GOP lawmakers eye small nuclear in Indiana, despite advocate concerns

A bill under consideration in the Indiana General Assembly would create new incentives for small nuclear technology. (Ned Oliver/Virginia Mercury)

Incentives to boost manufacturing of small nuclear reactors are at the heart of a Republican-backed bill that seeks to expand Indiana’s energy portfolio. But consumer advocates argue the novel technology is “too risky” and will come at a “massive” cost to ratepayers.

The wide-ranging House GOP priority measure creates a 20% tax credit for manufacturers of small modular nuclear reactors, or SMRs. 

Another provision would let public utilities ask for permission from utility regulators to spend money on SMRs and recover their costs before getting certificates of public convenience and necessity.

House Bill 1007, authored by Rep. Ed Soliday, R-Valparaiso, was heard and amended in the House utilities committee Tuesday. A vote to advance the legislation to the full chamber is expected next week.

Legislation similar to Soliday’s — Senate bills 423 and 424 — would create SMR pilot programs and allow utilities to shift research and development costs on to Hoosier ratepayers. Those GOP-authored bills are scheduled for hearings on Thursday in the Senate Utilities Committee.

“Our goal in this ongoing endeavor is keep Indiana competitive in the national and world marketplace by keeping our five foundational energy pillars — reliability, affordability, resilient, stability and environmental sustainability — in balance,” said Soliday, who chairs the House utilities committee. He emphasized that his bill has been in the works for nearly a year.

SMRs are compact nuclear reactors — smaller than traditional nuclear power plants — that can generate up to 500 megawatts of electrical power. The International Atomic Energy Agency cites a lower range, qualifying SMRs as producing under 300 megawatts. Indiana law defines SMR power capacity up to 470 megawatts. The federal government hasn’t settled on a firm definition.

Currently, no electricity-generating nuclear power plants exist in the state. And of the few projected SMR sites across the United States — and the world — none are currently operational.

Even so, major Indiana employer Rolls Royce is developing an SMR, and there’s potential for a Mount Vernon nuclear manufacturing facility to build the technology, as well. 

Soliday said SMR language in the bill is twofold: “encourage more modern generation to come to the state,” and “put some incentives in place” for companies to manufacture small reactors in Indiana, even if the technology ultimately gets shipped out elsewhere. 

Proponents say the new technology is cheaper and safer than larger nuclear reactors currently in use today. But upfront adoption costs can balloon, and some scientists and environmental groups are concerned that operating expenses are actually much higher, and worry that SMR plants are more dangerous than developers let on.

Of significant concern to advocates, however, is the potential for consumers to bear utilities’ costs of getting SMR up and running.

“That’s not a risk for Indiana ratepayers to take,” said David Van Gilder, senior policy and legal director for the Hoosier Environmental Council. “This is the time for venture capital investment. This is a time for theMetas, the Amazons, the Googles, the Microsofts of the world to support SMRs through investment. This is not the time for what is essentially a tax on Hoosier ratepayers to support an unproven technology.”

Making Indiana ‘more competitive’

Much of Indiana’s electricity continues to come from coal, and while state lawmakers have been slow to commit to other energy options, Indiana’s power companies have been increasingly investing in greener technologies, particularly wind.

Still, Soliday’s legislation provides an avenue for lawmakers to get tough with utilities that plan to close or convert coal plants — though its provisions would apply to any type of generating resource of at least 100 megawatts.

Current law — adopted during the 2024 legislative session — mandates utilities that are not generating at least 85% of peak demand to report three-year projections to the Indiana Utility Regulatory Commission (IURC).

Eight Indiana coal sites offer ‘intriguing opportunities’ for nuclear plants, per new Purdue study

Soliday’s bill would instead require all utilities to report annually the amount of resource generating capacity they plan to take offline. If regulators don’t think a utility can provide reliable service, they will be required to investigate — then either approve or block the utility’s plan.

House Bill 1007 additionally expedites the approval processes for large-load projects, like data centers, and requires utilities to talk to regulators about the power demands of those big customers.

