"Small Modular Nuclear Energy Incentive Act."

A1841

ASSEMBLY, No. 1841

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman GREGORY E. MYHRE

District 9 (Ocean)

Assemblyman BRIAN E. RUMPF

District 9 (Ocean)

Co-Sponsored by:

Assemblyman Clifton, Assemblywoman Flynn, Assemblymen Auth,
DePhillips, S.Kean, McGuckin, Inganamort, Assemblywoman Fantasia, Assemblymen
Guardian and Scharfenberger

SYNOPSIS

���� "Small Modular Nuclear Energy Incentive
Act."

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning nuclear energy, amending P.L.2007, c.340,
and supplementing Title 48 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� (New section) Sections 1
through 6 of P.L. , c.
(C. ) (pending
before the Legislature as this bill) shall be known and may be cited as the
"Small Modular Nuclear Energy Incentive Act."

���� 2.� (New section) a.� The
Legislature finds and declares that:

���� (1)� Nuclear fission is a cost
effective, safe, and reliable method of generating electricity without emitting
greenhouse gases;

���� (2)� Solar and wind power do
not provide constant power output, rendering them unsuitable for replacing coal
and natural gas as the primary methods of electricity generation, meaning that
the State will be unable to reach its clean energy goals through the use of
solar and wind power alone;

���� (3)� Nuclear reactors, by
contrast, provide constant power output, and its fuel prices are not subject to
the frequent and unpredictable fluctuations in oil prices;

���� (4)� Private industries, with
the support of the federal Department of Energy, are developing a new type of
nuclear fission reactor, known as small modular reactors (SMRs), which are
designed to be compact, be capable of being factory-assembled and transported
to a location for installation, and to generate sufficient electricity to power
up to hundreds of thousands of homes;

���� (5)� SMRs are designed to be
simpler and safer than conventional nuclear reactors, often relying on passive
systems and inherent safety characteristics, such as natural circulation,
convection, gravity, and self-pressurization, to keep the reactor within
acceptable operating parameters, reducing the possibility of human error and
making them less prone to malicious attacks;

���� (6)� In addition, SMRs are
designed to require refueling only every three to seven years, as opposed
conventional reactors, which require refueling every one to two years, and some
SMRs are designed to operate for up to 30 years without refueling; and

���� (7)� The United States has
nearly four gigawatts of announced SMR projects, in addition to almost three
gigawatts in early development or pre-development stages, according to a 2024
report by the energy data analytics firm Wood Mackenzie.

���� b.� It is therefore in the
public interest for New Jersey to establish a program to incentivize and
attract the construction of small modular reactors, in order to provide
reliable electricity to the State, replace the jobs lost through retiring
nuclear, coal, and natural gas power plants, and help the State meet its clean
energy goals.

���� 3.� (New section) As used in
P.L. , c.
(C. ) (pending
before the Legislature as this bill):

���� "Board" means the
Board of Public Utilities.

���� "Small modular
reactor" or "SMR" means a nuclear fission reactor that:� (1) has
a rated electric generating capacity of not more than 300 megawatts; (2) is
capable of being constructed and operated either alone or in combination with one
or more similar reactors if additional reactors are or become necessary at a
single site; and (3) is required to be licensed by the United States Nuclear
Regulatory Commission.

���� "SMR incentive"
means a pecuniary incentive, provided per megawatt hour of electric energy
produced by an SMR that is selected through the competitive solicitation
program established by P.L. , c. (C. )
(pending before the Legislature as this bill).

���� "Transmission and
distribution system" means the same as the term is defined in section 3 of
P.L.1999, c.23 (C.48:3-51).

���� 4.� (New section) a.� No later
than one year after the effective date of P.L. ,
c.
(C. ) (pending
before the Legislature as this bill), the board shall develop a competitive
solicitation program for awarding SMR incentive contracts to promote the
construction of small modular nuclear reactors in the State.

���� b.� In order to be eligible to
participate in a solicitation process administered by the board pursuant to
this section, a project for the construction of small modular nuclear reactor
shall:

���� (1) commence after the
effective date of P.L. , c.
(C. ) (pending
before the Legislature as this bill); and

���� (2) be interconnected to a
transmission and distribution system operated by a New Jersey electric public
utility or local government unit.

