FISCAL NOTE
Date Requested: February 16, 2026
Time Requested: 11:04 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4094 |
Introduced |
SB942 |
|
|---|
| CBD Subject: |
Energy |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund Advance Baseload Energy Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses, Creates New Fund: Advance Baseload Energy Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to create an advanced-baseload ecosystem that provides affordable and reliable power while generating long-term economic and security benefits.
Per our interpretation, the bill would establish the Advanced-Baseload Energy Development Act. The bill creates a new division under the Office of Energy called the Advanced Energy Division (the Division). The Division is given the following duties: promote and assist in the development of advanced-baseload energy projects in this state; provide technical assistance to utilities and other entities seeking to develop advanced-baseload energy projects; serve as the state liaison to the U.S. Nuclear Regulatory Commission and U.S. Department of Energy; coordinate state-level permitting and environmental review for nuclear facilities; maintain a registry of qualified SMR and other advanced-baseload energy project sites, including reclaimed coal and industrial lands; administer the Advanced-baseload energy fund; and maintain an assessment of available grants, bonds, and other financing opportunities available to advanced-baseload energy projects. “Advanced-baseload energy project” means any facility that produces electricity that is generated by and advanced nuclear reactor or hydrogen that is derived from coal or natural gas and used carbon capture and sequestration technologies.
The bill also creates, in the State Treasury, a special revenue fund known as the “Advanced-Baseload Energy Fund” to be administered by the Division with the approval of the Secretary of Commerce. Moneys may be deposited in the fund from legislative appropriations, federal grants or matching funds, or any other sources. The fund may be utilized to establish and provide financing incentives for the development of advanced-baseload energy projects and to provide insurance for up to 25 percent of the debt incurred for the development of a project.
The bill establishes a consumer sales and service tax and use tax exemption for purchases of building materials and tangible personal property directly incorporated into the project, supporting infrastructure during construction, repair, maintenance and refurbishment of the project, and services directly used in construction, repair, maintenance, and refurbishment of certified project property. The bill also establishes the advanced-baseload energy investment credit (the investment credit). The credit is 20 percent of the certified project costs. The credit is applied annually in the amount of one-twentieth per year for a period of 20 consecutive years. Unused credit can be carried forward for five additional years. The credit may be applied to offset Corporation Net Income Tax and Personal Income Tax. West Virginia currently has a tax credit for investments made by Electric Power Producers. The Industrial Expansion and Revitalization Credit, W.Va. Code §11-13D, provides a credit of 10 percent of eligible investments which can be applied to offset the Business and Occupation Tax.
The bill contains additional provisions regarding Community Benefit Agreements, Public Utilities, Certified Microgrids, and recovery of developments costs.
Advanced small modular reactors (SMR) are typically designed at or below 300 megawatts with a range of roughly 40 to 400 megawatts. Construction costs for an Advanced SMR range from $6 million to $20 million per megawatt. The estimated cost to build a 40-megawatt Advanced SMR would be $240 million to $800 million. Based on the lower end of the estimate cost, a tax credit of 20 percent of certified project costs could generate a tax credit of up to $48 million dollars. The exemption from the sales and service and use tax is fairly broad. However, there is currently a direct use exemption under W.Va. Code §11-15-9(b) which would potentially cover the majority of purchases and services outlined.
According to our interpretation, the tax credit and exemptions created under this program would have an extremely narrow focus. However, as partially outlined above, even the construction of one eligible facility could generate a significant amount of potential tax credit. The impact of the exemption from the sales tax would be reduced significantly by utilization of the direct use exemption currently in code. The impact of the investment credit would depend more heavily on the amount of state income tax liability of the credit recipient than the amount of credit available. We are unable to quantify the net revenue impact from this proposal given the unknown variables and narrow focus.
Additional costs incurred by the State Tax Division would be $34,100 in FY2027, and $11,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
34,100 |
11,000 |
| Personal Services |
0 |
11,000 |
11,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
23,100 |
11,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would establish the Advanced-Baseload Energy Development Act. The bill creates a new division under the Office of Energy called the Advanced Energy Division (the Division). The Division is given the following duties: promote and assist in the development of advanced-baseload energy projects in this state; provide technical assistance to utilities and other entities seeking to develop advanced-baseload energy projects; serve as the state liaison to the U.S. Nuclear Regulatory Commission and U.S. Department of Energy; coordinate state-level permitting and environmental review for nuclear facilities; maintain a registry of qualified SMR and other advanced-baseload energy project sites, including reclaimed coal and industrial lands; administer the Advanced-baseload energy fund; and maintain an assessment of available grants, bonds, and other financing opportunities available to advanced-baseload energy projects. “Advanced-baseload energy project” means any facility that produces electricity that is generated by and advanced nuclear reactor or hydrogen that is derived from coal or natural gas and used carbon capture and sequestration technologies.
