Measure includes shifts in state’s priorities in law for ‘only way we keep lights on’
Legislation touted by its sponsor as the logical follow-up to a bipartisan law signaling support for new nuclear energy in Wisconsin got its own hearing in front of an Assembly committee this week.
The new bill, AB472, is a grab-bag of measures. A largely supportive train of witnesses offered even-toned objections to differing parts, but opposition was muted at most — a remarkable development in a state that repealed its moratorium on new nuclear plants only nine years ago.
The bill, said sponsor Rep. Shae Sortwell (R-Two Rivers), addresses start-up costs, in part by adding a tax credit for the first 19 years of a nuclear power plant’s operation, its value determined by how much power a plant produces.
Sortwell termed it “a long-term investment in our baseload generating capacity,” referring to the sort of power plant that operates predictably at a given output.
That means nuclear, given federal laws forcing the closure of coal-fired plants and the state’s commitment to reduce carbon emissions. As the sponsor of a Senate version of the bill, Sen. Jesse James (R-Thorp), told the hearing, nuclear plants run “when the sun isn’t shining and the wind isn’t blowing.”
The credit would be a sizeable subsidy: $1.21 for every megawatt-hour of electricity a plant produces in a year for the first 10 years, then phasing down to 12.1 cents per MWh in the 19th year. For a plant producing 10 million MWh, the typical annual output of Wisconsin’s one existing nuclear plant, that would mean a credit up to $12.2 million a year at the outset, $178 million in total.
Sortwell said he sees the credit as a way for Wisconsin to compete for new nuclear development, including the about-to-start deployment of “small modular reactors,” when other states are offering up-front subsidies, including loans. The tax credit amounts to giving up a portion — Sortwell reckons about half — of tax revenue a new plant generates, revenue the state would not get if a plant isn’t built here.
“The government on the whole isn’t losing money,” he said, just taking less than it would otherwise have gotten, assuming the plant was built without the credit.
Whether a plant would be built without it is in question. Nuclear plants are costly because of regulatory demands that start long before construction begins.
Electricity rates are set by the state Public Service Commission, which bases them in part on a utility’s costs. One part of the bill would declare that some of the regulatory prep work leading up to filing for approval to start building would count as a “recoverable” cost. Currently, pre-approval costs are not necessarily “recoverable.”
“Utilities wishing to advance new nuclear construction in our state face a one-way financial risk. We must invest more than $100 million upfront with no assurance that those costs will be recoverable,” Joel M. Haubrich, lobbyist for WEC Energy Group, owner of two utilities, Wisconsin Public Service and We Energies, told the hearing.
If costs aren’t recoverable, investors take the haircut, and such uncertainty stymies nuclear investment.
If they are, the tax credit would reduce the sum that ratepayers would have to bear, keeping nuclear’s high regulatory costs from raising existing customers’ bills, Sortwell told the hearing.
The bill’s other provisions include ones altering lists of energy priorities in state law that enshrine conservation and “renewable” sources, such as wind turbines and solar panels, as top priorities. The bill moves nuclear up to that first tier. It also would alter the state’s requirement that 10 percent of electricity be from “renewable” sources to instead be from “low-carbon-emission” sources that include nuclear.
The change, said Sortwell, recognizes that if the state government wants to reduce carbon emissions, nuclear power meets the goal as well as solar and wind do. Haubrich put it bluntly: If government policy is to stop emitting carbon, “the only way we can keep the lights on 24-7 is nuclear.”
The context includes the surge in proposed data centers in Wisconsin — the physical sites of the internet’s infrastructure, which use vast amounts of power.
“Whatever my opinion of data centers,” said Sortwell, “they are coming.” The bill includes a provision to set distinct rates for “very large” electricity consumers meant to direct the costs of added nuclear generating capacity onto large users and keep it off residential customers.
Sortwell said he sees the economic payoff not so much in data centers but in the ample, reliable power for any user that a robust nuclear sector would provide — and the jobs. That includes, he told the hearing before the Committee on Energy and Utilities, hope that the industry of factory-built small modular reactors would develop in Wisconsin, meaning engineering and skilled manufacturing expertise here rather than elsewhere.
“There’s a domino effect of building these SMRs,” he said, arguing that early adoption of the technology would lead to Wisconsin being a home for the industry.
Patrick McIlheran is the Director of Policy at the Badger Institute.
Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute Marketing Director Matt Erdman at matt@badgerinstitute.org.
Submit a comment
Go to the full page to view and submit the form.
