Calif. regulators grant PG&E nuclear plant 5-year extension, with conditions

Pacific Gas and Electric Co. has cleared a considerable hurdle in its bid to extend operations at its Diablo Canyon nuclear power plant in San Luis Obispo County, Calif., securing the California Public Utilities Commission's conditional consent to run the state's single-largest generating station until 2030.

The CPUC's 3-0 vote on Dec. 14 to approve a proposed decision — with one commissioner abstaining and another absent — is contingent upon the US Nuclear Regulatory Commission's authorization to continue operating the facility and a $1.4 billion state loan. In a third condition, regulators left the door open to voiding their extension if they determine that prolonging operations is "imprudent, unreasonable, or not cost-effective."

The action marks a major milestone in the PG&E Corp. subsidiary's effort to reverse a previously negotiated shutdown of Diablo Canyon's twin reactors in 2024 and 2025, respectively, which the CPUC approved in 2018. Amid heightened concerns over grid reliability, Gov. Gavin Newsom in September 2022 signed legislation directing Pacific Gas and Electric (PG&E) to seek all approvals required to keep the 2,240-MW plant online for another five years.

In comments ahead of the vote, Commissioner Karen Douglas called the extension "an important measure towards supporting the reliability of the California electricity grid as we move forward in our energy transition."

"The extension is still contingent upon information that we will receive and review in the coming months, specifically the more complete cost information from PG&E and a decision on the licensing extension from the Nuclear Regulatory Commission," CPUC President Alice Reynolds added.

The NRC in March granted PG&E an exemption needed to continue operations as it reviews the utility's relicensing application. PG&E filed its application for a 20-year extension in November, a standard-term license that would give California an easier pathway to further prolong operations, if deemed necessary. The multiyear federal review, which will consider safety conditions at the plant, begins once the NRC finds PG&E's application is ready.

Cost uncertainties

Regulators instructed PG&E to provide updated cost forecasts for extending the facility, noting a wide difference in estimates between the utility and other stakeholders.

During testimony in the proceeding, PG&E forecast the cost of operating Diablo Canyon between 2024 and 2030 at $5.2 billion, compared with ratepayer advocacy group the Utility Reform Network's $10.1 billion estimate.

In its decision, the CPUC said it was in the best interest of ratepayers that PG&E "produce a more comprehensive and transparent forecast of the costs associated with [Diablo Canyon's] extended operations for commission and party review" than it has presented to date.

"An up-front, transparent forecast of all anticipated [Diablo Canyon] costs through 2030 is also expected to provide a more comprehensive framework" to help determine whether the costs included in PG&E's annual cost forecasts "are reasonable and prudent," regulators said.

PG&E expects to file its first annual cost recovery application addressing customer impacts in March 2024, utility spokesperson Suzanne Hosn said in a Dec. 14 email. After its current operating licenses expire, Diablo Canyon will support customers across the state rather than solely in PG&E's service territory, Hosn added, noting that all customers will benefit from funds received through the US Energy Department's civil nuclear credit program.

The DOE in November 2022 conditionally awarded $1.1 billion to keep Diablo Canyon from closing.

Moreover, all of the facility's market revenues "will be used to offset costs of continued plant operations," Hosn said. "As such, customers could see little to no change or even a credit on their bills due to extended operations at [Diablo Canyon]."

Nuclear plant 'not necessary'?

In making its decision, the CPUC examined whether new renewable energy or other zero-carbon resources connected by the end of 2023 could be an adequate substitute for Diablo Canyon. Regulators found such replacement capacity was not ready.

But Rao Konidena, an energy expert and independent consultant working with San Luis Obispo Mothers for Peace, an advocacy group opposing Diablo Canyon's extension, called the state's analysis flawed.

"California does not need Diablo in my opinion," the engineer, who previously held positions at the Midcontinent ISO, said at a media briefing after the CPUC vote.

In weighing the need for the nuclear plant, state regulators have failed to fully consider surging demand response and battery storage resources, energy imports from other states or recent retirement delays for several aging natural gas-fired plants, according to Konidena.

"We are in a position in California where it is not necessary to keep running Diablo Canyon in order to keep the lights on," added Diane Curran, an attorney representing San Luis Obispo Mothers for Peace. "It is not necessary. And yet it is so dangerous."

San Luis Obispo Mothers for Peace, together with Friends of the Earth, on Nov. 30 filed a lawsuit against the NRC in the Ninth Circuit US Court of Appeals, alleging the agency violated federal law when it rejected their September request for a public hearing over concerns about delayed tests and inspections of the reactor pressure vessel at Diablo Canyon unit 1. They asked for an immediate shutdown of the unit.

In another case pending before the Ninth Circuit, the groups are challenging the NRC's decision to grant PG&E the exemption to operate Diablo Canyon units 1 and 2 during the licensing review.

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