Power Sources
Issue Brief

Nuclear Power

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Background

Nuclear power is the nation’s largest source of emissions-free electricity, accounting for 57 percent of domestic emissions-free electricity generation and 19.8 percent of total electricity generation. There are 99 reactors in 30 states. It is a reliable source of baseload (i.e., available most of the time) energy, operating with an average capacity factor greater than 90 percent. Given these characteristics, nuclear plays a significant part in ensuring reliable, zero-emissions electricity service.

In 2016, public power utilities generated 16.9 percent of their electricity from nuclear power. Public power utilities both own and operate nuclear reactors outright, or partner with other utilities to co-own a facility. In addition, public power utilities receive power from nuclear power plants through bilateral contracts, indirectly through electricity markets, or in the case of those located in the Tennessee Valley, by purchasing power generated by the Tennessee Valley Authority (TVA), which owns and operates several nuclear power plants.

The American Public Power Association (Association or APPA) supports the continued use of nuclear power, a key source of baseload, emissions-free electricity. The Association believes the federal government should make the construction of an interim storage facility for nuclear waste in a willing host community a priority. The Department of Energy (DOE) must also follow its statutory obligations and construct a final repository for nuclear waste, whether at Yucca Mountain, or another location. APPA also believes that federal policies should be enacted to facilitate the construction of new nuclear facilities and further the development of small modular reactors (SMRs). APPA also supports the decision to allow public power co-owners of new nuclear plants to allocate their portions of the production tax credit to other co-owners.

Spent Nuclear Fuel

The United States has long searched for a solution to address the back end of the nuclear fuel cycle (also referred to as spent nuclear fuel or “nuclear waste”). In 1982, Congress passed the Nuclear Waste Policy Act (NWPA), which assigned responsibility to DOE to site, construct, and operate a final repository for spent nuclear fuel. In 1987, Congress amended the NWPA and designated Yucca Mountain as the sole site for DOE to consider, after conducting studies of nine potential sites.

As part of the NWPA, a surcharge of one-tenth of one cent was placed on electricity produced from nuclear power plants to fund the federal government’s efforts to construct the final repository. Nuclear energy consumers, through this surcharge, paid a total of $30 billion into the nuclear waste fund, or more than $750 million per year. In 2008, DOE began pursuing a license with the Nuclear Regulatory Commission (NRC or Commission) to construct a facility at Yucca Mountain. However, despite spending nearly $15 billion dollars on the project, in 2009, the Obama administration eliminated funding for the project, and a year later, DOE moved to withdraw its license.

Due to the federal government’s failure to fulfill its obligations under the NWPA to construct a repository, in 2013 the U.S. Court of Appeals for the D.C. Circuit ordered DOE to stop collecting the nuclear waste fee. Separately, on August 13, 2013, the court also ordered the NRC to use already obligated funds to resume its review of DOE’s Yucca Mountain license, which the Commission had stopped doing in 2010.

In 2014, NRC staff finished a five-volume safety evaluation report and found Yucca Mountain to be a safe location for the long-term storage of spent nuclear fuel. However, the report recommended against NRC approval of the site until land and water rights are acquired and a supplement to DOE’s environmental impact statement (EIS) is completed. While the NRC has been pressed to use its own funds to complete the EIS, it is unlikely that other necessary actions for approval will be completed without DOE cooperation or congressional action.

President Trump has made clear his intention to resume work on Yucca Mountain and included a request in his fiscal year (FY) 2018 and 2019 budgets to restart work on the facility and create a temporary storage program. While the President’s support for the project is a positive step, it is unclear whether the site will ever open given the opposition of the Nevada congressional delegation and the time it would take to restart the process at DOE.
 

Nuclear Production Tax Credit

The 2005 Energy Policy Act established a production tax credit (PTC) of 1.8 cents per kilowatt-hour of electricity produced during the first eight years of operation by advanced nuclear power facilities—although the PTC is available only to the first 6,000 MW of capacity placed in service. When public power utilities, rural cooperatives, and investor-owned utilities (IOUs)partner to construct and co-own a new nuclear plant, the PTC is divided among the plant’s owners on a pro-rata basis. However, due to their tax-exempt status, public power and rural cooperatives would not have benefited from the PTC allocated to them. The Bipartisan Budget Act of 2018 (P.L. 115-123) modified the advanced nuclear PTC to permit a public power utility or cooperative to allocate its portion of the PTC to other partners in the project, including an IOU co-owner or entities engaged in the design or construction of the project. Additionally, the new law eliminated a 2020 “placed-in-service” deadline for qualifying for the PTC. This will allow the full 6,000 MW of new capacity to claim the PTC, despite slower than expected construction of new advanced nuclear facilities.

