California could lend PG&E $1.4 billion to save Diablo Canyon

A last-minute proposal from Governor Gavin Newsom could keep the Diablo Canyon nuclear plant open until 2035, a decade after the current closure date – in part by giving owners Pacific Gas & Electric Co. a forgivable $1.4 billion loan.

The proposal is part of a draft legislative language that was distributed to state legislators late Thursday night. The bill, which has yet to be introduced in the Legislature, would also exempt the Diablo Canyon extension from the California Environmental Quality Act and several other environmental rules that nuclear adversaries could use to challenge extension.

Diablo Canyon is California’s largest source of electricity. Officials fear that without it, the state could have trouble turning on the lights — and air conditioners — during intense summer heat waves. Newsom has also suggested that keeping the plant open will help fight climate change because Diablo doesn’t produce planet-warming pollution.

“Some would say it was the right and right climate decision,” Newsom told The Times earlier this year.

The 2,250-megawatt power plant – producing 6% of the state’s electricity by 2021 – is located along the Central Coast south of Morro Bay. Its fate had been a subject of controversy for decades, with the then Government. Jerry Brown railing against facility construction in the late 1970s amid a wave of protests against nuclear activity spurred by the partial crisis on Three Mile Island.

It’s been six years since PG&E reached an agreement to shut down Diablo by 2025, amid public concerns that the plant – located near several seismic fault lines – could emit deadly radiation during a battle earthquake. The US also has no long-term storage for spent fuel, meaning radioactive waste is piling up at nuclear plants around the country, including Diablo.

But since PG&E agreed to pull out of the atomic energy business, the increasingly urgent climate crisis – which has led to wildfires, heat waves, storms and increasingly severe droughts – has prompted some environmental review of nuclear plant closures.

That’s a particularly pressing question in California, which has struggled to provide enough power to keep the lights on on those hot summer evenings after sunset, when solar panels stop. electricity generation. Parts of the state lost power continuously for two nights in August 2020. Since then there have been several close calls.

Nuclear waste containers near the Pacific coast at the San Onofre Nuclear Generating Station in San Diego County.

Nuclear waste containers near the Pacific coast at the closed San Onofre Nuclear Production Station in San Diego County.

(Allen J. Schaben / Los Angeles Times)

When the Biden administration announced earlier this year that it would spend $6 billion in federal funds to help rescue nuclear plants facing shutdowns, Newsom said California would “not be allowed to question the situation.” That’s on the scale as an option.”

But it’s still unclear if PG&E is eligible for federal funds – hence the draft bill being circulated by Newsom’s office.

If the Legislature initials it, the state’s Department of Water Resources will be authorized to lend PG&E $1.4 billion. This money could help pay for federal license renewals and the maintenance needed to keep Diablo safe.

The utility company will have to repay a portion of the loan that it ultimately doesn’t need. If federal funding for Diablo eventually passes, California taxpayers could get all or part of their money back.

Newsom spokesman Anthony York said: “We are optimistic that there may be some federal assistance involved in this.

Newsom told The Times earlier this year that for PG&E, changing course on Diablo Canyon “wasn’t their happy place.” But the beleaguered company – which emerged from bankruptcy two years ago after one of its power lines caused the deadliest fire in state history – was left with no choice but to go under the Governor’s new direction on nuclear energy.

When asked about the draft legislation, Lynsey Paulo, a spokesperson for PG&E, said in an email that the proprietary utility “is committed to California’s clean energy future and as a regulated utility, we are forced to must follow state energy policies”.

“We understand the discussions of state leaders to potentially expand operations in [Diablo Canyon] progressing,” said Paulo. “We are proud of our role [Diablo Canyon] play in our state, and we’re here to support if there’s a change in state policy, to help ensure grid reliability for our customers and all Californians at the lowest possible cost. body. “

Diablo Canyon Nuclear Plant in the background of the coast and some bushes.

Diablo Canyon nuclear plant, seen in 2005.

(Michael A. Mariant / Associated Press)

Under the draft legislation, PG&E would be allowed to continue operating Diablo Canyon through 2035 – but negotiations with lawmakers are just underway and Newsom’s proposal could change. Another document circulated by the governor’s office discusses an initial extension of five years to 2030, with an additional five-year extension only as needed.

“Final details are being worked on,” York said.