���� c.� The board may develop
additional eligibility criteria and application processes for participation in
the solicitation process.

���� d.� Solicitation rounds shall
occur at least as frequently as once every 18 months, beginning no later than
two years after the effective date of P.L. ,
c. (C. )
(pending before the Legislature as this bill). The solicitation process shall:

���� (1)� be open on a
non-discriminatory basis to any entity seeking to construct a small modular
nuclear reactor that complies with the provisions of
P.L. , c.
(C. ) (pending
before the Legislature as this bill);

���� (2)� be carried out in
accordance with criteria developed by the board and applied equally to all
responses to the solicitation;

���� (3)� award contracts for SMR
incentives to promote the construction of small modular reactors, with the
first solicitation round closing no later than three years after the effective
date of P.L. , c. (C. )
(pending before the Legislature as this bill);

���� (4)� give preference to
projects that are located on the site of former nuclear, natural gas, or coal
power plants, or which include a process to retrain and employ former employees
of retired nuclear, natural gas, or coal power plants;

���� (5)� ensure that the length of
any award is sufficient to encourage low financing rates, reasonable risks to
ratepayers, and to enable the development of affordable energy resources;

���� (6)� mitigate price and
delivery risks for ratepayers; and

���� (7)� include requirements
designed to ensure successful completion of projects, including, but not
limited to, the imposition of appropriate escrow fees, bid maturity
requirements, required interconnection milestones, and conditions on when a
project must achieve commercial operation.

���� e.� The board may establish
confidential high and low bid thresholds prior to conducting a competitive
solicitation pursuant to this section, provided that the thresholds promote
fiscal responsibility for the State and the likelihood of successful bids, as
determined by the board. The thresholds may include a cap on the SMR incentive
payments paid to a project developer. The board may also procure more than the
minimum quantity of SMR power required by this section if bids are below the
predetermined bid threshold.

���� f.� The board shall determine,
in consultation with the Department of Environmental Protection, if a small
modular reactor facility may be sited on a contaminated site or landfill for
the purposes of this section.

���� g.� At the end of each bidding
round, the board shall:

���� (1)� rank all bids received
based on the bid price and any preference awarded pursuant to paragraph (4) of
subsection d. of this section;

���� (2)� select bids in ranked
order, up to the procurement budget set by the board; and

���� (3)� adjust quantities awarded
if prices are above or below any confidential pre-determined thresholds
established pursuant to subsection d. of this section.

���� h.� Any moneys placed in
escrow by an applicant as part of the competitive solicitation process shall be
reimbursed to the applicant in full or in part upon meeting the conditions set
forth by the board when the board established the escrow requirement, including,
but not limited to, selection in the competitive solicitation or commencement
of commercial operation of the small modular reactor facility. The escrow
amount shall be forfeited to the General Fund if the facility does not meet the
conditions set forth by the board when the board established the escrow
requirement, including, but not limited to, commencing commercial operation
within the term specified by the board's requirements established pursuant to
paragraph (7) of subsection c. of this section, including any extensions as may
be granted pursuant to procedures established by the board.

���� i.� SMR incentive payments
issued pursuant to paragraph (3) of subsection c. of this section may be paid
from the "Global Warming Solutions Fund" established pursuant to
section 6 of P.L.2007, c.340 (C.26:2C-50).

���� 5.� (New section)� a.� A small
modular reactor shall not receive, in the same year, a SMR incentive issued
pursuant to P.L. , c.
(C. ) (pending
before the Legislature as this bill) and a grant issued by the New Jersey
Economic Development Authority pursuant to paragraph (1) of subsection b. of
section 7 of P.L.2007, c.340 (C.26:2C-51).

���� b.� The owner or operator of a
small modular reactor that receives a SMR incentive for a unit of energy
produced by the reactor shall not otherwise sell, alienate, or dispose of any
of the environmental benefits or attributes associated with that energy, in any
way apart from its participation in the zero emissions certificate program.

���� c.� A small modular reactor
facility that is selected by the board pursuant to section 4 of
P.L. , c.
(C. ) (pending
before the Legislature as this bill) shall be responsible for the payment of an
annual administrative fee, in an amount, which does not exceed the board's
reasonable expenses in implementing the provisions of
P.L. , c. (C. )
(pending before the Legislature as this bill), to be determined annually by the
board.

