Bill Allowing Construction of Nuclear Reactors in Indiana Clears First Hurdle

Senate Bill 271 would pave the way for the first small modular nuclear reactor in the state.
January 24, 2022

The Senate Committee on Utilities approved a bill that would allow the construction of nuclear reactors small enough to install in existing abandoned coal-fired power plants.

But environmental and consumer advocacy groups are concerned the expensive projects could put the health of Hoosiers at risk and saddle their monthly bills with extra costs for projects that could ultimately never provide them with electricity.

Senate Bill 271 would empower the Indiana Utility Regulatory Commission, which oversees utilities in the state, to basically approve the construction, purchase or lease of small modular nuclear reactors for use in Indiana as long as the company planned to apply for federal nuclear permits.

The bill would also make electric utilities that take on nuclear energy projects eligible for financial clean energy incentives.

“At the present time, we have no nuclear energy production in the state of Indiana. However, Hoosiers do use nuclear energy that is produced in our neighboring state of Michigan,” said Sen. Eric Koch, author of the bill. “This bill will create a framework for Indiana, if it so decides, to move into the world of small modular nuclear reactors.”

Department of Energy video explaining small modular reactors

Small modular reactors are about the third of the size of traditional reactors and produce about 300 megawatts of electricity, or about half the power produced by a coal-fired power plant.

The reactors produce energy without producing greenhouse gases like carbon dioxide or methane, which trap heat in the atmosphere and change the climate.

But, like traditional nuclear reactors, small modular reactors still use radioactive nuclear material to produce energy. The spent nuclear fuel would either be stored near the reactor site or be shipped to federal nuclear waste repositories in Nevada, New Mexico and Texas.

According to the U.S. Environmental Protection Agency, most of the waste produced from commercial nuclear power plant reactors — more than 85,000 metric tons — is stored at the site where the waste was generated.

Every year, that number grows by an additional 2,000 metric tons.

SB271 would allow the storage of “high level radioactive waste” at the reactor site as long as the plant owner met all the “applicable requirements” of the U.S. Nuclear Regulatory Commission.

Koch said the reactors would most likely be built at the site of retired coal-fired power plants or natural gas plants due to existing infrastructure and a highly trained workforce that could easily transition to nuclear power.

The sites would be beneficial to utilities, but could potentially place Hoosiers at risk if utilities find it easier or less expensive to store waste at the plant sites, much like they did with toxic coal ash during the heyday of coal-fired power plants.

“If these SMRs are built at coal plant sites around Indiana, then this radioactive waste under the plan to store the waste at the sites would be in close proximity to major population centers,” said Hoosier Environmental Council senior policy director Tim Maloney during the committee hearing.

Maloney said coal-fired power plants in Indianapolis, Terre Haute, Evansville and several cities in northwest Indiana, as well as the Indiana suburbs of Louisville and Cincinnati, Ohio could be affected by the storage of radioactive materials at the site.

Lawmakers at the meeting discussed the possibility of small modular reactors being purchased by towns or counties, potentially increasing radioactive storage sites.

According to nuclear industry representatives who spoke at the committee hearing, nearly a decade would pass before the reactor would produce electricity and several more years would pass before nuclear waste is produced.

The federal permit process to construct a nuclear facility takes about three years, and construction of the reactor takes another three to four years.

Consumer and environmental advocates are concerned that the long period of time between the project proposal and completion could allow utilities to reap the financial benefits of investing in clean energy but make ratepayers absorb the full brunt of the reactor price.

SB271 would add small modular reactor projects to the list of clean energy projects that are eligible for financial incentives, including recovery of costs through rate increases for utility customers.

Citizens Action Coalition executive director Kerwin Olson testified that utilities could charge customers for the attempt to purchase the nuclear reactor for years without any climate change benefits.

Olson said Indiana ratepayers would likely face the problems recently faced by ratepayers in Georgia and South Carolina, the sites of a nuclear reactor under construction and an abandoned project.

“The only nuclear power plant under construction in the country today, the Vogtle three and four reactors in Georgia, are now five years behind schedule and $14 billion over their original cost estimate standing at a price today of nearly $30 billion. The ratepayers of Georgia have been paying for the Vogtle three and four reactors, which are not delivering any energy to their customers, for 10 years now,” Olson said.

The construction costs of the Vogtle reactors jumped from $14.1 billion to $32 billion between 2009 and 2021, an increase of 140%.

The Georgia Public Service Commission, the entity that regulates utilities in Georgia like the IURC does in Indiana, and the Georgia General Assembly allowed Georgia Power to recover the costs of financing associated with the project.

As a result, Georgia Power customers paid $3.5 billion more in their electric bills between January 2011 and December 2020 to cover the cost of the financing, and will pay about $500 million more by the end of construction.

In South Carolina, lawmakers in 2008 approved a $9.8 billion project to build two nuclear reactors at the Virgil C. Summer Nuclear Station. The privately owned South Carolina Electric and Gas Co. and the state-owned electric and water utility named Santee Cooper would be joint owners of the reactors, which were expected to be completed by 2019.

After a series of construction setbacks and cost overruns, the project was scrapped. The project was little more than a hole in the ground, but South Carolina officials allowed the companies to charge ratepayers for the cost of financing the project. Ratepayers are paying off about $2.3 billion in extra charges due to the failed project local press has called the “Nukegate scandal.”

Indiana has had its own failed nuclear project in 1984, when the Public Service Company of Indiana, now Duke Energy Corp., abandoned the Marble Hill Nuclear Generating Station project in Jefferson County midway through construction.

The Marble Hill Generating Station before it was demolished

The U.S. Nuclear Regulatory Commission halted the project and launched an investigation due to “quality control and construction management inadequacies at the plant.” The NRC eventually found that concrete placement failed to meet requirements and needed repairs before construction could continue. Construction was later halted again due to questions about the electrical work at the facility.

Indiana Gov. Robert Orr established a task force that ultimately decided the company should scrap the plant. Orr endorsed the task force’s finding.

The company spent $2.5 billion, or about $6.7 billion in today’s dollars, before abandoning the project. It cited an “overwhelming” increase in costs and a lack of money to finish the construction as reasons for the abandonment.

The company recouped its costs with utility rate increases over 20 years.

“Before we add small modular reactors to the clean energy incentives that are available to that technology, let's make sure it is as cost effective as the industry claims that it is because we see no evidence that it is to this point,” Olson said. “Let's have the industry prove that these plants are safe, that they are cost effective, before we provide financial incentives to these companies and put these costs in risks on the backs of ratepayers.”

Olson and other environmental advocates urged lawmakers to vote against the bill and to instead support wind and solar projects, which can be up and running 18 months after completing the permitting process.

The bill passed the committee and now heads to the full Indiana House of Representatives for consideration.

Bill Allowing Construction of Nuclear Reactors in Indiana Clears First Hurdle