California Keeps Diablo Canyon Nuclear Power Plant Open
Legislation keeps nuclear power plant open for an additional five years beyond its scheduled closing in 2024 and 2025.
Governor Gavin Newsom signed into law S.B. 846, which extends the life of the 2,250 MW Diablo Canyon nuclear power plant’s two units by five years to 2029 and 2030. The legislation also authorizes a forgivable $1.4 billion loan for plant owner Pacific Gas & Electric (PG&E) and streamlines environmental reviews. The bill passed overwhelmingly in both the state Senate and Assembly and overcame opposition from environmental groups and some Democrats.
The Diablo Canyon nuclear power plant is the largest power source in California and provides 8.6% of the state’s electricity, including approximately 17% of its zero-emissions electricity. The plant’s two units were scheduled to be retired in 2024 and 2025, but concerns over anticipated power shortages during the state’s transition to renewable energy led to growing support for keeping it open. Newsom originally proposed a 10-year extension, but legislators rejected that proposal in favor of the shorter timeline. (See Newsom Introduces Bill to Keep Diablo Canyon Nuclear Power Plant Open here.)
The legislature stated that it is keeping the plant open to “protect the state against significant uncertainty in future demand resulting from the state’s greenhouse-gas-reduction efforts involving electrification of transportation and building energy end uses and regional climate-related weather phenomenon, and to address the risk that currently ordered procurement will be insufficient to meet this supply or that there may be delays in bringing the ordered resources online on schedule.” PG&E must now obtain licenses for the extension from the California state agencies and the U.S. Nuclear Regulatory Commission.
$1.4 Billion Forgivable Loan
The law provides a $1.4 billion forgivable loan for PG&E to extend operations of the Diablo Canyon power plant facility to November 1, 2029 for Unit 1 and November 1, 2030 for Unit 2. The law transfers $600 million from the General Fund to the Department of Water Resources and states that the transfers of the remaining $800 million requires future legislative authorization. In a change from Newsom’s original proposal, the amount is not to be paid in a lump sum but rather to be paid in semi-annual disbursements according to review procedures. Among other requirements for the loan, PG&E must conduct an updated seismic assessment on the plant.
Regulatory Streamlining
The legislation also streamlines and expedites the regulatory process for the extension. It would require state agencies to take action on an application or request for an extension within 180 days of submission.
Federal Funding
The law requires the Diablo Canyon plant to secure funds from the U.S. Department of Energy or other federal sources to pay back the loan. It requires the plant to qualify for the U.S. Department of Energy’s $6 billion Civil Nuclear Credit program by March 1, 2023, or the loan will be canceled. PG&E has applied for federal aid from the program, which was created in the 2021 Infrastructure Investment and Jobs Act to help nuclear power plants maintain operations. Diablo Canyon is the only plant expected to apply for the funding, as the 10-year nuclear power production tax credit passed as part of the Inflation Reduction Act could provide a better incentive.
Clean Energy Reliability Investment Plan
The bill also provides $1 billion from 2023 to 2026 under the Clean Energy Reliability Investment Plan to support “programs and projects that accelerate the deployment of clean energy resources, support demand response, assist ratepayers, and increase energy reliability.”