California Faces $241M Bill to Close Diablo Canyon Nuclear Plant

SACRAMENTO (CN) — Signing off on plans Thursday to shut down California’s last nuclear power plant, regulators said Pacific Gas & Electric can recover $241.2 million from ratepayers, not the $1.76 billion it requested.

“It is uncontested that the retirement of Diablo Canyon would result in reduced local tax revenues and a loss of well-paying jobs, with a corresponding potential for significant adverse economic impacts on the local area,” the California Public Utilities Commission said in its 78-page proposed decision. “The question before this commission is not whether there will be economic impacts, or even the potential size and scope of those impacts, but rather whether PG&E ratepayers should pay to mitigate these impacts.”

Diablo Canyon Power Plant opened in San Luis Obispo County in 1985, despite protests from environmental groups and others concerned about its proximity to fault lines. Gov. Jerry Brown even tried to block the plant from opening in the 1970s during his first term in office.

With its federal licenses set to expire in 2024 and 2025, however, plant owner PG&E proposed in 2016 to retire Diablo Canyon, saying that continued maintenance would be too expensive.

A number of groups supported the shut-down application, including the International Brotherhood of Electrical Workers Local 1245, the Coalition of California Utility Employees, Friends of the Earth, and the Natural Resources Defense Council.

Though the California Public Utility Commission unanimously signed off on the proposal Thursday, it rejected most of PG&E’s bid to recover certain costs from ratepayers, including $85 million to compensate the community surrounding Diablo Canyon for the loss of revenue from the plant’s closure.

“Utility rates should be used to provide utility services, not government services, no matter how beneficial those services may be,” the decision states.

The commission said the proposed community payments were a bit too fair to PG&E — burnishing the utility’s reputation with the appearance of charitable giving while facing “no out-of-pocket costs.”

“The fairness to the community is less clear,” the decision states.

Coupled with uncertainty about how fairly the community payments would be allocated, the commission said the ultimate cost on ratepayers made the plan too burdensome. If PG&E wants to support the community, the commission said it can do so with shareholder funds.

The bulk of PG&E’s proposed rate recovery encompassed a $1.3 billion plan to partially replace Diablo Canyon’s output. Noting that it will tackle replacement-procurement issues in a separate proceeding, the commission said a broad range of groups objected to PG&E’s proposal to replace Diablo Canyon with renewable energy sources, including wind and solar power.

In addition to the oil giant Shell, the proposal drew objections from the Sierra Club and recent Tesla acquisition SolarCity.

“While parties did not object to the idea of replacing Diablo Canyon with GHG-free resources,” the commission’s decision says, using an abbreviation for greenhouse gas, “they challenged the feasibility, effectiveness, cost-effectiveness, cost, and cost allocation of PG&E’s specific proposal.”

A representative for the Natural Resources Defense Council, which supported PG&E’s plan, called the commission’s decision unfortunate.

“It’s critical to ensure that Diablo Canyon’s electricity output is replaced without increasing carbon emissions and we remain committed to that goal,” Ralph Cavanagh, co-director of the NRDC’s energy program, said in a statement. “It’s a real tragedy that the commission did not specifically authorize carbon-free replacement like energy efficiency and wind and solar power, and that it ignored the full impact of the plant’s closure on the workers and surrounding communities. The decision undermines what should have been an inspiring model for the rest of the country and the world on best practices for planning for the closure of giant, expensive, and inflexible nuclear plants.”

Cavanagh said his group “will explore alternative options to ensure that the urgent needs of the affected communities, workers, and the environment are addressed.”

Though the commission emphasized that it does not want the closure of Diablo Canyon in 2024-25 to cause any increase in greenhouse gas emissions, it said there are several obstacles now to determining offsets.

The decision notes that Diablo Canyon’s retirement is still years away, that California’s electricity market is already changing rapidly, and that the availability of renewable energy is still growing.

Closing Diablo Canyon is expected to put 1,500 PG&E employees out of work. Though PG&E wanted $352.1 million for employee retention and retraining, the commission’s decision Thursday permits a recovery in rates of just $222.6 million for this effort.

PG&E said in a statement it was disappointed by the commission’s vote, noting that its proposal took many voices into account.

“While we are disappointed that they did not approve the full employee retention program, as well as the community impact mitigation and energy efficiency programs, we are appreciative that the CPUC took the positive step to increase the amount of funding for employee retention beyond their original proposed decision,” the company said.

Returning to the drawing board, PG&E said it has plans to “confer with our labor, community and environmental group partners in the days ahead about the decision, our next steps and the path forward.”

The $241 million rate-recovery plan approved by the commission includes $222.6 million for employee retention and retraining and $18.6 million for license-renewal activities.

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