As the nuclear energy economy continues to accelerate across the United States, lawmakers in Kentucky are weighing a bill that would see the commonwealth invest tens of millions of dollars toward developing sites for reactors.
Senate Bill 57, sponsored by Paducah Republican Sen. Danny Carroll, would establish what’s called the Kentucky Nuclear Site Readiness Program, a $75 million grant initiative with the goal of accelerating nuclear energy developments in the state. The measure passed out of the Senate Monday with no dissenting votes.
Carroll has been one of the legislature’s strongest advocates for nuclear developments in Kentucky over the past decade. He said the state needs to make a move in the nuclear space or else it risks getting left behind.
“We are at a tipping point in nuclear energy efforts in our state. We either invest at a significant level or we fall back with the states who are not committed,” he said Monday on the Kentucky Senate floor.
Three projects could be selected to receive up to $25 million to support applications for early site and construction permits – as well as combined operating licenses – from the U.S. Nuclear Regulatory Commission.
Kentucky Nuclear Energy Development Authority (KNEDA) – the nonregulatory agency Carroll pushed to create last year – would recommend projects to the legislature for those grants. They would be evaluated based on site suitability, potential economic return and location, among other factors. The locales that ultimately host those awarded projects would need to obtain the state’s nuclear-ready community designation before funds can be doled out.
Each grant could then cover roughly a third of each site’s price tag to go through the licensing process – with the other two thirds coming from the participating utility and a hyperscaler (like Google or Amazon) hoping to buy nuclear power to use in data centers.
The western Kentucky senator said the bill has the potential to pay big dividends when it comes to economic impact.
“When you look at a $75 million [state] investment that has a $20 billion anticipated return, you know, that's a good investment, and it's going to be life changing for some communities within our state,” Carroll said in a February interview.
Paris GOP Sen. Stephen West heaped praise on the bill Monday, saying it may prove to be “the most important piece of legislation to pass the General Assembly this session.”
“The best time to plant a tree is today, and the senator is bringing this measure today,” West said. “We need to get behind this. We need to fund it. My only complaint is we need to put in more funding than [Carroll has] asked for.”
Carroll also said Monday that an additional $75 million in appropriations has been requested to invest in nuclear project developments in the state through KNEDA. Carroll has previously said those KNEDA grant funds serve to urge the development of the state’s evolving “nuclear economy” by supporting ancillary businesses, providing education and workforce development.
Though the measure was reported favorably out of a pair of February Senate committee meetings, a Kentucky Resources Council representative raised concerns at that time about the bill, saying its language does not guarantee that projects selected for the funds will generate power.
As written, the bill currently states that a grant funding recipient and all of its partners would forfeit and repay all funds awarded within 60 days of:
- Failing to apply to the NRC for early site approval for one year
- Failing to apply for a construction permit through the NRC or a combined operating license within five years of receiving an early site approval
- Failing to start construction within 10 years of all necessary permits and licenses having been obtained
- The transferring of the entirety of a utility or affiliate’s interest in the early site permit/construction permit/combined operating license before construction has started
The bill also indicates that the Kentucky Public Service Commission may allow for the recovery of costs “not covered in the existing rates of the utility that have been incurred in applying for and procuring an early site permit, construction permit, or combined operating license,” while also not allowing cost recovery for any amounts offset by grant funding.
Audrey Ernstberger, an attorney and lobbyist with KRC, said the version approved by the Senate doesn’t protect Kentucky’s ratepayers enough, and could potentially leave them holding the bag.
“These projects can get incredibly expensive, and there's no guarantee that these projects can be finished,” Ernstberger said. “Even with the surety bond to repay the $25 million to the state and the awarded grant fees, utilities could still be approved [by the Kentucky Public Service Commission] to recover a considerable amount of money from ratepayers who might never see the service.”
Ernstberger also said the measure “sidesteps” the state’s “used and useful” standard, which has been invoked for decades in the commonwealth to mandate that energy assets be in operation and benefitting a utility’s customers before they’re asked to cover any of that asset’s costs.
“It kind of foregoes this by not having any type of guarantee that a nuclear project that's going to be funded by the ratepayers will benefit that ratepayer in particular,” she said.
She also questioned whether nuclear energy is the safest and most cost-effective solution when it comes to meeting Kentucky’s projected increases in energy demand in the coming years, citing a KRC analysis published in December that recommended the state invest in solar, wind, natural gas combined cycle and combustion turbine capacity, as well as short- and long-duration energy storage.
Ahead of Monday’s vote, Carroll called KRC’s concerns “premature,” saying that the protections in the bill as written are enough to safeguard the state’s investment and the wallets of customers who use utilities that launch grant-funded projects.
SB57 now advances to the state House.
