Will the Nuclear Industry Bite on Indiana’s Bait?

A new bill authored by state Sen. James Merritt, R-Indianapolis, is designed to promote nuclear power development in Indiana, which doesn’t currently have any operating nuclear power plants.

Senate Bill 302 provides that projects involving the construction of nuclear energy production or generating facilities qualify for the financial incentives available for clean energy projects. Current Indiana law provides that only projects involving the life cycle management of such facilities qualify for the incentives.

Sen. Merritt carries significant political clout in the state as the chair of both the Senate Majority Caucus and the Senate Utilities Committee. The Indiana Chamber of Commerce honored him as the “Most Pro-job Indiana Senator” in 2011.

His bill would amend the definitions of: 1) “nuclear energy production or generating facility” to include a facility constructed in Indiana after June 30, 2014; and 2) “qualified utility system expenses” to specify that the term includes preconstruction costs and applies to a new energy production or generating facility or a new nuclear energy production or generating facility.

The change would open the door for recovery of expenses utilizing construction work in progress (CWIP) in a utility’s base rate. CWIP allows a utility to collect financing costs for a project prior to a plant’s completion, which reduces the overall amount needed to finance a project. Many consumer advocacy groups oppose this type of financing, because they feel it transfers risk from the utility to the customers.

Although no nuclear plants currently operate in Indiana, residents have witnessed previous nuclear development gone bad. Public Service Company of Indiana began construction of the Marble Hill Nuclear Power Station near Hanover, Ind., in 1977, but abandoned the project in 1984 after sinking an estimated $2.5 billion into the facility. A project was also proposed in northern Indiana in the late 1960s, but it was never built.

—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)