Power Sources

Budget agreement signed by Trump offers support for nuclear power

A two-year budget deal signed by President Donald Trump on Feb. 9 includes provisions that will benefit the development of nuclear power in the U.S. including the expansion of Plant Vogtle, which is located near Waynesboro, Ga.

Trump’s signing the budget deal formally set annual discretionary spending targets for fiscal years 2018 and 2019 and ended the second government shutdown of the year.

Included in the budget agreement is a provision that suspends the deadline for receiving advanced nuclear production tax credits and a modification to allow public power utilities, such as MEAG Power, to utilize the credits that were intended to incentivize construction of new nuclear facilities in the U.S., MEAG Power noted in a Feb. 9 news release.

The two new nuclear units, Vogtle units 3 and 4, will be the nation's first new nuclear units in 30 years.

MEAG Power said that passage of the budget bill is expected to provide benefits amounting to hundreds of millions of dollars for MEAG Power’s ownership share of the project.

The leadership of Sen. Johnny Isakson, R-Ga., “has played an integral role throughout the process of updating and clarifying the law,” said Jim Fuller, MEAG Power’s President and CEO. “We would also like to thank” Sen. David Perdue, R-Ga., “and all of the Georgia House delegation for their efforts,” Fuller said.

MEAG Power noted that these benefits follow the recent favorable developments for the Vogtle project, including receipt of the full amount of the parent guarantee payments from Toshiba and the conditional commitment from the U.S. Department of Energy for up to $415 million in loan guarantees.   

Plant Vogtle Units 3 and 4 consist of two 1,100 megawatt Westinghouse AP1000 nuclear reactors being constructed in Burke County, Georgia.

MEAG Power is a co-owner (22.7% share) in the units along with Georgia Power, Oglethorpe Power and the City of Dalton, Ga.

Through power purchase agreements with Florida’s JEA and PowerSouth Energy Cooperative, MEAG Power will sell approximately 41.2% and 24.9%, respectively, of its share of the output in the nuclear expansion project for the initial 20 years of operation of each unit.

The Nuclear Energy Institute on Feb. 9 said that the legislation signed by Trump: (1) allows for new nuclear reactors placed in service after Dec. 31, 2020 to qualify for the nuclear PTC; (2) permits the Secretary of Energy to allocate credits up to a 6,000-megawatt capacity limit for the first “new nuclear” reactors placed in service after Dec. 31, 2020; and (3) allows public-entity project partners to transfer their credits to other project partners.

NEI said that the deadline change will ensure the two reactors being built at Vogtle will benefit from the PTC and that the 6,000-MW capacity limit indicates the PTC will also benefit NuScale Power LLC’s and its partners’ plans to build its first commercial power plant at the Idaho National Laboratory by 2026.

The NuScale power plant will consist of 12 small modular reactor modules linked together for a single plant installation of 600 megawatts. It will be owned by Utah Associated Municipal Power Systems and operated by utility Energy Northwest, both public power entities.

A Department of Energy official recently told a House hearing that advanced SMRs are “potentially game changing.”

Budget agreement impacts Build America Bonds

Section 30101 of the budget agreement extends Joint Select Committee sequestration, currently set to expire after Fiscal Year 2025, through Fiscal Year 2027.

Sequestration percentages, which apply to payments to issuers of Build America Bonds (BABs), for 2022 through 2027 will equal the percentage calculated for 2021 – previously estimated to be roughly 5.5 percent.

A January 2018 American Public Power Association issue brief, Sequestration of Build America Bond Credit Payments, notes that Congress’s failure to meet federal deficit reduction targets in 2012 have, to date, triggered more than $1.3 billion in payment cuts (“sequestration”) to state and local issuers of BABs.

Public power utilities issued more than $16 billion in BABs and have seen payment cuts totaling an estimated $120 million thus far. “Sequestration ignores Congress’s intent for BABs and reneges on what the federal government promised in partnership with state and local governments,” the Association said. “We believe Congress should act to prevent further cuts to BAB credit payments.”

The Association said in the issue brief that it strongly objected to the Trump Administration’s proposal to extend sequestration through 2027.

Enhancement of CO2 sequestration credit

Another section of the budget agreement signed Trump modifies the existing credit for carbon dioxide sequestration. The scope of eligible facilities is modified to include smaller facilities and direct air capture facilities that do not qualify under current law, but only facilities for which construction begins before 2024.

With respect to carbon capture equipment placed in service on or after the date of enactment, the amount of the credit is increased over time, the credit is allowed over a 12-year period instead of being subject to a national cap, and the credit is available to taxpayers that contractually ensure the capture of the carbon oxide.

Funds for USVI, Puerto Rico grid work

In addition to regular spending increases, the deal provides $23.5 billion to the Federal Emergency Management Agency to replenish disaster relief funds and another $4.9 billion to provide parity in Medicaid payments to Puerto Rico and the U.S. Virgin Islands (USVI), a move also designed to help in disaster recovery.

Puerto Rico and USVI will also be granted greater flexibility in use of FEMA funding to “build grids and other critical infrastructure back better.” Likewise, of $28 billion in additional Community Development Block Grants, $2 billion is directed to Puerto Rico and USVI to “rebuild and improve their electric grids in a more resilient and energy efficient way.”