Virginia has taken a significant further step to promote clean energy. The General Assembly recently passed legislation promoting the development of small modular nuclear reactor (SMR) electric-generating facilities. Under the legislation, investor-owned electric utilities may accelerate the recovery of costs they incur when developing one or more SMRs at a single site, facilitating the investment required to advance this type of resource. Each SMR can be up to 500 megawatts.
SMRs are relatively small nuclear power plants, a significant portion of which can be built off-site. Compared to large traditional custom-built nuclear plants, SMRs are touted as more economical to develop and construct because they are “modular” and can be built in factories using replicable designs at lower costs.
The SMR legislation consists of two bills that become effective on July 1, 2024. Each bill is directed at one of the commonwealth’s two largest investor-owned electric utilities, Dominion Energy Virginia (DEV) and Appalachian Power Co. (APCo). Both bills clear the way for the utilities to recover SMR-related development costs on a current basis from their respective ratepayers, as opposed to traditional recovery over the service life of the facility. However, the bills also have notable differences.
House Bill 1491, which relates to APCo, allows the utility to recover most SMR development costs, but excludes the recovery of costs for obtaining construction permits and licensing with the Nuclear Regulatory Commission. Other than the cost to acquire a site, APCo’s overall cost recovery is capped at $125 million. House Bill 1491 expires on July 1, 2034.
The legislation that applies to DEV, Senate Bill 454, allows the utility to recover up to 80% of its costs to develop an SMR facility on a current basis through a special rate adjustment clause, or “rider,” with the remaining costs eligible for conventional recovery. Unlike House Bill 1491, Senate Bill 454 does not exclude any categories of development costs. Instead, the bill caps the amount that DEV can recover on an accelerated basis by limiting the impact of such recovery to no more than $1.40 a month on the typical customer’s monthly electric bill, assuming 1,000 kilowatt hours of monthly electricity usage. The DEV legislation expires on Dec. 31, 2029.
Any accelerated recovery rider to recoup SMR development costs will be subject to Virginia State Corporation Commission approval. Before the costs can be passed to the utility’s customers, the commission must determine that they are reasonable and prudent.
While there is significant work to be done before SMR technology can be added to Virginia’s electric generation portfolio, this new legislation is a meaningful step in that direction. With the ever-increasing demand for electricity, additional nuclear generation could be the key to achieving the commonwealth’s goal to be carbon free by 2050.