The bill also says any state action needed to keep Diablo open would be exempt from the California Environmental Quality Act, or CEQA. That means agencies considering the expansion – which could include the Coastal Commission, Public Utilities Commission and State Lands Commission – will not need to do extensive research into environmental impacts. .

The draft law justifies that exemption by saying that the continued operation of the nuclear reactors “will not result in operational or physical changes and no new adverse environmental impacts.” or otherwise materially”.

“Accordingly, the Legislature finds that continuing to operate consistently with the state’s environmental priorities would not substantially interfere with the needs and resources of the public trust, otherwise consistent with the doctrine of public confidence, the Coastal Act and California coastal management program, and is in the best interest of the state,” the bill reads.

At the same time, the bill would allow PG&E to continue with at least one “adverse environmental impact.”

Diablo Canyon is currently inoperable after 2025 in part due to state regulations that require coastal power plants to stop sucking in large amounts of seawater to cool their generators – a process that kills fish and other wildlife. other sea creatures. Closing the plant is PG&E’s solution to complying with that rule, rather than spending billions of dollars upgrading its equipment.

The draft legislation would provide PG&E with a remission, setting a new compliance deadline of October 31, 2035. It would also require the company to pay an environmental “mitigation fee” of $10 per million gallons of seawater used, starting in 2024 – about $8 million annually, with a 3% annual fee increase. That’s more than the company is currently paying.

“Despite the improvement, we would like to see marine life not lost in the first place. And we certainly want the impacts to go away together,” Sean Bothwell, executive director of the California Coast Guard Alliance, said in a message.

There is not much time left to introduce a bill and pass it before the legislative session ends on August 31. And Newsom’s proposal has been met with resistance from environmental groups including the Sierra Club. , the Natural Resources Defense Council and the California Coast Guard Network. They say the state should focus on replacing nuclear power with cleaner options.

Dan Jacobson, senior adviser to the California environmental advocacy group, said the $1.4 billion PG&E could receive under the draft bill would be “better spent on renewable energy, conservation and efficiency.” fruit.” He worries Diablo will become a “money pit” where “you start putting money in, and suddenly PG&E … will say they need more.”

“$1.4 billion turned into $2 billion, turned into $6 billion, turned into $10 billion,” he said.

The Los Angeles Department of Electricity's Pine Tree Wind and Solar Farm in Kern County.

The Los Angeles Department of Electricity’s Pine Tree Wind and Solar Farm in Kern County.

(Irfan Khan / Los Angeles Times)

Unlike wind and solar farms, nuclear reactors can produce electricity around the clock – crucial for California and other parts of the country that are increasingly facing the risk of shortages. electricity, especially on hot evenings in August and September.

The amazing development of lithium-ion battery storage has made it easier and cheaper to store solar and wind power for those times of day when the grid is strained. But there are still relatively few battery systems on the grid. And worse heat waves – caused by climate pollution – are driving demand for air conditioners, which use large amounts of electricity.

State officials worry there could be a power outage this summer, even before Diablo was scheduled to close.

“The grid is very vulnerable right now,” said Neil Millar, vice president of California Independent Systems Operators.

That vulnerability is partly due to the shutdown of gas-fired power plants – a major source of climate pollution, but also an important tool for keeping the lights on when the sun goes down. . At Newsom’s urging, state lawmakers passed a bill in June that critics say could help some gas plants along the Southern California coast stay open through the closure date. expected in 2023.

Several lawmakers who voted for that bill – including State Senator Henry Stern (D-Los Angeles), an ardent climate advocate – said continued dependence on fossil fuels was an unfortunate necessity while California develops cleaner alternatives to keep the lights on 24/7.

In addition to batteries, those alternatives could include geothermal energy, offshore wind, and long-term storage. California could also pay for homes that use less energy and coordinate electricity supplies more closely with other states.

“We’re trying to get through the crisis,” Stern said in June. “If we don’t manage this crisis, utility companies around the state of California will do whatever they have to. And in the past, that meant burning [gas] plants in disadvantaged communities. “

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It remains unclear whether the Legislature will make an amendment similar to Newsom’s plan for Diablo Canyon.

The California Energy Commission will host a panel Friday night to discuss nuclear plant expansion possibilities and solicit public input. Information on how to join the conference by Zoom or by phone is posted on the commission website. California could lend PG&E $1.4 billion to save Diablo Canyon

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