DESCRIPTION OF H.R. 5879, 

A BILL TO AMEND THE INTERNAL REVENUE CODE OF 1986 

TO MODIFY THE CREDIT FOR PRODUCTION FROM 

ADVANCED NUCLEAR POWER FACILITIES

Scheduled for Markup 

by the 

HOUSE COMMITTEE ON WAYS AND MEANS 

on September 14, 2016 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

 

September 13, 2016 

JCX-76-16
i 

CONTENTS 

Page 

INTRODUCTION .......................................................................................................................... 1

A. Advanced Nuclear Power Production Credit ................................................................ 2

B. Estimated Revenue Effect ............................................................................................ 4
1 

INTRODUCTION 

The House Committee on Ways and Means has scheduled a committee markup of 

H.R. 5879, a bill to amend the Internal Revenue Code of 1986 to modify the credit for 

production from advanced nuclear power facilities, on September 14, 2016. This document,1

prepared by the staff of the Joint Committee on Taxation, provides a description of the bill. 

 1

 This document may be cited as follows: Joint Committee on Taxation, Description of H.R. 5879, a Bill 

to Amend the Internal Revenue Code of 1986 to Modify the Credit for Production From Advanced Nuclear Power 

Facilities (JCX-76-16), September 13, 2016. This document can also be found on the Joint Committee on Taxation 

website at www.jct.gov. All section references herein are to the Internal Revenue Code of 1986, as amended, unless 

otherwise stated. 
2 

A. Advanced Nuclear Power Production Credit 

Present Law 

Taxpayers producing electricity at a qualifying advanced nuclear power facility may 

claim a credit equal to 1.8 cents per kilowatt-hour of electricity produced for the eight-year 

period starting when the facility is placed in service.2 The aggregate amount of credit that a 

taxpayer may claim in any year during the eight-year period is subject to limitation based on 

allocated capacity and an annual limitation as described below. 

An advanced nuclear facility is any nuclear facility for the production of electricity, the 

reactor design for which was approved after 1993 by the Nuclear Regulatory Commission. For 

this purpose, a qualifying advanced nuclear facility does not include any facility for which a 

substantially similar design for a facility of comparable capacity was approved before 1994. 

A qualifying advanced nuclear facility is an advanced nuclear facility for which the 

taxpayer has received an allocation of megawatt capacity from the Secretary of the Treasury 

(“the Secretary”) and is placed in service before January 1, 2021. The taxpayer may only claim 

credit for production of electricity equal to the ratio of the allocated capacity that the taxpayer 

receives from the Secretary to the rated nameplate capacity of the taxpayer’s facility. For 

example, if the taxpayer receives an allocation of 750 megawatts of capacity from the Secretary 

and the taxpayer’s facility has a rated nameplate capacity of 1,000 megawatts, then the taxpayer 

may claim three-quarters of the otherwise allowable credit, or 1.35 cents per kilowatt-hour, for 

each kilowatt-hour of electricity produced at the facility (subject to the annual limitation 

described below). The credit is restricted to 6,000 megawatts of national capacity. Once that 

limitation has been reached, the Secretary may make no additional allocations. Treasury 

guidance required allocation applications to be filed before February 1, 2014.3

A taxpayer operating a qualified facility may claim no more than $125 million in tax 

credits per 1,000 megawatts of allocated capacity in any one year of the eight-year credit period. 

If the taxpayer operates a 1,350 megawatt rated nameplate capacity system and has received an 

allocation from the Secretary for 1,350 megawatts of capacity eligible for the credit, the 

taxpayer’s annual limitation on credits that may be claimed is equal to 1.35 times $125 million, 

or $168.75 million. If the taxpayer operates a facility with a nameplate rated capacity of 1,350 

megawatts, but has received an allocation from the Secretary for 750 megawatts of credit eligible 

capacity, then the two limitations apply such that the taxpayer may claim a credit effectively 

equal to one cent per kilowatt-hour of electricity produced (calculated as described above) 

subject to an annual credit limitation of $93.75 million in credits (three-quarters of $125 million). 

The credit is part of the general business credit. 

 2

 Sec. 45J. The 1.8-cents credit amount is reduced, but not below zero, if the annual average contract price 

per kilowatt-hour of electricity generated from advanced nuclear power facilities in the preceding year exceeds eight 

cents per kilowatt-hour. The eight-cent price comparison level is indexed for inflation after 1992. 

3

 I.R.S. Notice 2013-68. 
3 

Description of Proposal 

The proposal modifies the national megawatt capacity limitation for the advanced nuclear 

power production credit. To the extent any amount of the 6,000 megawatts of authorized 

capacity remains unutilized, the proposal requires the Secretary to allocate such capacity first to 

facilities placed in service before the year 2021, to the extent such facilities did not receive an 

allocation equal to their full nameplate capacity, and then to facilities placed in service after such 

date in the order in which such facilities are placed in service. The proposal provides that the 

present law placed-in-service sunset date of January 1, 2021, does not apply with respect to 

allocations of such unutilized national megawatt capacity. 

The proposal also allows qualified public entities to elect to forgo credits to which they 

otherwise would be entitled in favor of an eligible project partner. Qualified public entities are 

defined as (1) a Federal, State, or local government of any political subdivision, agency, or 

instrumentality thereof; (2) a mutual or cooperative electric company; or (3) a not-for-profit 

electric utility which has or had received a loan or loan guarantee under the Rural Electrification 

Act of 1936.4 An eligible project partner under the proposal generally includes any person who 

designed or constructed the nuclear power plant, participates in the provision of nuclear steam or 

nuclear fuel to the power plant, or has an ownership interest in the facility. In the case of a 

facility owned by a partnership, where the credit is determined at the partnership level, any 

electing qualified public entity is treated as the taxpayer with respect to such entity’s distributive 

share of such credits, and any other partner is an eligible project partner. 

Effective Date 

The proposal requiring the allocation of unutilized national megawatt capacity limitation 

is effective on the date of enactment. The proposal allowing an election by qualified public 

entities to forgo credits in favor of an eligible project partner is effective for taxable years 

beginning after the date of enactment. 

 4

 7 U.S.C. sec. 901 et seq. 
4 

B. Estimated Revenue Effect 

Fiscal Years 

[Millions of Dollars] 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26 

 

--- --- [1] -1 -2 -2 -2 -2 -2 -2 -3 -14 

NOTE: Details do not add to totals due to rounding. 

[1] Loss of less than $500,000.