���� d.� Each worker employed in
the State during the construction of a small modular reactor that that is
selected by the board pursuant to section 4 of P.L. ,
c. (C. )
(pending before the Legislature as this bill) shall be paid not less than the
prevailing wage rate for the worker's craft or trade, as determined by the
Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150
(C.34:11-56.25 et seq.).

���� e.� The issuance of SMR
incentives pursuant to P.L. , c.
(C. ) (pending
before the Legislature as this bill) shall be deemed "Board of Public
Utilities financial assistance" as provided under section 1 of P.L.2009,
c.89 (C.48:2-29.47).

���� f.� The owner, operator, and
developer of a small modular reactor that is selected by the board pursuant to
section 4 of P.L. , c.
(C. ) (pending
before the Legislature as this bill), as appropriate, shall obtain all
necessary permits and other approvals as may be required pursuant to federal,
State, or local law, rule, regulation, or ordinance.

���� 6.� (New section) No later
than four years after the effective date of P.L. ,
c.
(C. ) (pending
before the Legislature as this bill), the board shall submit a report to the
Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164
(C.52:14-19.1), which summarizes the program developed pursuant to this
section, and includes any recommendations to improve the functioning of the
program.

���� 7.� Section 7 of P.L.2007,
c.340 (C.26:2C-51) is amended to read as follows:

���� 7.� a.� The agencies
administering programs established pursuant to this section shall maximize
coordination in the administration of the programs to avoid overlap between the
uses of the fund prescribed in this section.

���� b.��� Moneys in the fund,
after appropriation annually for payment of administrative costs authorized
pursuant to subsection c. of this section, shall be annually appropriated and
used for the following purposes:

���� (1)�� Sixty percent shall be
allocated to the New Jersey Economic Development Authority to provide grants
and other forms of financial assistance to commercial, institutional, and
industrial entities to support end-use energy efficiency projects and new,
efficient electric generation facilities that are state of the art, as
determined by the department, including but not limited to energy efficiency
and renewable energy applications, to develop combined heat and power
production and other high efficiency electric generation facilities, to
stimulate or reward investment in the development of innovative carbon
emissions abatement technologies with significant carbon emissions reduction or
avoidance potential, to develop qualified offshore wind projects pursuant to
section 3 of P.L.2010, c.57 (C.48:3-87.1), and to provide financial assistance
to manufacturers of equipment associated with qualified offshore wind
projects.� The authority, in consultation with the board and the department,
shall determine:� (a) the appropriate level of grants or other forms of
financial assistance to be awarded to individual commercial, institutional, and
industrial sectors and to individual projects within each of these sectors; (b)
the evaluation criteria for selecting projects to be awarded grants or other
forms of financial assistance, which criteria shall include the ability of the
project to result in a measurable reduction of the emission of greenhouse gases
or a measurable reduction in energy demand, provided, however, that neither the
development of a new combined heat and power production facility, nor an
increase in the electrical and thermal output of an existing combined heat and
power production facility, shall be subject to the requirement to demonstrate
such a measurable reduction; and (c) the process by which grants or other forms
of financial assistance can be applied for and awarded including, if
applicable, the payment terms and conditions for authority investments in
certain projects with commercial viability;

���� (2)�� Twenty percent shall be
allocated to the board to support programs that are designed to reduce
electricity demand or costs to electricity customers in the low-income and
moderate-income residential sector with a focus on urban areas, including
efforts to address heat island effect and reduce impacts on ratepayers
attributable to the implementation of P.L.2007, c.340 (C.26:2C-45 et al.)
[
or
]

,
to
support the light duty plug-in electric vehicle incentive program and the
incentive program for in-home electric vehicle service equipment established
pursuant to sections 4 and 6 of P.L.2019, c.362 (C.48:25-4 and C.48:25-6)
,
or to fund small modular reactor incentive payments issued pursuant to section
4 of P.L. , c.
(C. ) (pending
before the Legislature as this bill)
.� For the purposes of this paragraph,
the board, in consultation with the authority and the department, shall
determine the types of programs to be supported and the mechanism by which to
quantify benefits to ensure that the supported programs result in a measurable
reduction in energy demand or accomplishment of the plug-in electric vehicle
goals established pursuant to section 3 of P.L.2019, c.362 (C.48:25-3);

