LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7481 NOTE PREPARED: Mar 11, 2025
BILL NUMBER: SB 424 BILL AMENDED: Mar 11, 2025
SUBJECT: Small Modular Nuclear Reactor Development Costs.
FIRST AUTHOR: Sen. Koch BILL STATUS: CR Adopted - 2
nd
House
FIRST SPONSOR: Rep. Soliday
FUNDS AFFECTED:XGENERAL IMPACT: State
XDEDICATED
XFEDERAL
Summary of Legislation: (Amended) This bill amends as follows the Indiana Code section concerning
certificates of public convenience and necessity (certificates) for Small Modular Nuclear Reactors:
(1) Authorizes a public utility to petition the Indiana Utility Regulatory Commission (IURC) for approval
to incur, before obtaining a certificate, project development costs for the development of one or more small
modular nuclear reactors.
(2) Sets forth certain factors that the IURC must consider in reviewing a public utility's petition to incur
project development costs.
(3) Requires the IURC to issue a final order approving or denying the petition not later than 180 days after
receiving the petition and the public utility's complete case in chief, subject to the IURC's right to extend the
time for review if the public utility does not object to the extension.
(4) Provides that if a public utility receives approval to incur project development costs, the public utility
may petition the IURC at any time before or during the development and execution of a small modular
nuclear reactor project for the approval of a rate schedule that periodically adjusts the public utility's rates
and charges to provide for the timely recovery of project development costs.
(5) Provides that after reviewing a public utility's proposed rate schedule, the IURC shall approve the
recovery of project development costs by the public utility if the IURC finds that project development costs
that have been or will be incurred are:
(A) reasonable in amount;
(B) necessary to support the construction, purchase, or lease of a small modular nuclear reactor; and
(C) consistent with the IURC's finding as to the best estimate of project development costs.
(6) Provides that a public utility that is authorized to recover project development costs shall:
(A) recover 80% of the approved project development costs under the approved rate schedule; and
(B) defer the remaining 20% of approved project development costs for recovery as part of public
utility's next general rate case before the IURC.
(7) Provides that the recovery of a public utility's project development costs through an approved periodic
rate adjustment mechanism must occur over a period that is equal to:
(A) the period over which the approved project development costs are incurred; or
(B) three years; whichever is less
(8) Provides that project development costs that:
SB 424 1 (A) are incurred by a public utility; and
(B) exceed the best estimate of project development costs included in the IURC’s order authorizing
the public utility to incur project development costs; may not be included in the public utility’s rates
and charges nless found by the IURC to be reasonable, necessary, and prudent in supporting the
construction, purchase, or lease of the small modular reactor for which they were incurred.
(9) Provides that:
(A) project development costs incurred for a project that is canceled or not completed may be
recovered by the public utility if found by the IURC to be reasonable, necessary, and prudently
incurred; but
(B) such costs shall be recovered without a return unless the IURC makes certain additional findings.
(10) Provides that if a public utility does not seek:
(A) approval of; or
(B) cost recovery for; project development costs under the bill's provisions, the IURC may approve
the deferral and amortization of project development costs in accordance with the statutory
procedures set forth for construction costs.
Effective Date: July 1, 2025.
Explanation of State Expenditures: The bill could increase the workload of the IURC to approve rate
change requests submitted by utilities who wish to recover Small Modular Nuclear Reactor development
costs. Additionally, the bill could increase IURC workload to adopt rules concerning recovery of these costs.
Any increase in IURC workload is expected to be accomplished within existing resource and funding levels.
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: The bill allows small modular nuclear reactor partnerships to recover 80%
of project costs within a 3 year period, with 20% of the deferred to the utilities next general rate case before
the IURC. Development costs that exceed best estimate costs may not be included in cost recovery unless
the IURC finds that such costs are reasonable, necessary, and prudent.
Development costs from cancelled or incomplete projects may be recovered, but may not yield a return unless
the IURC finds that cancelling a project was prudent. A return may also occur in cancelled or incomplete
projects if the costs will be offset by factors which include but are not limited to, US Department of Energy
funding, cost reimbursements from a major customer whose request initiated the project, or if a return will
be appropriate to avoid harm to the public utility and its customers.
Changes to utility rates paid in the state from rate increases utilized by utilities to recover these costs would
increase revenue the state receives from sales tax collections.
Additional Information - 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%).
Explanation of Local Expenditures:
SB 424 2 Explanation of Local Revenues:
State Agencies Affected: Indiana Utility Regulatory Commission.
Local Agencies Affected:
Information Sources:
Fiscal Analyst: Abdulrahman Abdulkadri, 317-232-9852.
SB 424 3