CPUC Backs PG&E Plan to Retire Diablo Canyon Nuclear Plant

California regulators have approved Pacific Gas & Electric's (PG&E's) application to retire the Diablo Canyon nuclear plant by year-end 2025, ending a protracted battle over the generating station that pitted local economic interests against environmentalists and other opponents of nuclear power.

The state Public Utilities Commission (CPUC) on January 11 voted unanimously to accept PG&E's request to decommission the two reactors at the plant near Avila Beach when operating licenses for the units expire in November 2024 and August 2025, respectively. The 2,256-MW plant is the lone remaining operating nuclear facility in California.

The CPUC also authorized PG&E to recover from ratepayers $241.2 million in costs associated with the retirement: $211.3 million to keep employees until the plant in closed; $11.3 million to retrain displaced workers; and $18.6 million for operating license renewal costs.

CPUC President Michael Picker, the commissioner assigned to today's proceeding, said "Diablo Canyon has been a source of reliable and clean electricity, and employment, in San Luis Obispo [County] for many years now. But the plant is no longer economic, and the owner, PG&E, has asked to close it down. We looked hard at all the arguments, and the Commission agrees that the time has come. We have laid out a fair and reasonable pathway to clean power replacement, as well as a program for retaining skilled workers over the course of the next seven years."

Commissioner Liane M. Randolph, among those voting in favor of PG&E's application, said closing Diablo Canyon "moves California away from the era of nuclear power and toward the era of zero-carbon renewable energy."

"Given the long transition time we have here " [and] the severance package and increased amount allocated toward worker retention, I believe it is a reasonable and prudent package we are approving," said Commissioner Clifford Rechtschaffen.

PG&E in a statement said: "The Diablo Canyon Power Plant joint proposal represented a significant milestone in the planning to meet California's ambitious clean energy vision. We appreciate the CPUC's thoughtful consideration of this complex issue and its approval of certain elements."

Renewables, Storage, Efficiency Programs

PG&E has said it will increase its use of renewable energy and energy storage, and expand energy efficiency programs, to replace the lost nuclear power. California's landmark 2015 energy law requires power companies to produce 50% of their electricity from renewable sources, such as solar or wind, by 2030.

Administrative Law Judge Peter Allen, assigned by the CPUC to hear arguments concerning the plant's retirement, in 2017 said the utility should "be prepared to present scenarios for Diablo Canyon retirement in the Integrated Resource Planning proceeding that demonstrate no more than a de minimis increase in the GHG emissions of its electric portfolio."

State regulators in December issued a statement in support of energy storage, particularly battery storage, saying: "Energy storage is a clean energy resource that can be fast-responding, reliable and constructed in a short time frame."

Allen, who in a November hearing recommended the CPUC approve PG&E's application to retire the plant, also recommended that ratepayers not be responsible for a settlement between the utility and the county, and the CPUC concurred in today's action, denying PG&E's request for $85 million for a Community Impact Mitigation Program (CIMP). PG&E could instead use shareholder funds to support the CIMP, which is designed as a payout for San Luis Opisbo County cities, schools, and agencies that would be negatively impacted by the closure.

The utility proffered the CIMP plan in 2016, after announcing in June of that year it would seek to close the plant. Of the $85 million, $75 million was expected to go to offset property tax losses by the school district, county, and 69 other special districts. Another $10 million would go for economic development efforts in the county and nearby communities.

PG&E also has agreed to pay between $37.5 million and $62.5 million toward local emergency planning efforts until all spent fuel at the Diablo Canyon site is in dry cask storage, and the two nuclear reactors are fully decommissioned.

Studies Show $1 Billion Hit to Local Economy

Economic studies in the wake of PG&E's 2016 announcement that it would seek to retire Diablo Canyon showed closing the plant could lead to a loss of $1 billion annually to the local community. The plant is San Luis Obispo County's largest private employer, and the closure announcement sparked concern about lost jobs and tax revenue. Still, PG&E officials said it would be more economical for the utility to close the plant as California mandated the use of more renewable energy, and the state saw increased use of distributed generation in a move away from the traditional power grid.

At the time, PG&E CEO Tony Earley said "On cooler spring and fall days, you still have to generate from renewables to meet your 50% renewable requirement, because that's the state law. There's just not going to be enough need to have to run your nuclear plant."

The safety of Diablo Canyon, which was named a POWER Top Plant in 2009, has been at the forefront of arguments against its continued operation, particularly after the Fukushima disaster in Japan in 2011. Diablo Canyon is located near two major faults-Hosgri and San Gregorio-and concerns about seismic activity in the region have been cited often by the plant's opponents, most notably The Utility Reform Network (TURN), a San Francisco-based ratepayer advocacy group.

PG&E in 2015 submitted documents to the federal Nuclear Regulatory Commission (NRC) that said the plant could safely withstand earthquakes, tsunamis, and flooding, of particular importance due to Diablo Canyon's seaside location. But the utility also recognized the headwinds against continued operation of the plant at a time of low power prices, and at a time when California is mandating the use of more renewable energy such as solar and wind.

The plant began commercial operation in 1985 with the startup of the first of its two Westinghouse 4-loop pressurized water reactors. It became the last operating nuclear plant in California after the San Onofre Nuclear Generating Station was permanently closed in 2013.

Proponents of keeping Diablo Canyon open argued it was built to last a century, and had many years of life remaining. Californians for Green Nuclear Power said nuclear power was more efficient than renewables, and argued electricity costs for PG&E ratepayers would rise if the plant closed. Those in support of keeping the plant online said safety concerns were overstated, and cited the negative economic impact of a closure to the local community.

The Diablo Canyon shutdown will bring an end to nuclear power plants in California, but not nuclear power in the state. Part of Southern California continues to receive electricity from the 4-GW Palo Verde nuclear plant in Arizona, which is partly owned by Southern California Edison (SCE), the Los Angeles Department of Water and Power, and the Southern California Public Power Authority.

Nuclear generation in California dates to the 1957 opening of PG&E's Vallecitos plant, and the Santa Susana plant operated by SCE. Six nuclear plants have operated in the state at various times over the past 60 years.

The shuttering of Diablo Canyon will leave just one nuclear plant-the Columbia Generating Station near Richland, Washington, a POWER Top Plant in 2017-operating on the U.S. West Coast.

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

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