���� (3)�� Ten percent shall be
allocated to the department to support programs designed to promote local
government efforts to plan, develop and implement measures to reduce greenhouse
gas emissions, including but not limited to technical assistance to local governments,
and the awarding of grants and other forms of assistance to local governments
to conduct and implement energy efficiency, renewable energy, and distributed
energy programs and land use planning where the grant or assistance results in
a measurable reduction of the emission of greenhouse gases or a measurable
reduction in energy demand. For the purpose of conducting any program pursuant
to this paragraph, the department, in consultation with the authority and the
board, shall determine:� (a) the appropriate level of grants or other forms of
financial assistance to be awarded to local governments; (b) the evaluation
criteria for selecting projects to be awarded grants or other forms of
financial assistance; (c) the process by which grants or other forms of
financial assistance can be applied for and awarded; and (d) a mechanism by
which to quantify benefits; and

���� (4)�� Ten percent shall be
allocated to the department to support programs that enhance the stewardship
and restoration of the State's forests and tidal marshes that provide important
opportunities to sequester or reduce greenhouse gases.

���� �c. (1) The department may use
up to four percent of the total amount in the fund each year to pay for
administrative costs justifiable and approved in the annual budget process,
incurred by the department in administering the provisions of P.L.2007, c.340
(C.26:2C-45 et al.) and in administering programs to reduce the emissions of
greenhouse gases including any obligations that may arise under subsection a.
of section 11 of P.L.2007, c.340 (C.26:2C-55).

���� (2)�� The board may use up to
two percent of the total amount in the fund each year to pay for administrative
costs justifiable and approved in the annual budget process, incurred by the
board in administering the provisions of P.L.2007, c.340 (C.26:2C-45 et al.)
and in administering programs to reduce the emissions of greenhouse gases
including any obligations that may arise under subsection a. of section 11 of
P.L.2007, c.340 (C.26:2C-55).

���� (3)�� The New Jersey Economic
Development Authority may use up to two percent of the total amount in the fund
each year to pay for administrative costs justifiable and approved in the
annual budget process, incurred by the authority in administering the provisions
of P.L.2007, c.340 (C.26:2C-45 et al.) and in administering programs to reduce
the emissions of greenhouse gases.

���� d.��� The State Comptroller
shall conduct or supervise independent audit and fiscal oversight functions of
the fund and its uses.

(cf:� P.L.2019, c.362, s.12)

���� 8.� The board shall, in
accordance with the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.). adopt rules and regulations as necessary to implement
this act.

���� 9.� This act shall take effect
immediately.

STATEMENT

���� This bill, to be known as the "Small
Modular Nuclear Energy Incentive Act," would direct the Board of Public
Utilities (BPU) to establish a program to solicit bids for the construction of
new small modular nuclear reactors in the State.

���� The bill would authorize the
BPU to issue financial incentives to SMRs, to be known as SMR incentives, for
each megawatt hour of electric energy produced by the reactor.� The amount of
the incentive would be determined through a competitive solicitation process.�
Private entities would submit bids to the BPU, which state the level of SMR
incentive they estimate they would require to achieve profitability.� The BPU
would select the lowest bids, except that the bill authorizes the BPU to give
preference to certain projects, for example projects sited at former nuclear
energy facilities or fossil fuel power plants.� The bill would authorize the
BPU to use moneys in the "Global Warming Solutions Fund," which
serves as the repository for funds collected by the State under the Regional
Greenhouse Gas Initiative (RGGI), in order to fund the SMR incentives.

���� The bill would direct the BPU
to develop the program within one year after the bill's enactment, and to begin
the first competitive solicitation round within two years after the bill's
enactment.� The bill would restrict the owner or operator of an SMR that
receives an incentive from otherwise profiting from the environmental
attributes of the energy it produces.� Finally, the bill would require each SMR
that is selected to participate in the incentive program to pay an annual
administrative fee to the BPU, to compensate the BPU for its costs in
administering the program.