiana bill heard March 11 and a larger bill (HB 1007) with identical language about cost recovery, a utility must file with the state Utility Regulatory Commission to confirm an estimate of expected costs to be recovered. But the utility can recoup costs beyond that if the commission decides the overruns are 'reasonable, necessary, and prudent in supporting the construction, purchase, or lease' of SMRs. 'Reasonable and prudent are my least favorite words in the English dictionary, written by lawyers for lawyers,' said Olson. Indiana Conservation Voters' community and government affairs manager, Delaney Barber Kwon, said during the hearing that her organization also opposes the bill. 'Rate recovery up front without a guarantee of project completion puts Hoosiers at serious risk,' she said, adding that other opportunities like grants, tax credits, and public-private partnerships are already available to utilities that want to develop SMRs. The cost tracker bill (SB 424) passed the Indiana Senate 34–14 on Feb. 3 and passed the House committee on utilities, energy, and telecommunications with a 10–3 vote at the recent hearing. HB 1007 — aimed at incentivizing data center development and including the same cost recovery provisions as SB 424 — would also create a tax credit for SMR development. That bill passed the House on Feb. 13 and is now in a Senate committee. A separate bill (SB 423) would allow two SMR pilot projects in the state and similarly allow utilities to recover costs for those projects before they are actually approved. That bill passed the Senate on Feb. 3 and is now in the same House committee that recently passed the cost tracker bill. Yet another bill before the House utilities committee prevents local government entities from blocking construction of new generation at the sites of closed power plants or mines (dubbed 'energy production zones'); however, it excludes wind and solar. That means local governments could not prevent an SMR or natural gas plant on these sites but could block wind or solar. At the March 11 hearing, Indiana Secretary of Energy and Natural Resources Suzanne Jaworowski said SMRs are needed to power data centers, industries moving back to the U.S., and 'electrification of our culture,' including the increase in electric vehicles. 'This is proven technology that the U.S. created, the Department of Energy is developing, that is being deployed other places around the world,' she said. 'Russia has a floating reactor. China has SMRs.' China launched the world's first SMR in late 2023; a floating nuclear power plant in the Russian Arctic went online in 2020. 'This is a great time to be able to start developing the infrastructure to support SMRs,' Jaworowski said.
Yahoo
05-02-2025
- Business
- Yahoo
Indiana's nuclear power legislation places costs on customers, advocates say
Indiana lawmakers want the state to lead the way in developing small module nuclear reactors, but consumer advocates say proposed legislation will leave Hoosiers stuck with the bill for the new and unproven technology. A series of bills introduced this year would provide Indiana's monopoly utilities the ability to recover development costs of these small reactors. Those costs, critics say, will show up on Hoosier's monthly energy bills — even if the reactors are never built and never provide any electricity. Small module nuclear reactors are much smaller than full-scale nuclear plants, but cost estimates can run into the billions for a completed reactor. Senate bills 423, 424 and House Bill 1007 all provide utilities options to make customers pay back at least some of the costs incurred before construction even begins. Kerwin Olson, executive director of Citizens Action Coalition, said the bills shift 100% of the risk of the to Hoosier customers. 'In three different bills we have language to force ratepayers to pay these project development costs — not only before a utility gets approval, but even before they file for approval,' Olson said. 'It's simply outrageous we would allow the investor-owned utilities to put that burden on the backs of ratepayers.' Sen. Eric Koch, R-Bedford, introduced SB 424, which allows utilities to petition the Indiana Utility Regulatory Commission for project development costs of SMRs and ultimately recoup those costs through ratepayer bills. Indiana lawmakers in 2022 paved the way for SMRs in the state with a policy that set rules for proposals. 'Senate Bill 424 builds upon that policy by extending recovery for preconstruction and development costs, which is very important to incentivize SMRs,' Koch said. The two senate bills have passed through that chamber and been sent to the House, while HB1007 is scheduled for another committee hearing. 