The bill also creates, in the State Treasury, a special revenue fund known as the “Advanced-Baseload Energy Fund” to be administered by the Division with the approval of the Secretary of Commerce. Moneys may be deposited in the fund from legislative appropriations, federal grants or matching funds, or any other sources. The fund may be utilized to establish and provide financing incentives for the development of advanced-baseload energy projects and to provide insurance for up to 25 percent of the debt incurred for the development of a project.
The bill establishes a consumer sales and service tax and use tax exemption for purchases of building materials and tangible personal property directly incorporated into the project, supporting infrastructure during construction, repair, maintenance and refurbishment of the project, and services directly used in construction, repair, maintenance, and refurbishment of certified project property. The bill also establishes the advanced-baseload energy investment credit (the investment credit). The credit is 20 percent of the certified project costs. The credit is applied annually in the amount of one-twentieth per year for a period of 20 consecutive years. Unused credit can be carried forward for five additional years. The credit may be applied to offset Corporation Net Income Tax and Personal Income Tax. West Virginia currently has a tax credit for investments made by Electric Power Producers. The Industrial Expansion and Revitalization Credit, W.Va. Code §11-13D, provides a credit of 10 percent of eligible investments which can be applied to offset the Business and Occupation Tax.
The bill contains additional provisions regarding Community Benefit Agreements, Public Utilities, Certified Microgrids, and recovery of developments costs.
Advanced small modular reactors (SMR) are typically designed at or below 300 megawatts with a range of roughly 40 to 400 megawatts. Construction costs for an Advanced SMR range from $6 million to $20 million per megawatt. The estimated cost to build a 40-megawatt Advanced SMR would be $240 million to $800 million. Based on the lower end of the estimate cost, a tax credit of 20 percent of certified project costs could generate a tax credit of up to $48 million dollars. The exemption from the sales and service and use tax is fairly broad. However, there is currently a direct use exemption under W.Va. Code §11-15-9(b) which would potentially cover the majority of purchases and services outlined.
According to our interpretation, the tax credit and exemptions created under this program would have an extremely narrow focus. However, as partially outlined above, even the construction of one eligible facility could generate a significant amount of potential tax credit. The impact of the exemption from the sales tax would be reduced significantly by utilization of the direct use exemption currently in code. The impact of the investment credit would depend more heavily on the amount of state income tax liability of the credit recipient than the amount of credit available. We are unable to quantify the net revenue impact from this proposal given the unknown variables and narrow focus.
Additional costs incurred by the State Tax Division would be $34,100 in FY2027, and $11,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create an advanced-baseload ecosystem that provides affordable and reliable power while generating long-term economic and security benefits.
Subsection (b) of §5B-2P-5 indicates that the Advanced Energy Division has the final authority to decide the eligibility of any project to receive the tax credits. However, §5B-2P-5(a)(2)(B) indicates that the election to receive the tax credit shall be made on an annual income tax return, which is received by the Tax Division, rather than an application to the Advanced Energy Division. Presumably, the Tax Division may need to have the Advanced Energy Division review any entities that elect to take the credit on the return.
The bill does not give rulemaking authority to the Tax Division, and instead only gives rulemaking authority to the Department of Commerce or Office of Energy under §5B-2P-9. However, W.Va. Code §11-10-5 gives the Tax Commissioner rulemaking power regarding all taxes to which article 10 of chapter 11 applies; including the sales and use taxes and all income taxes, but because rulemaking authority is explicitly addressed in this bill, it may be construed that the Tax Division lacks such authority. Furthermore, giving rulemaking authority to agencies other than the Tax Division regarding tax exemptions and credits may be problematic and cause administrative difficulties.
The new §23-2-4i regards the recovery of costs associated with advanced-baseload energy projects. This section does not include any provisions related to tax and is outside the scope of expertise for the Tax Division.
Due to the scope of this bill, additional input should be sought from the Department of Commerce, the Office of Energy, and the Public Services Commission.
There is no effective date. However, §23-24-4i(d) references July 1, 2026, implying that is intended to be the effective date. If so, there may be administrative difficulties because several agencies will need to coordinate to implement this bill.
Person submitting Fiscal Note: Peter Shirley
Email Address: RADfiscal@wv.gov