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US budget bill includes credits for Georgia nuclear plant, small reactors

Washington (Platts)--9 Feb 2018 253 pm EST/1953 GMT


The budget bill President Donald Trump signed Friday morning to avert a shutdown of the US government includes a broadening of production tax credits for nuclear projects critical for the completion of two reactors at Georgia Power's Vogtle station and designed to spur development of the first commercial small modular reactors in the US.

The 2,300-MW Vogtle plant expansion in Waynesboro, Georgia, has experienced delays and cost overruns that threatened its completion. The Georgia Public Service Commission gave the go-ahead for rate recovery, which Georgia Power had said was crucial for completing the nuclear generating units.

But the production tax credits were also a key element of the project's economic case, Georgia Power officials have said.

The budget agreement, which extended government funding past a midnight Thursday deadline and raised the government's borrowing limit, also waives a deadline by which the new Vogtle units would have had to be operating to receive the credit of $18/MWh over eight years.

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The original legislation establishing the credits, which were intended to spur construction of a fleet of next-generation nuclear units, set an end-2020 deadline for the units in question to enter service.

The latest schedule for the commercial operation of the Vogtle units is November 2021 for the first new unit, with the second to follow a year later.

The waiver of the deadline will provide Georgia Power customers about $1 billion in benefits by reducing the need for rate increases when the Vogtle units enter service, the utility said Friday in a statement.

The budget bill also allows the tax-exempt minority partners in the Vogtle project -- cooperative Oglethorpe Power, the Municipal Electric Authority of Georgia and the city of Dalton, Georgia -- to trade their credits to any project participant in exchange for compensation.

The legislation is just the latest federal incentive for the project. The US Department of Energy has provided about $12 billion in loan guarantees to help with the project, reducing financing costs for all the partners except for Dalton, which did not seek such a guarantee.

Because the original legislation offered the production tax credits for up to 6,000 MW of next-generation nuclear capacity and only the Vogtle units are currently being built, the new budget bill allows DOE to allocate the credits to any new nuclear unit that comes online in the future, even though they may not have met earlier deadlines for receiving regulatory approval for their designs and projects.

This means that Utah Associated Municipal Power Systems, a non-profit wholesale energy company serving community power groups in six states, may be able to get the credits for its proposed 600-MW nuclear plant using small modular reactors.

The organization, which has not made a final decision to build the project, is considering using 12 50-MW nuclear units of a new design manufactured by NuScale Power, possibly for deployment on the site of DOE's Idaho National Laboratory.

"Both projects will serve as anchors for energy infrastructure in the Southeast and Mountain West," respectively, said Maria Korsnick, president and CEO of the Nuclear Energy Institute, in a statement Friday.

The extension of the credits has been debated in Congress since it became clear that the Vogtle project and the similar South Carolina Electric & Gas expansion of its Summer station would not meet the 2020 deadline to enter service and receive the credits.

SCE&G and partner Santee Cooper in July canceled the Summer expansion after spending about $9 billion, citing project risks after the bankruptcy reorganization filing of main contractor Westinghouse.

A version of the expansion of the credit was included in a House of Representatives version of the federal tax bill that passed last year, but did not make it into the final bill Trump signed.

--William Freebairn, william.freebairn@spglobal.com
--Edited by Valarie Jackson, newsdesk@spglobal.com



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