Holtec International, a politically-connected nuclear energy equipment company that’s enmeshed in a years-long dispute with the state over hundreds of millions of dollars in tax incentives, could receive more huge state subsidies under recently-introduced legislation it asked a key lawmaker to introduce.
Last month, Senate Environment and Energy Chair Bob Smith (D-Middlesex) and Sen. Jean Stanfield (R-Burlington) introduced legislation, NJ S2971 (22R), that’s tailored to Holtec’s plans to expand its Camden plant and build another facility to manufacture small modular reactors the company describes as “innovation through simplification and use of entirely passive safety systems.”
The reactors are built to be operated by smaller staffs, making them a potential energy source in developing countries, according to the company.
Holtec proposed the idea for the legislation, Smith said in a phone interview. But, he said, the bill will change substantially if it begins advancing through the Legislature.
“It is not in any way close to what it should be. It’s put in as a placeholder,” Smith said. “The bill is much too generous in terms of subsidies, but it establishes the placeholder that New Jersey needs to consider more nuclear in its future.”
The bill, as currently written, would:
— Allow companies to apply for a corporation business tax credit of up to 15 percent to cover “renovation, modernization, or expansion” of an already-existing New Jersey facility as well as for building a new facility. Holtec is seeking to expand its Camden plant to build the new reactors and plans to open a new, larger facility at a yet-to-be determined location. The credits could be higher for companies that relocate from other states or are minority or veteran-owned.
— Establish a “New Jersey Advanced Nuclear Energy Development Program” that would provide $1 million in tax credits for each megawatt of energy produced at a plant that had previously been the site of a decommissioned nuclear facility. Holtec acquired the Oyster Creek nuclear plant in South Jersey in 2019 and is in the process of decommissioning it. Holtec is considering the plant as the site for a small modular reactor.
— Create a grant program funded by the state Board of Public Utilities that would be required to provide grants of $50 per megawatt hour of power generated. Holtec’s planned small modular reactor, the SMR-160, could produce up to 160 megawatts of power per hour running at full capacity. That would mean it would be eligible for up to $70 million in grants per year, though it’s unlikely the reactor would run at full capacity 24 hours a day all year. The old nuclear plant at Oyster Creek was able to generate several times more energy.
Smith said he wants to revise the bill to create more competitive opportunities for other companies and to make it less generous.
“My biggest gripe is they are using a business model where the citizens of New Jersey are fronting all their costs, and that doesn’t work for me,” Smith said.
Joe Delmar, a spokesperson for Holtec, said the company has invested hundreds of millions of dollars in developing the small modular reactor and is looking at a variety of business models. The company says getting a reactor up and running helps the state to meet its clean energy goals, creates jobs and also allows Holtec to expand.
"It opens up a lot of potential for an international market," Delmar said.
He said the project has local support from Lacey Township.
Stanfield, who told POLITICO Holtec did not contact her about the legislation, said she toured the company’s manufacturing facility in Camden.
“We’ve been hearing a lot of testimony about the grid and how we need some redundancy so that if we get to the point where there’s a lot of solar, wind and things like that, we know those things can fail at times,” said Stanfield, who is a member of Smith’s committee. “So having a back-up that’s still a cleaner option is important.”
Smith, who helped craft the state’s $300 million annual subsidies for three South Jersey nuclear plants, said putting a small modular reactor at Oyster Creek made sense since the site already has been home to a nuclear plant. A small reactor would still take up about five acres.
Any new nuclear facility will inevitably draw opposition, but that opposition might be less intense in a place where one already operated. Also, the Oyster Creek site has existing connections to the electric grid that other sites do not, and creating those connections elsewhere would increase the cost of any new power plant.
To Smith, nuclear power is a key way to deal with the "mind boggling" problems of climate change. He said the hundreds of millions of dollars in subsidies for PSEG's existing nuclear plants pale in comparison to the billions of dollars in damage extreme storms driven by climate change can and have done to the state.
“With regard to energy policy, you have to look at the really big picture,” he said.
About 40 percent of the state’s power comes from nuclear energy, and most of the rest comes from natural gas. Gov. Phil Murphy is looking to dramatically reduce the state’s reliance on natural gas because of the greenhouse gases that come from burning it.
In 2014, Holtec was awarded a $260 million tax incentive over 10 years to build its Camden campus — one of the largest incentives in state history. That led to some major controversies.
The company’s board includes South Jersey Democratic power broker George Norcross, one of whose brothers, Phil Norcross, helped design the tax incentive program Holtec utilized. Another brother, Rep. Donald Norcross (D-N.J.) helped push the tax incentive legislation through the Legislature when he was a state senator.
In 2019, as the Murphy administration feuded with Norcross allies over tax incentives, the state Economic Development Authority suspended the $26 million tax incentive payment to Holtec because the company did not disclose on a tax incentive application that it had been temporarily barred from working with the Tennessee Valley Authority because of allegations it bribed a federal official for a contract. Although the company was never charged in that case, it paid a $2 million fine.
Holtec sued to release the funds and won in state Superior Court earlier this year. The EDA is appealing the ruling.
Holtec’s CEO, Kris Singh, also faced political blowback after he told a publication about difficulties he said the company had with workers from Camden.
“They don’t show up to work,” Singh told ROI-NJ in 2018. “They can’t stand getting up in the morning and coming to work every single day. They haven’t done it, and they didn’t see their parents do it. Of course, some of them get into drugs and things. So, it’s difficult.”
More recently, Holtec has faced two fines by the Nuclear Regulatory Commission of up to a combined $200,000 over alleged security lapses at Oyster Creek the NRC characterized as significant.
Sue Altman, executive director of the New Jersey Working Families Alliance and a major critic of the state’s tax incentive programs, said she was shocked to hear Smith mention the bill and Holtec at a League of Conservation Voters breakfast on Tuesday.
“We already know Holtec likely made fraudulent claims on their original 2013 tax incentive bill in Camden to move their headquarters there. We know the CEO of Holtec made extremely racist remarks about Camden residents,” Altman said. “We are really sick and tired of giving politically-connected corporations laws that are tailor made for them in the Legislature and allows them to skirt taxation laws. We’re allowing major corporations to loot the treasury on behalf of hardworking New Jerseyans.”
