America's Only Nuclear Project Facing a Tax Reform Setback
America's Only Nuclear Project Facing a Tax Reform Setback
(Bloomberg) -- The compromise tax bill being negotiated in Washington is threatening to deal a blow to the only nuclear power plant being built in the U.S.
The latest version of the tax plan excludes a provision extending the nuclear power credit that Southern Co. has been counting on for two reactors under construction in Georgia, a Republican with knowledge of the talks said, asking not to be identified because the information isn’t public.
The exclusion could represent a serious setback for the Vogtle project, the first U.S. nuclear plant to be licensed in 30 years. The reactors have already faced billions of dollars in cost overruns and years of delays. Following the bankruptcy of the project’s contractor, Westinghouse Electric Co., the plant isn’t likely to be in service before 2021, when the federal production tax credit for new nuclear power generation is due to expire.
Republican Senator Johnny Isakson described the tax credit extension as a “huge deal in Georgia” and said the prospect of it being included in a subsequent tax bill was a “fair guess.”
The exclusion comes just a week before Georgia regulators are scheduled to vote on the fate of the Vogtle project, the costs of which have soared above $25 billion. At least one member of the state Public Service Commission has raised the tax credit as a key factor in deciding whether work on the reactors should continue.
It "wouldn’t be constructive for Southern’s recommendation to proceed with construction of new nuclear reactors at Vogtle, although not the end of the world either,” Shahriar Pourreza, an analyst at Guggenheim Securities, said Friday in a note.
Southern rose 0.8 percent to $51.90 at 10:27 a.m. in New York. The shares are up 5.5 percent this year.
‘Bipartisan Endorsement’
Southern spokesman Jacob Hawkins said that, while the extension isn’t included in the compromise bill, it “continues to receive bipartisan endorsement.” The company still supports legislation that would allow the Vogtle project to qualify for the credit should it be placed in service after Jan. 1, 2021, he said.
The utility owner has estimated that the tax credits for Vogtle would amount to about $800 million should it be brought online in time to qualify. The new reactors aren’t forecast to come online until November 2021 and November 2022.
To contact the reporters on this story: Ari Natter in Washington at anatter5@bloomberg.net, Mark Chediak in San Francisco at mchediak@bloomberg.net.
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Stephen Cunningham, Joe Richter
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