Nuclear power bill at statehouse conjures up ghosts

February 9, 2011

Indiana’s last flirtation with nuclear power didn’t end well. The Marble Hill nuclear plant near Madison, a project of Duke Energy Corp. predecessor PSI Energy, was abandoned in 1984 after $7 billion in construction-cost overruns.

Now, a measure in the Indiana General Assembly has evoked old ghosts; it would require Indiana regulators to allow utilities to quickly recover from ratepayers costs to study, design and build nuclear power plants. The bill is already drawing heavy criticism from the Citizens Action Coalition, a utility watchdog group.

Traditionally, a utility and its shareholders bear the upfront costs of such projects and then seek to recover them, later, in a subsequent rate case.

The 21-page Senate Bill 251 is set for hearing at 9 a.m. Thursday. Proponents are calling the proposal a "clean-energy" bill that would remove funding hurdles to such projects in Indiana.

James Merritt (R-Indianapolis), co-sponsor of SB 251 and the chairman of the Senate Utilities and Technology Committee, noted the resurging interest in nuclear power on a national level. He said Indiana sooner or later will likely have to revisit it.

Political realities at the Statehouse are driving the discussion because Republicans, who are traditionally more open to nuclear power, now control both chambers. Other co-sponsors of the bill are Republicans Beverly Gard (Greenfield), Brandt Hershman (Monticello) and Phil Boots (Crawfordsville).

It may be now or never for utility interests who’ve been prolific this session with pro-utility legislation, given the shift in power.

SB 251 would amend state utilities law enacted in recent years that allows utilities to seek timely recovery of costs for so-called clean-coal projects. The most notable such project is Duke Energy’s $3 billion coal-gasification plant, under construction in Edwardsport.

Duke’s plant, which will convert coal to a cleaner burning gaseous state, is running some 30 percent above initial construction cost estimates.

“What [utilities] have done is say, ‘let’s just add nuclear’ to that” clean-coal law, said Jack Wickes, a Lewis & Kappes attorney representing large industrial energy customers.

Of course, as Wickes points out, there are no commercial nuclear plants operating or proposed in Indiana, at least not yet. As he reads the bill, however, it appears utilities would be able to petition the Indiana Utility Regulatory Commission for costs to construct nuclear plants in other states that provide electricity to Indiana.

Some of the electricity produced at American Electric Power’s Donald C. Cook nuclear plant in Michigan is already exported to northern Indiana, for example.

Of particular concern in SB 251 to Wickes is that it appears utilities would be able to deem as qualified expenses—those that could be recovered from ratepayers—certain costs toward site selection, design, licensing or permitting “regardless” of whether the facility for which such costs are incurred is ultimately constructed or placed in service.

“We’re going to end up with legislation that’s just more risks ... and costs to ratepayers,” Wickes said.

The voluminous bill also includes portions of recently proposed SB 102 that would require the IURC to allow an energy utility to bill customers for costs of new federal mandates such as certain environmental rules and energy-efficiency standards. Such expenses, recovered apart from a traditional rate case, are known as trackers.

Ratepayer groups have grown weary of such trackers and say the latest measure could allow utilities to essentially obtain a regulatory rubber stamp, without sufficient oversight of the IURC.

Kerwin Olson, program manager at Citizens Action Coalition, called SB 251 a “utility Christmas tree wish list.”

The group issued a statement Wednesday morning calling for the bill's immediate withdrawal, saying it would lead to "skyrocketing electric bills" if passed.

“As we have stated many times over the last four years, the only way utility companies can build coal and nuclear plants is by shifting all design, construction and operating risks to the ratepayer," Olson said in the statement. "Ratepayers would be mandated to assume all of the risk, while monopoly utility companies walk away with all the profit.”



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