SB 885 - HB 1133
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 17, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
SB 885 - HB 1133
SUMMARY OF BILL: Expands the definition of “certified green energy production
facility” to include nuclear energy production facilities for the purposes of sales and use tax credits.
FISCAL IMPACT:
OTHER FISCAL IMPACT
The extent and timing of any foregone state and local revenue due to tax exempt purchases for
nuclear energy production facilities cannot be quantified with reasonable certainty.
Assumptions:
• This proposed legislation expands the definition of a certified green production facility to
include nuclear energy production facilities, as certified by the Tennessee Department of
Environment and Conservation.
• Pursuant to Tenn. Code Ann. § 67-6-346, a certified green energy production facility is
entitled to a pollution control credit equal to 100 percent of the sales and use tax paid for
machinery and equipment used to produce or store electricity in the facility.
• Tennessee has four nuclear plants – Sequoyah 1 and 2; and Watts Bar 1 and 2.
• All four plants are operated by the Tennessee Valley Authority (TVA), whose purchases are
exempt from state sales and use tax, but makes payments in lieu of taxes (PILOT). The
proposed legislation would exempt any purchases not directly made by TVA.
• Based on publicly available information, there is one small modular reactor (SMR) planned
to begin operations by 2033. It is assumed that the proposed exemption will apply to
machinery and equipment purchased with regards to the construction of the SMR, if such
purchases are not made directly by TVA.
• Components of construction costs for an SMR are currently not subject to the sales and use
tax, such as land, while other components are assumed to be exempt as industrial
machinery.
• According to the U.S. Energy Information Administration’s (EIA) January 2024 report
entitled Capital Cost and Performance Characteristics for Utility-Scale Electric Power Generating
Technologies, capital costs for an SMR range between $1,000,000,000 and $5,000,000,000.
• According to the Tennessee Nuclear Energy Advisory Council’s Final Report and
Recommendations released in October 2024, the construction costs of an SMR in Tennessee is
estimated to be approximately $1,400,000,000.
SB 885 - HB 1133 2
• The total amount of sales estimated to be exempt under this legislation cannot be
determined with reasonable certainty due to multiple unknown variables, including, but not
limited to the extent and timing of such purchases in Tennessee and the extent to which
such purchases would be made by TVA or entities already exempt from sales taxes due to
any other statutory provisions.
• If additional nuclear energy production facilities are constructed in future years, there will
be additional unknown amounts of foregone state and local revenue due to tax exemption
for purchases of eligible machinery or equipment.
• DOR can comply with the provisions of the proposed legislation utilizing existing
resources.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director