Sunday, January 24th, 2010
The nuclear industry has focused most of its lobbying efforts at the federal level, but any resurgence in the construction of new nuclear generating plants also will depend heavily on decisions made by state regulators and legislators. The industry is making strides in states like Florida and South Carolina where customers pay for new nuclear plants before they’re even built.
Since 2005, about a dozen states have passed legislation or adopted regulations supporting nuclear plant construction, according to the Nuclear Energy Institute. But in other states there has been resistance to measures to speed up nuclear construction. And state public utility commissions and environmental agencies have a say in the process, even if the federal government passes a bill designed to boost nuclear plant construction around the country.
“Our primary role in the beginning is to determine if there is a need for the plant, whether it’s nuclear or not, if the growth in the state and increased demand warrant it,” Kirsten Olsen, a spokesperson for the Florida Public Service Commission, said. “Consumers are going to pay more, so we want to make sure it’s needed.”
The Florida commission sets and approves electricity rates, and those rates are based in part on how much a company spent on plant construction costs, Olsen said.
State utility commissions across the country help to determine whether new generating facilities qualify for "certificates of public good" or similar documents showing the need exists for a proposed plant, according to the Nuclear Regulatory Commission’s Scott Burnell. State agencies participate in the NRC’s environmental reviews of new reactor applications, and they issue water use or discharge permits for the plants’ cooling systems.
Some state legislators recently proposed measures that would lift current bans on nuclear plant construction or grant utility commissions the power to increase electricity rates to help investors recoup upfront costs.
But others have balked at the idea of making nuclear power plant construction easier. Last year, Minnesota legislators introduced a constitutional amendment to repeal the state’s ban on nuclear reactors and grant the Minnesota Public Utilities Commission authority to issue a certificate of need for the construction of nuclear plants. The House didn’t vote on the measure and a Senate companion bill did not exist. In a separate attempt, the Senate approved an omnibus energy bill amendment that would have allowed new plant construction, however, the House voted it down.
Waste disposal remains a major stumbling block in many states.
Legislators in Illinois, Kentucky and Wisconsin have proposed bills to tweak nuclear waste disposal plans, which would lift moratoriums on new nuclear facilities. But none of the proposals have made it into law.
The Illinois Senate considered removing a 22-year prohibition against construction of new nuclear plants until the U.S. government “has identified and approved a demonstrable technology or means for the disposal of high level nuclear waste.” In other words, the waste problem would not have to be resolved before a new plant could be built in Illinois, already the nation’s biggest generator of nuclear power. The Senate did not vote on the bill, which was referred back to committee where it will either die or be brought up again this year. The legislature did create a Nuclear Power Issues Task Force , which has not yet submitted its recommendations.
On Jan. 20, the Kentucky Senate approved a measure that would end a ban on nuclear plant construction. The bill, which requires a plan for the storage of nuclear waste rather than a means for permanent disposal, still needs to pass the full House. Similar legislation didn’t make it out of a Kentucky House committee in 2009.
In 2008, the Wisconsin Assembly considered permitting plant construction even if a nuclear waste disposal facility is not available. Although the bill did not pass, some legislators haven’t given up. On Jan. 7, legislation that would have required only that a plan for managing nuclear waste be “economic, reasonable, stringent, and in the public interest” was introduced in the Wisconsin Senate.
Customers pay for nuclear plants before construction complete
Another major issue facing the states is when to allow utilities to start charging for construction of new power plants, including nuclear generators.
During Missouri’s last legislative session, there was an effort to change a 30-year-old state law that prohibits utilities from increasing customer rates before a plant begins producing electricity. The change would have allowed a utility to include expenditures in the rates as the plant is built, according to Steve Reed, general counsel for the Missouri Public Service Commission.
Ameren – Missouri’s largest electric utility – had submitted an application to the Nuclear Regulatory Commission to build a new reactor in Callaway County and stood to benefit from the legislation. However, when the Senate did not support the rate change, the company issued a press release asking sponsors to withdraw the bill and suspended its plans to build a new reactor.
Other state legislatures granted utility commissions the power to raise electricity rates in order to finance nuclear power plants. Floridians began paying higher electricity fees in 2009 to pay for hundreds of millions of dollars worth of planned improvements at existing nuclear plants and the construction of proposed reactors.
With the passage of Georgia’s Nuclear Energy Financing Act in 2009, utility companies can now increase rates to recover financing costs for two new reactors planned for Vogtle, Ga.
