PG&E gets green light to close Diablo Canyon nuclear power plant

Jan 11, 2018

State regulators have approved Pacific Gas & Electric’s plan to close the Diablo Canyon Power Plant, California's last nuclear power generating facility. 

The California Public Utilities Commission (CPUC) authorized PG&E to raise customer rates to recover over $241 million dollars, enough to cover the company's costs of closing the plant. That figure is considerably less than the $1.77 billion PG&E sought in its proposal filed with the CPUC in 2016.

The vast majority of the approved rate increases will go to employee retention and retraining programs.

The Commission denied the PG&E's request to raise customer rates even more to cover an $85 million dollar agreement with a coalition of San Luis Obispo County, local cities, a school district, unions and other groups. That agreement, called the Community Impacts Mitigation Program (CIMP), was intended to make up for lost property taxes and other revenues from the plant’s operation.

CPUC president Michael Picker agreed with a commission judge that PG&E shareholders - not ratepayers - should shoulder the cost of the community funding agreement.

“The question before this commission is not whether there will be economic impacts or even the potential size and scope of those impacts, but rather whether PG&E ratepayers should be paying to mitigate those impacts,” Picker said. “Utility rates should be used to provide utility services, and not government services, no matter how beneficial those services may be.”

“Having ratepayers take the place of taxpayers in paying for government services is not reasonable, and should not be approved,” California Public Utilities Commission Judge Peter V. Allen wrote in his initial proposed decision.

“Looking...at whether the CIMP under the proposed settlement is fair to PG&E, to the community, and to ratepayers, it is clear that the proposed settlement on this issue is fair to PG&E. Because the cost of the payment would be recovered in rates, PG&E itself bears no out-of-pocket costs,” Allen ruled. 

Allen ruled the joint agreement would need legislative authorization. This week, a majority of CPUC member agreed.

Diablo Canyon currently produces roughly six percent of the state’s total energy. As California’s political leadership continues to pivot towards renewable energy, PG&E foresees Diablo Canyon won’t be needed beyond 2025.

“Continued operation would only exacerbate over generation and then thereby increasing renewable generation curtailment,” Picker said. “PG&E’s bundled load is reducing, as customers migrate to [Community Choice Aggregation], direct access and into self-generation. And that would require PG&E to sell more Diablo Canyon output on the wholesale market. And also, in the coming years, PG&E will need to spend much more on maintenance and repair to what's clearly an aging power plant.”

In public comment before the vote, a representative from Assembly member Jordan Cunningham’s office, Chris Finarelli, appealed to the Commission to approve the CIMP funding. Cunningham represents the 35th District, which encompasses Diablo Canyon. 

“We have an entire local economy built around Diablo Canyon. If the community impact funds are not included in the final PUC decision, the economic impact to families and schools on the Central Coast will be severe,” Finarelli said. “The joint proposal serves the best interest of the local communities, workers, environment, taxpayers and ratepayers.”

San Luis Obispo City Manager Derek Johnson said Thursday’s CPUC decision was “very disappointing.”

“Our region bore the risk of hosting a nuclear power plant that benefited millions of Californians, and will continue to bear those risks during the shutdown process and afterward, including the storage of nuclear wastes for an unknown time period,” Johnson said. “As a result, it is only fair that the people in this region receive support to reduce the significant economic, social, and environmental impacts of Diablo Canyon’s closure.”

Picker said San Luis Obispo County advocacy group Mothers For Peace presented valid reasons for shutting down the plant earlier than 2025. In his comments before the vote, Picker said an earlier closure is an option and PG&E should be prepared to make an alternative plan for a 2020 or 2022 closure.