LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7547 NOTE PREPARED: Feb 10, 2025
BILL NUMBER: HB 1007 BILL AMENDED: Feb 10, 2025
SUBJECT: Energy Generation Resources.
FIRST AUTHOR: Rep. Soliday BILL STATUS: 2
nd
Reading - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
XFEDERAL
Summary of Legislation: (Amended) Small Modular Nuclear Reactor Credits: This bill provides a state
tax credit for expenses in manufacturing small modular nuclear reactors in Indiana and establishes procedures
for energy utilities to request approval from the Indiana Utility Regulatory Commission (IURC) for: (1)
expedited generation resource (EGR) plans to meet customer load growth; (2) generation resource submittals
under approved EGR plans; and (3) projects serving large load customers. It also sets requirements for
request approvals, financial assurances, and cost recovery for utilities and allows public utilities to seek
IURC approval to incur and recover project development costs for small modular nuclear reactors.
Small Modular Nuclear Reactor Cost Recovery: The bill provides that any standard tariff offered by an
energy utility after June 30, 2025, to a large load customer of the energy utility must include a provision that
requires reimbursement by the large load customer of at least 80% of the project costs reasonably allocable
to the large load customer, regardless of whether the large load customer ultimately takes service in any
anticipated amount and within any anticipated time frame. This bill also authorizes rate adjustments for
timely recovery of 80% of approved costs, with 20% deferred to the next general rate case and permits the
IURC to approve cost deferral for utilities opting out of recovery provisions.
ERP Requirements: This bill updates electric resource planning (ERP) report requirements post-2025 for
utilities retiring or refueling generation resources of 125 megawatts or more, specifying replacement or
refueling capacity details and requires IURC staff reports on planned retirements and mandates investigations
if reliability concerns arise. It also requires utilities to specify the reasoning they are retiring these electricity
generating facilities. It also empowers the IURC to direct construction, acquisition, or delay of resource
retirements to maintain service reliability and makes technical amendments to related Indiana Code
provisions.
Effective Date: Upon passage; January 1, 2025 (retroactive); July 1, 2025.
Explanation of State Expenditures: Summary - The bill could increase the workload of the IURC, Office
of Energy Development (OED), the Indiana Economic Development Corporation (IEDC), and the Office of
the Utility Consumer Counselor (OUCC). Increases in workload are expected to be accomplished within
HB 1007 1 existing resource and funding levels.
Small Modular Nuclear Reactors: The bill could increase the workload of the IURC to consider and approve
generational resource plans and EGR plan requests submitted by utilities. The bill would also increase IURC
workload to receive and review progress reports submitted by utilities that receive approval for a generational
resource plan or EGR plan. The bill could also increase the workload of the OED, the IEDC, and the OUCC
to meet with utilities as a condition of a utility’s generation resource plan application to have each agency
review the proposed plan.
Small Modular Nuclear Reactor Cost Recovery: Additionally, the bill could increase the workload of the
IURC to (1) process requests to recover small modular nuclear reactor planning costs through utility rate
increases and (2) include additional information concerning utility retirement or refueling in the IURC’s
annual report starting in 2026.
ERP Requirements: This bill will increase the workload of the IURC to arrive at facility retirement decisions.
The IURC will have 120 days after the initiation of a facility retirement investigation to grant an approval
or denial. If the IURC does not grant an order in this time frame, the utility will be considered to have met
the requirements for facility retirement.
Additional Information - The operating budget of the IURC is funded by regulated utilities operating in
Indiana. The rate at which to bill the utilities is based on the agencies' budgets, less reversions, divided by
the total amount of gross intrastate operating revenue received by the regulated utilities for the previous fiscal
year. Based on this formula, utilities are currently billed approximately 0.12% of their gross intrastate
operating revenues to fund the IURC.
Explanation of State Revenues: Summary - The bill could increase utility rates paid in the state to the extent
utilities petition the IURC to recover planning costs or other specified cost allowances. Changes to utility
rates paid in the state would increase revenue the state receives from sales tax collections.
Additionally, the bill could reduce state revenue from tax credits afforded to the development small modular
nuclear reactors. The IURC has no information on planned small modular nuclear reactors in the immediate
future.
Additional Information - Small Modular Nuclear Reactor Cost Recovery: Generational resource plans and
EGRs could (1) increase utility efficiencies resulting in lower energy production costs and (2) increase utility
rates to the extent the IURC approves recovery of acquisition and project costs. In the event a generational
resource plan is not approved by the IURC, the utility is still authorized to recover planning costs through
rate increases. Additionally, the bill allows a utility to petition the IURC to recover small modular nuclear
reactor planning costs.
Changes to utility rates paid in the state would increase revenue the state receives from sales tax collections.
Sales Tax revenue is deposited in the state General Fund (99.838%), Commuter Rail Service Fund (0.131%),
and Industrial Rail Service Fund (0.031%).
Tax Credit for Small Modular Nuclear Reactors: The bill allows a tax credit for the manufacturing costs of
small modular nuclear reactors. Manufacturing costs range based on the number of kilowatts generated in
the facility, anywhere from $3,000 to $8,000 per kilowatt. The tax credit is available for small modular
HB 1007 2 nuclear reactors with a minimum capacity of 470 MW (470,000 kW conversion), so minimum manufacturing
costs for eligible small modular nuclear reactors is expected to be approximately $1.4 B.
The bill allows a taxpayer to claim 20% of a taxpayer's expenditures incurred in the manufacture of a small
modular nuclear reactor in Indiana as tax credit against an individual’s tax liability for Adjusted Gross
Income Tax, Financial Institutions Tax, or Insurance Premiums Tax. The minimum credit that is estimated
to be claimed by any taxpayer is about $280 M. Since this provision is effective tax year 2025, the fiscal
impact could begin in FY 2026. Any unused amount of this credit can be carried over into subsequent years
and the credit is non-refundable.
Explanation of Local Expenditures: The bill could affect municipally-owned utilities. To the extent a
municipally-owned utility is absorbed through a generational resource plan, municipally-owned utility
operations could cease. Additionally, to the extent a municipally-owned utility elects to plan for small
modular nuclear reactor utilization, workload would increase to petition the IURC for recovery of planning
costs through rate increases. Further, municipally-owned utilities would be required to report any retirement
or refueling plans to the IURC.
Explanation of Local Revenues: To the extent a municipally-owned utility successfully petitions the IURC
for recovery of small modular nuclear reactor planning costs or generational resource planning costs, utility
rates would likely increase.
State Agencies Affected: IURC, IEDC, OUCC, OED.
Local Agencies Affected: Municipally-owned utilities.
Information Sources:
https://www.cleantech.com/will-small-modular-reactors-surpass-regulatory-and-supply-chain-hurdles-to-f
ill-the-need-for-stable-baseload-power/#:~:text=Costs%20for%20SMRs%20vary%2C%20but,%243B%2
0for%20larger%20units;
https://www.in.gov/oed/resources-and-information-center/about-indiana-resources/technologies/small-mo
dular-reactors/;
https://pubs.naruc.org/pub/7CE3939B-F659-0270-21D7-7456B16F6F2E#:~:text=An%20Integrated%20
Resource%20Plan%20(IRP,economic%20development%2C%20and%20other%20factors.
Fiscal Analyst: Abdul Abdulkadri, 317-232-9852; Randhir Jha, 317-232-9556; Bill Brumbach, 317-232-
9559.
HB 1007 3