Utility agrees not to renew license at 2,200 MW+ Diablo Canyon nuke in California

As part of a deal with union and environmental groups, Pacific Gas and Electric (PG&E) has agreed to drop plans for a 20-year license renewal for its two Diablo Canyon nuclear units when the existing regulatory life expires in the 2020s.

The PG&E Corp. (NYSE:PCG) utility subsidiary announced June 21 that it has agreed with Friends of the Earth (FOE), the Natural Resources Defense Council (NRDC) and other parties that it plans to operate Diablo Canyon to the end of its current NRC operating licenses, which expire on Nov. 2, 2024 (Unit 1), and Aug. 26, 2025 (Unit 2).

The move is part of a joint proposal with labor and leading environmental organizations that would increase investment in energy efficiency, renewables and storage beyond current state mandates while phasing out PG&E’s production of nuclear power in California by 2025, the parties in a news release.

Since the retirement of the Edison International (NYSE: EIX) subsidiary South California Edison’s (SCE) San Onofre Nuclear Generating Station, Diablo Canyon is the last operating nuclear complex in California.

A California state senator had recently proposed legislation calling for a state study of the adverse economic impacts that could affect San Luis Obispo County if the Diablo Canyon Nuclear Power Plant were to shut down.

The Diablo Canyon news also comes days after the Omaha Public Power District (OPPD) board of directors accepted a management recommendation to 478-MW Fort Calhoun nuclear power plant in Nebraska at the end of the year.

Where Fort Calhoun is about the smallest operating nuclear plant in North America, the two Diablo Canyon units are much larger. PG&E had previously filed for a 20-year license renewal for the two 1,100-MW pressurized water reactors (PWRs) in Avila Beach, California.

It should be noted that California has long been home to a large and organized anti-nuclear movement. Nuclear foes in California ramped up their criticism after the 2011 Fukushima disaster in Japan – and questioned the future of nuclear power in earthquake-prone California.

The joint proposal announced June 21 would replace power produced by two nuclear reactors at the Diablo Canyon with a cost-effective, greenhouse gas free portfolio of energy efficiency, renewables and energy storage. It includes a PG&E commitment to a 55% renewable energy target in 2031, an unprecedented voluntary commitment by a major U.S. energy company.

The parties to the joint proposal are PG&E, International Brotherhood of Electrical Workers Local 1245, the Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, Environment California and Alliance for Nuclear Responsibility.

“California’s energy landscape is changing dramatically with energy efficiency, renewables and storage being central to the state’s energy policy,” said PG&E Corp. Chairman, CEO and President Tony Earley.

 “As we make this transition, Diablo Canyon’s full output will no longer be required. As a result, we will not seek to relicense the facility beyond 2025 pending approval of the joint energy proposal,” Earley said.

“Importantly, this proposal recognizes the value of GHG-free nuclear power as an important bridge strategy to help ensure that power remains affordable and reliable and that we do not increase the use of fossil fuels while supporting California’s vision for the future,” Earley said.

This eight- to nine-year transition period will provide the time to begin the process to plan and replace Diablo Canyon’s energy with new GHG-free replacement resources.

PG&E will immediately cease any efforts on its part to renew the Diablo Canyon operating licenses and will ask the Nuclear Regulatory Commission (NRC) to suspend consideration of the pending Diablo Canyon license renewal application pending withdrawal with prejudice of the NRC application upon California Public Utilities Commission (CPUC) approval of the joint proposal application.

PG&E does not believe customer rates will increase as a result of the joint proposal because it believes it is likely that implementing the proposal will have a lower overall cost than relicensing Diablo Canyon and operating it through 2044.

Factors affecting this include, in addition to lower demand, declining costs for renewable power and the potential for higher renewable integration costs if Diablo Canyon is relicensed.

Utility agrees to help workers, still needs various approvals

The utility will use a retention program to provide, other things, incentives to retain employees during the remaining operating years of the plant, a retraining and development program to facilitate redeployment of a portion of plant personnel to the decommissioning project or other positions within the company, and severance payments upon the completion of employment.

PG&E has reached agreement on these benefits with IBEW Local 1245 and will immediately engage in bargaining with its other labor unions to ensure appropriate benefits for represented employees.

The joint agreement is contingent on a number of important regulatory actions, including:

  • Approval of a lease extension from the State Lands Commission without which the company cannot operate Diablo Canyon beyond 2018.
  • Approval by the CPUC of the proposed plan for replacement of Diablo Canyon with greenhouse gas free resources. Any resource procurement PG&E makes will be subject to a non-bypassable cost allocation mechanism that ensures all users of PG&E’s grid pay a fair share of the costs.
  • CPUC confirmation that PG&E’s investment in Diablo Canyon will be recovered by the time the plant closes in 2025.
  • CPUC approval of cost recovery for appropriate employee and community transition benefits.

Sen. Barbara Boxer, D-Calif., who is the Ranking Member of the Senate Environment and Public Works Committee and a vocal critic of Diablo Canyon, said in a June 21 statement: “In 2011, I learned that the seismic risk at Diablo Canyon was much more dangerous than we thought, so I applaud PG&E’s decision to cease operations at Diablo Canyon after their its expires in 2025, and I appreciate that Friends of the Earth will remain focused on the safety issues while the plant is still operating. The news that nuclear power will be replaced by renewables is heartening.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.