“If we are going to be telling the world that we’re going to onshore a lot of things that have been taken off shore, we’ve got to provide for it,” Soliday said. “We have to provide the infrastructure. And this is happening rapidly, so we have provided an expedited process, but you have to meet certain standards.”

Included in the bill, too, are standards for big customers’ financial assurances and for cost recovery mechanisms.

Much of Tuesday’s testimony centered around SMRs, however.

Danielle McGrath, president of the Indiana Energy Association, said House Bill 1007 “positions Indiana for the future” by “fostering a nascent SMR industry as an all-of-the-above approach to energy,” and by “adding tools to the toolbox, so that we can move at the speed of business and ensure that Indiana remains competitive when working to meet the needs of our customers.”

Suzanne Jaworowski, recently tapped as Indiana’s energy and natural resources secretary, added that Soliday’s bill “is really the foundation for us to bring much-needed generation to the state of Indiana.”

“It attracts advanced nuclear energy, which is the future of energy,” Jaworowski said. “It is sustainable, it is affordable, it is reliable, it is resilient, it is environmentally sound.”

The energy secretary noted that Indiana gets about 45% of its energy from coal, about 38% from natural gas, and 12% from renewables, like wind and solar. But with rising costs of electricity — and increased demand, especially from the state’s ongoing manufacturing boom — Jaworowski said she’s pushing for Indiana to “continue to diversify its generation portfolio,” whether from nuclear, geothermal, natural gas or other sources. 

“(SMR) is a capital investment that takes, up front, a lot of capital. But we right now have the opportunity to cost-share that with these large industrial users, so that makes it more affordable,” Jaworowski continued. “Once it’s built and up and operating, it will be affordable, long term, for 80 to 20 years.”

Steve Baker, president and CEO of Indiana Michigan Power, pointed to a state-funded report, quietly released by the Indiana Office of Energy Development in November, which lauded SMRs as “24/7 dispatchable sources” of carbon-free electricity that have the capacity to meet the state’s growing energy needs. 

Researchers said the reactors could present “substantial opportunities” for Indiana to meet its energy demands, and identified eight current or former coal sites across the state that could serve as coal-to-nuclear opportunities.

That included Indiana Michigan Power’s current coal generating facility in Spencer County. Baker said the utility is now exploring SMR potential at that site.

“We’re very interested in all options available, from a generation standpoint, to meet electrical needs,” he said. “We’re trying to find every way we can to offset costs, to make the cost of new nuclear construction competitive and available for our customers.”

Consumer advocates push back

Kerwin Olson with the Citizens Action Coalition, a utility-focused customer advocacy group, maintained that SMR is not the solution to Indiana’s energy shortfalls. 

“From our perspective, House Bill 1007 has little to do with what your feelings are on SMRs, nuclear power, coal plants, data centers — and everything to do with how you feel about customers, with what the role of a captive rate is, and with what role investors and the utilities play,” Olson said. “Once again, we are flipping the paradigm of the regulatory compact, forcing customers to assume the investment risk of running an investor-owned utility company. We are using — and continue to use — ratepayers as economic development tools, and putting those costs on the backs of ratepayers.”

Olson and other critics of the bill referenced other projects across the country that saw millions, even billions, spent on upfront SMR costs, only for those plans to fall through.

He emphasized, for example, a “$9 billion hole in the ground” in South Carolina, where utility customers are on the hook for billions of dollars for an abandoned nuclear power project.

“We are using, and continue to use ratepayers as economic development tools, putting those costs on the backs of ratepayers for the better part of 20 years now,” Olson said. “We are putting the cost of (research and development), planning and permitting on the backs of captive consumers who are struggling to pay their bills on a daily basis. This bill is loaded with rate increases.”

Van Gilder, with the Hoosier Environmental Council, added that ratepayers shouldn’t be charged for technology that does not yet exist.

“The way that the bill is designed, it recognizes that the development of SMRs is a risky business. … The concept of SMRs is to build smaller size reactors in assembly line form. This does not exist today. There are no assembly lines for SMRs. It will take decades to build that industry, if it even does get built,” he said. “This is too risky to put on the backs of Hoosier ratepayers.”