The General Assembly will take another look at legislation that would allow the state’s two biggest electric utility companies to request ratepayer funds to cover costs of early development for small modular nuclear reactors.
SMRs are well-described by their name. They’re smaller than a traditional reactor — those are often rated at about 1,000 MW. An SMR would produce about one-third of that. They’re modular — meaning they can be built off-site and used in an array of one or more reactors.
Gov. Glenn Youngkin’s office made some changes to the bills that supporters say would protect electric ratepayers against major bill impacts — opponents of the measures maintain the bills have ratepayers fronting the risk of an unproven technology.
“With the increase in electricity demand over the past few years in Virginia, small modular reactor technology can play a crucial role in making sure that the new demand is met with emission-free energy,” wrote state Sen. Dave Marsden (D–Fairfax) in a Twitter/X statement supporting Youngkin’s amendments.
Marsden is carrying Senate Bill 454, which applies to SMR exploration by Dominion Energy. It would allow the company to seek cost recovery for “evaluation, design, engineering, federal approvals and licensing, environmental analysis and permitting, early site permitting, equipment procurement, and an authorized rate of return,” according to the legislation.
Del. Israel O’Quinn (R–Bristol) is carrying House Bill 1491, a similar measure that would apply to Appalachian Power Company — but wouldn’t allow the company to ask for ratepayer coverage on federal approval from the Nuclear Regulatory Commission. Licensing through the NRC can cost millions of dollars — fees are how most of the NRC budget is accounted for.
If the bills are approved, the utilities would not be able to automatically add an SMR fee to monthly bills; they’d have to request permission from state regulators to pass on the costs.
When Marsden’s bill went to the governor’s desk in March, it allowed Dominion to request a rate adjustment clause, or rider, that would cost a maximum of $1.75 per month. Youngkin knocked that limit down to $1.40.
The governor also changed applicable costs — clarifying that all costs accrued before July 1, 2024, and 20% of all costs accrued thereafter would not be eligible for recovery by rider. Instead, they’ll be considered in regular biannual base rate proceedings, so it’s not immediately clear how they would affect customer bills. (For example, Dominion rolled $350 million of riders into base rates last year without an increase in base rates.)
As for the Appalachian Power bill, Youngkin added an overall cap — outside of cost to acquire a site, the company would not be allowed to recover more than $125 million total under the legislation.
Both bills allow the State Corporation Commission to put a deadline on this early development work. The regulatory body is also allowed to order the sale of any purchased sites if the work doesn’t yield results in the form of electricity; proceeds from the sale would be returned to customers.
The legislation would also allow SCC regulators to require utilities to pursue federal financial support through the U.S. Department of Energy. The Biden administration is setting aside billions to help finance SMRs in the United States and abroad.
Dominion and Appalachian Power say the legislation would help them develop SMRs over the next decade. The companies are attempting to meet state requirements to generate electricity from entirely zero-carbon sources within thirty years, while meeting rapidly growing demand from data centers and other electricity-intensive industries.
“It’s an effective way to help make sure that the utilities can keep planning for the future to meet future needs for the economy and needs of the customers,” said Bernie McNamee, a McGuireWoods consultant speaking on behalf of Dominion at a February hearing on Marsden’s bill.
Nuclear, which generally produces 30%-40% of the electricity used in the multi-state grid that Virginia is a part of, has baseline capabilities that renewables like wind and solar don’t have due to their intermittent nature; reactors don’t need sunlight or wind to generate electrons. Nuclear supporters see the source as potentially key to a carbon-free energy system.
Opponents to the legislation argue it sets up a cost recovery mechanism for projects that may never produce any electrons. Some have referenced a previous attempt by Dominion to expand its North Anna plant with a third reactor, which petered out in 2017 — but not before the company racked up a reported $600 million in project costs.
“I’m really scared of a North Anna 3 type situation, where… ratepayers are on the hook for tens of millions, if not hundreds of millions of dollars, for a project that may never see the light of day,” said Del. Alfonso Lopez (D–Arlington) in a committee meeting on O’Quinn’s bill.
A failed reactor project in Idaho has drawn similar concerns.
Nuclear is not the only big-ticket energy development that faces market risk. The offshore wind industry, although established in Europe, has struggled with some major American projects.
New Jersey is moving forward on new projects after Ørsted, a Norwegian company, pulled out of the state, citing supply chain difficulties.
Dominion’s own offshore wind project is moving along. The now–$9.8 billion Coastal Virginia Offshore Wind project received final construction approval from federal regulators at the Environmental Protection Agency on Monday. The company plans to begin offshore construction in May.
Opponents to nuclear energy say resources should be spent on developing storage technology to increase the around-the-clock viability of solar and wind.
Marsden is confident that nuclear power is part of the answer.
“There is a certain amount of risk here, but I have faith in American technology and we need to get moving on this,” he said.
Lawmakers reconvene on Wednesday to consider amendments and vetoes made by Youngkin.
