California would loan PG&E $1.4 billion to keep nuclear plant open under Newsom proposal
California would loan PG&E Corp. up to $1.4 billion to keep the Diablo Canyon nuclear plant open for another 10 years under a proposal from Gov. Gavin Newsom.
The draft legislation circulated by his office shows Newsom’s increasing anxiety about the vulnerability facing California’s power grid in the coming years — a fear of blackouts so acute that he’d be willing to loan money to a notoriously unpopular company linked to a recent string of fatal wildfires. Under certain conditions, a portion of the loan could be forgivable.
The legislation surfaced at the same time the California Independent System Operator, which runs the power grid, indicated Friday that supplies could tighten next week as temperatures exceed 100 degrees for multiple days.
Diablo Canyon, the state’s last remaining nuclear plant, accounts for nearly 10% of the state’s electricity. It’s scheduled to shut down in 2025 in part because of economic reasons. The utility told regulators in 2016 that Diablo Canyon didn’t make sense in an era increasingly dominated by solar, wind and other cheap sources of renewable energy.
But over the past year, momentum has been building to keep the plant open. Although nuclear power remains controversial among many environmental groups, others favor it as a carbon-free energy source that can help the state achieve its goals on fighting climate change. Meanwhile, two years after a string of rolling blackouts hit California during a massive heatwave, the state’s electricity grid remains prone to power outages.
The plant on the coast outside San Luis Obispo could get federal aid under a program created by the infrastructure bill signed into law last year by President Joe Biden. California officials persuaded the Biden administration earlier this year to loosen the guidelines to make the PG&E plant eligible for the program.
Newsom’s administration argues that climate change has caused the demand for electricity to rise — and has made a Diablo Canyon extension increasingly important. “It’s a very difficult conversation, and it’s a last resort,” Ana Matosantos, the governor’s cabinet secretary, said at a workshop held Friday by the California Energy Commission and the Independent System Operator, which runs the grid.
And, after years of insisting they were intent on closing the plant, PG&E officials said in July they’re considering delaying the shutdown.
Environmentalists unhappy with Diablo extension
Newsom’s proposal drew immediate reaction from environmentalists who want the plant shut down. David Weisman, of the San Luis Obispo group Alliance for Nuclear Responsibility, called Diablo Canyon a seismic risk that badly needs maintenance if it’s to remain open.
“There is so much deferred maintenance going on,” he said. “It would take more than $1.4 billion to get it up to speed.”
He also blasted Newsom for helping PG&E in light of the utility’s troubled safety record. “When will the Legislature stop giving blank checks for PG&E?” he said. “How many millions get poured down the toilet for PG&E?”
The company, in a statement, said: “PG&E is committed to California’s clean energy future, and as a regulated utility, we are required to follow the energy policies of the state. We understand state leaders’ discussions to potentially extend operations at (Diablo Canyon) are progressing. We are proud of the role that (Diablo Canyon) plays in our state, and we stand ready to support should there be a change in state policy, to help ensure grid reliability for our customers and all Californians at the lowest possible cost.”
Central Coast lawmaker favors keeping Diablo open
Assemblyman Jordan Cunningham, R-San Luis Obispo, represents the San Luis Obispo County communities around Diablo Canyon and has long been a champion of keeping the power plant open.
“I don’t think we have enough electrons on the grid, even with Diablo, to achieve all our other goals: de-carbonizing electricity production, electrifying transports, building more housing — all of which requires AC units,” Cunningham said.
“The soonest any offshore wind power is going to be put to use in the grid is probably 2030, from what I’ve been told,” Cunningham added. “So we’ve got a real gap from 2025 to 2030. If you could extend Diablo to help meet some of that gap, then you’re displacing mostly natural gas power.”
He referred to a Stanford-MIT study from November 2021 that suggested delaying Diablo Canyon’s closure until 2035 would save the state and PG&E ratepayers billions of dollars in additional energy costs.
“If we don’t have enough energy in the grid, they go buy it on the stock market from out of state,” Cunningham said. “That’s expensive, and those costs get passed along to ratepayers. So I’m more than convinced, and I’ve been saying for years to the public that we need it. And we need to revisit the closure plan and the decommissioning plan. Because the reality is, when they made that decision in 2016, we assumed we’d be a certain place with renewables and storage, and we’re just not there.”
Cunningham said he’d been in talks with the governor’s office about the loan and trailer bill throughout the week.
“I think they’re pretty serious,” he said. “Serious enough to be briefing me about it, serious enough to be proposing some bill language in a trailer bill, serious enough to be expending some political capital to try to make the case and get the information to the voters and the public as to why we need it.”
Yet state Sen. John Laird, a Democrat who also represents the area, took a more skeptical tone, questioning whether Diablo Canyon’s continued operation “is the key to energy reliability in California.”
At Friday’s workshop, Laird cited reports that the plant could be vulnerable to earthquakes.
“Safety is No. 1,” Laird said.
This story was originally published August 12, 2022 at 3:43 PM with the headline "California would loan PG&E $1.4 billion to keep nuclear plant open under Newsom proposal."