Small Modular Reactors

SMRs have the potential to be an important addition to America’s energy mix. They are small nuclear reactors that could generate up to 300 megawatts of power and be linked together to provide incremental power as load grows. SMRs could yield significant economic, energy security, and environmental benefits. They are expected to be an attractive option for generating electricity from a non-greenhouse gas emitting energy source and could provide utilities with flexibility through scalability and plant siting. Because of the potential benefits of SMRs, DOE has provided funding for the accelerated development and commercialization of this technology.

On February 19, 2016, DOE announced an agreement to support possible siting of an innovative SMR project at its Idaho National Laboratory (INL). The Site Use Permit allows APPA member Utah Associated Municipal Power Systems (UAMPS) to access the INL site to analyze environmental, safety, and siting conditions to identify potential locations suitable for building its Carbon Free Power Project. On January 12, 2017, NuScale Power, working in conjunction with UAMPS, submitted its design application to the NRC to approve its SMR commercial power plant design. This is the first-ever SMR design certification application to be submitted to the NRC. Completion of the certification process is expected 40 months from the date of submission. If approved, this project will be a 12-module power plant built on the site of the INL near Idaho Falls, Idaho. Additionally, TVA submitted an early site permit for two or more SMR modules at the Clinch River Nuclear site on May 12, 2016.

Congressional Action

Several bills have been introduced in the House of Representatives and Senate on nuclear matters in the 115th Congress. S. 512, the Nuclear Energy Innovation and Modernization Act, by Senate Environment & Public Works Committee Chairman John Barrasso (R-WY), would establish new transparency and accountability measures related to NRC’s budget and fee programs. It would also ensure the Commission could develop the regulatory framework necessary to enable the licensing of advanced nuclear reactors. In addition, S. 512 would establish performance metrics and reports to Congress to improve transparency on the timeliness of decision making. The bill was approved by the committee on March 22, 2017, by a vote of 18-3.

On February 9, 2018, Congress passed and the President signed into law H.R. 1892, the Bipartisan Budget Act of 2018. In addition to funding the government, the law carries extensions of certain energy tax credit provisions, including the nuclear PTC. Specifically, it includes a suspension of the nuclear PTC 2020 “placed-in-service” deadline for up to 6,000 MW in nuclear capacity, allocated according to the order placed in service. This will enable new nuclear that may not be in service by the end of 2020 to claim the remaining credits. The law also includes a provision to allow public power utilities partnered in nuclear development projects to assign their allocation of a nuclear PTC to entities with tax obligations that are involved in the project. Public power utilities and rural electric cooperatives have partnered with IOUs in the construction of new nuclear plants in recent years, so this will allow those utilities to take advantage of the nuclear PTC.

H.R. 1625, the Consolidated Appropriations Act of 2018, was passed by the House and Senate and signed by the President on March 23, 2018. Among other things, the bill would increase annual funding for non-defense energy programs at DOE by roughly $1.6 billion dollars. However, despite the President’s call to restart adjudication of the Yucca Mountain license application in the Administration’s FY 2018 budget request, H.R. 1625 included no funding to do so.

On May 10, 2018, the House of Representatives passed H.R. 3053, the Nuclear Waste Policy Amendments Act of 2017, by a vote of 340-72. Sponsored by the Energy & Commerce Committee’s Environment Subcommittee Chairman John Shimkus (R-IL), the legislation would preserve Yucca Mountain as the most expeditious path for spent nuclear fuel and high-level radioactive waste disposal while authorizing interim storage, including private storage initiatives, to provide optionality until Yucca Mountain is fully licensed and prepared to receive shipments. APPA, the Nuclear Energy Institute, National Rural Electric Cooperative Association, and Edison Electric Institute sent a joint letter in support of the bill prior to House passage. It is unclear if the bill will receive a vote in the Senate before the November election.

American Public Power Association Position

APPA supports the construction of a consolidated interim storage facility in a willing host community in the next 10 years. The Association also supports the creation of a congressionally chartered federal corporation dedicated to implementing the waste management program and construction of a final repository for nuclear waste, including, but not limited to, Yucca Mountain. APPA appreciates Congress’s efforts to modify the PTC for nuclear facilities to permit a public power utility to transfer or sell its allocation of these tax credits to an IOU project co-owner, as well as the elimination of the placed-
in-service date. In addition, the Association supports federal efforts to further the development of SMRs, including the licensing and commercialization of such technologies for use by electric utilities in the U.S.