And a 2007 South Carolina law gives the state’s public service commission the power to determine reasonable costs of a project and to change electricity rates on an annual basis during the construction of nuclear plants. In addition, companies may recover “reasonable” costs, if the plans for a nuclear plant are eventually abandoned, according to the South Carolina Public Service Commission.
In 2008 South Carolina Electric & Gas Company filed applications for two nuclear units it plans to build at V.C. Summer Nuclear Station at Jenkinsville, S.C. The commission approved initial rates to help pay for the new reactors in March 2009, but the company has since applied for “revised rates.” Last September, the commission approved a 1.1 percent rate increase that's expected to generate $22.5 million.
The rate hike is not going into effect without a fight. Friends of the Earth, an international environmental group, filed a petition with the Commission stating the South Carolina law that allows electricity rates to be levied for reactors far in advance of their demonstrated use is unconstitutional “because it deprives electricity consumers of property without due process of law.”
Last spring, the Commission issued an order denying the Friends of the Earth petition because the group had failed to adequately state its ground for alleging the Base Load Review Act is unconstitutional. Friends of the Earth along with another petitioner, the South Carolina Energy Users Committee, a group comprised of industrial users of electricity whose primary purpose is to “intervene on behalf of its members in rate proceedings,” appealed the ruling to the state Supreme Court. The appeal is on the Court's preliminary list for the March term.
“We’re confident the court will uphold the PSC ruling,” Eric Boomhower of South Carolina Electric & Gas, said. The company’s plans for the new plants were presented in detail during a three-week hearing before the South Carolina Public Service Commission, at the end of which the commission deemed the plans prudent, he said.
“The process was a deliberative, quasi-judicial process based on the record,” said Charles Terreni, a South Carolina Public Service Commission spokesperson. “I feel comfortable that it was carried out in a fair manner and parties received due process while they aired their views.”
However, Tom Clements, Friends of the Earth’s southeastern nuclear campaign coordinator, says the South Carolina public service commissioners are chosen by state legislators, who are influenced by energy companies. “The legislators pay very close attention to what the utilities want, they have far less interest in listening to the consumers and rate payers,” Clements said. “The legislators know where power is wielded and it is by the utilities in this state.”
States enacting legislation or regulations in support of nuclear power
- Florida : Statute 366.93 (2007): Cost recovery for the siting, design, licensing, and construction of nuclear and integrated gasification combined cycle power plants (2007)
- Georgia : Nuclear Energy Financing Act (2009): Allows utility to recover from its customers the costs of financing associated with the construction of a nuclear generating plant
- Idaho : Allows Public Utility Commission to establish binding ratemaking treatments when costs of a new electric generation facility are included in rates and allows for nontraditional cost recovery mechanisms
- Kansas : Senate Bill 586 (2008) Utilities may recover “prudent expenditures” for a new nuclear generating facility
- Louisiana: Public Service Commission Docket No. R-29712 (2007): Approved the incentive cost recovery rule for nuclear power generation
- Michigan : House Bill 5524 (2008): Expands power of Michigan Public Service Commission, which can issue certificate of necessity allowing utilities to recover costs through rates
- Mississippi : Senate Bill 2793 (2008): Authorizes the public service commission to utilize an alternative method of cost recovery on certain base load generation
- North Carolina : Senate Bill 3 (2007): Act allows for ongoing review of construction costs, which may be recovered in rates
- Ohio : Senate Bill 221 (2008): Twenty-five percent of electricity must be produced by alternative sources by 2025. Advanced energy projects include “advance nuclear energy production, Generation III technology or significant improvement to existing facilities."
- South Carolina : Base Load Review Act (2007): Gives the state’s public service commission the power to determine reasonable costs of a project and to change customer electricity rates on an annual basis during the construction of nuclear plants
- Texas : House Bill 1386 (2007): Relates to regulation of the decommissioning costs of the first six nuclear-powered commercial electric generating units under construction by 2015.
- Utah : House Bill 430 (2009): Renewable Energy Development Act classifies nuclear power as a renewable and provides tax incentives
- Virginia : House Bill 3068/Senate Bill 1416 (2007): Allowed capped rate period to expire in 2008 rather than 2010, and it gave the State Corporation Commission the authority to begin to set and review electric rates
- Wisconsin : Act 7 (2005): A public utility that proposes to apply for a certificate for the construction of an electric generating facility can apply to the Wisconsin Public Service Commission for an order specifying in advance the rate-making principles that will be applied to the public utility’s recovery of capital costs