2022 law: A bill would pave the way for nuclear power in Indiana -- at a cost to consumers Mark Nichol with the Nuclear Energy Institute told lawmakers demand and interest in SMRs is quickly accelerating. Large energy customers, like data centers, are moving into Indiana and in some cases will double the power demand from regional utilities. While data centers are built rather quickly, SMRs are projected to be much slower to come online. It could take 10 years to get an SMR built once a project kicks off, Nichol said, but policy conditions aren't right to enable these projects to begin. 'I do think it is a bit slower if you don't pass the legislation,' Nichol said. 'The biggest challenge is you may find yourself acting too slowly and getting left behind.' Building reactors means developing a workforce and acquiring supplies, which are real constraints for projects, and Nichol said those who aren't at the front of the queue may have to wait to deploy the reactors. Steve Baker, president and CEO of Indiana Michigan Power, told lawmakers his company is on the verge of explosive load growth in its service territory with the construction of data centers and is determining how to best serve those large customers. It took I&M 120 years to gradually build out its current energy portfolio, which reaches a peak demand of about 4 gigawatts, Baker said. The new data centers and other projects being built will require 4.5 gigawatts of new energy in the next five years. The utility has done some things to address this demand, Baker said, but there is a real opportunity with SMRs. 'We think new nuclear technology," he said, "has a role to serve.' Consumer and environmental advocates oppose the new Indiana bills. Some say Indiana should wait until the technology is tested and proven effective. The legislation would create a path to socializing the risks while privatizing the profits utilities stand to gain, said Shannon Anderson from Earth Charter Indiana. 'It's an interesting choice for (lawmakers) to bank state money and consumer money on unproven pieces of technology,' Anderson said. There are only a handful of fully operational SMRs in the world today, and none of them are in the U.S., though some companies are trying to put them in the ground. Duke Energy, based in North Carolina, is developing a SMR that originally had a proposed $75 million price tag on its development costs. That number has since ballooned to $365 million. These are the kind of development costs Hoosier ratepayers may be on the hook to cover, and include evaluation and design costs, federal approvals, environmental analysis, site permits and other expenditures. The bills lawmakers are putting forward are evidence of the financial risks of SMRs, Olson said. Utilities would be able to recoup the pre-planning costs before even applying for approval of a project. 'Utilities are just simply unwilling to bear that risk because the markets aren't willing to bear the risk' Olson said. Investors, bond holders and the company should be providing the capital to run the utility, but, in large part, bills like these create unaffordable utility bills for Hoosiers, Olson said. Sam Carpenter with the Hoosier Environmental Council echoed concerns about the financial burden Hoosiers could face. 'It is not appropriate to put somebody who is trying to cover their basic expenses and have them take the risk to pay for development planning on unproven technology," Carpenter said. Delaney Barber Kwon with Indiana Conservation Voters said the legislation in Indiana is concerning because it mirrors the legislation passed in South Carolina in 2008 that allowed a utility there to charge its customers for a failed full-scale nuclear project. Those South Carolina residents are still paying for a reactor the utility provider never built. The bills homeowners pay there were increased by 5.6% to pay for the failed project, according to the South Caroline Daily Gazette. This fee is meant to pay off the utility's $2.3 billion debt from the project. That plan was for a full-scale nuclear plant, but Barber Kwon said a small module nuclear reactor project in Utah also was abandoned last year after cost estimates tripled. It was going to be the first SMR built in the U.S., but the project was abandoned after costs grew too high. 'SMRs as a whole is not something that Indiana Conservation Voters is opposed to, but this is still experimental technology and it's going to take a long time to actually implement and get it to a place where it could really work in Indiana,' Barber Kwon said. Opposing the bills is not an indictment of nuclear power in the state, critics said, but about how new projects are funded. 'The opposition is about customers,' Olson said. 'The risk is enormous, that's why they have that language in three bills.' IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust. Karl Schneider is an IndyStar environment reporter. You can reach him at Follow him on BlueSky @ This article originally appeared on Indianapolis Star: Indiana's nuclear energy bills dump costs on customers, advocates say
