A last-ditch effort to send hundreds of millions of dollars in tax breaks to Georgia’s struggling Plant Vogtle nuclear project appears to be stuck in the U.S. Senate as lawmakers grapple with the prospect of a broader tax overhaul.
Boosters of the estimated $25 billion project, the only one of its kind left in the U.S., think the federal bill could throw an economic lifeline to the companies behind the venture as they decide whether to move ahead with construction or abandon work amid major cost overruns and deep delays.
Under current law, newly constructed nuclear reactors can receive federal tax credits for producing electricity only if they are put in service before 2021. The bill before Congress would lift the deadline.
The extension would help preserve the roughly $800 million in tax credits that Georgia Power, which has a nearly 46 percent share of the project, has been counting on as it builds a pair of new reactors at Plant Vogtle near Augusta.
“Credits for the Vogtle project are part of an overarching proactive financing strategy and are a direct benefit for customers, offsetting additional costs associated with building the first new nuclear (project) in 30 years,” said Jacob Hawkins, a spokesman for Georgia Power.
A bill extending the tax credits sailed through the U.S. House nearly unanimously back in June, but it needs the Senate's approval before it can be sent to President Donald Trump's desk. And that's where the bill appears to be stuck, not because of outright opposition but the greater gravitational pull of a broader tax overhaul.
“A consensus on Capitol Hill is not necessarily a powerful driver for action,” said Timothy Fox, vice president at ClearView Energy Partners LLC, a Washington-based research firm.
With their health care agenda stalled, Republican leaders on Capitol Hill are dead set on achieving their decades-long quest of rewriting the tax code. In the meantime, some lawmakers are wary of making smaller tweaks to the current system out of fear that it could sap support from or complicate their larger effort.
Meanwhile, top Senate Democrats want GOP leaders to first agree to extend other expired tax incentives for roughly a dozen other sources of clean energy, including fuel cells, geothermal heat pumps and wind microturbines, if they are also going to aid Vogtle.
The tax-writing Senate Finance Committee has yet to hold hearings on the issue. A spokeswoman for the committee’s chairman, Orrin Hatch, said the Utah Republican “recognizes the importance of the issue and is analyzing options with members.”
Tax overhaul
White House officials hope both chambers of Congress can pass a tax overhaul by the end of the year, but the timeline appears murky at best as Congress must first deal with other time-sensitive issues such as raising the government’s borrowing limit.
“When it passed the House, we suggested that it was unlikely to move in the Senate until they came up with an idea of how to move forward with tax reform,” Fox said, referring to the nuclear tax credit extension bill. “We have not seen any indication since then that the bill is likely to be considered by the Senate soon.”
There has been talk among some project backers of trying to attach the Vogtle legislation to must-pass bills this fall, including a short-term government funding plan.
Amanda Maddox, a spokeswoman for U.S. Sen. Johnny Isakson, said the Georgia Republican will look to get an extension “included on tax reform or any other bill that is moving between now and the end of the year.”
If and when the Senate does act matters a great deal to the consortium of companies behind Vogtle.
Georgia Power and its nonprofit partners Oglethorpe Power, MEAG and the city of Dalton are expected to make a recommendation this month about whether to continue with the project, which is more than $3 billion over budget and more than three years behind its original schedule. Their review comes in the wake of Westinghouse, the project's main contractor, declaring bankruptcy, a move that sent Vogtle and a similar project in South Carolina into upheaval. The Georgia Public Service Commission has final say on the project.
The PSC could vote to approve the latest round of Vogtle expenses at a meeting today.
Georgia backers of the project recently visited Washington to ask for more aid from the Trump administration, Bloomberg reported last week, potentially by increasing or speeding up the disbursement of $8.3 billion in federal loan guarantees.
“If we decide to go forward with the Vogtle project, we will work with (the Department of Energy) and Congress on any necessary adjustments in existing programs to support the project going forward,” Georgia Power’s Hawkins said.
At this point, Vogtle would be the sole beneficiary of the nuclear production tax credits if Congress does indeed extend them.
The bill would also allow the nonprofits associated with the project to take advantage of their tax credits by selling them to for-profit participants, such as Georgia Power or construction firms. The move would allow Oglethorpe and others to sell roughly $1 billion worth of tax credits, the AJC previously reported.
The recent cancellation of a similar nuclear project at V.C. Summer in South Carolina lowers the projected cost of the Vogtle tax credits on the government, which could make the effort more palatable to cost-conscious fiscal conservatives. But it also cost Georgia's lawmakers — who have been pushing for an extension for months — vocal boosters in the South Carolina congressional delegation, which had been pushing hard on behalf of their own project.
Nuclear power also has its critics on Capitol Hill, who see it as a waste of taxpayer funding.
“With so much renewable energy, nuclear power just doesn’t make sense,” U.S. Rep. Lloyd Doggett, a Texas Democrat, said earlier this summer.
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