BY PETER JOHNSON, New Times
The U.S. Department of Energy (DOE) is proposing a last-minute amendment to its guidelines for the $6 billion aid package that’s aimed at saving struggling nuclear power plants—a change that specifically favors Diablo Canyon Power Plant.
In turn, for the first time, PG&E openly expressed interest in applying for a portion of the aid and changing course on its 2016 decision to shutter the nuclear power plant located on the shores of San Luis Obispo County.
“The people of PG&E are proud of the role that Diablo Canyon Power Plant plays in our state,” company spokesperson Suzanne Hosn said in a statement on June 21. “We are open to applying for DOE funding.”
On June 17, the DOE unveiled the proposed amendment to its criteria guiding applicants seeking a slice of the $6 billion package for nuclear plants, which is funded by the Biden administration’s recently passed infrastructure law.
That revision, open for public comment through June 27, eliminates a requirement that the nuclear plant applicant operate in a competitive marketplace and not recover more than 50 percent of its costs from regulated contracts or rates.
In a letter sent from Gov. Gavin Newsom’s office to the DOE on May 23, Newsom explicitly asked for that amendment to accommodate Diablo Canyon—which recovers its costs from regulated rates and may not meet the competitive marketplace criteria. In April, Newsom told the Los Angeles Times that he was concerned that closing Diablo as planned in 2024-25 could lead to blackouts and increased greenhouse gas emissions in California—sparking a hurried effort to change course.
“The state is evaluating a temporary delay of the planned retirement of Diablo Canyon Power Plant,” Newsom’s letter to the DOE read. “A key factor for the state’s evaluation of an extension and its economic viability is whether the first award period for the Civil Nuclear Credit Program [the aid package] applies to Diablo Canyon Power Plant.”
Newsom argued that Diablo needs the federal assistance to cover the “significant” costs associated with pivoting from a planned shutdown to ongoing operation—an undertaking where “there is no existing cost recovery mechanism.”
“For Diablo Canyon to extend operations, it would incur significant transition costs over the next four years to perform necessary studies, invest in plant enhancements, and obtain licenses and permits,” the governor’s letter read. “The fact that the revenue that Diablo Canyon may generate in the electricity market comes from cost-of-service ratemaking does not alter the fact that extending operations at Diablo Canyon would cause significant economic losses of the sort that the Civil Nuclear Credit Program was designed to address.”
According to the DOE, the new proposed guidance would “provide a nuclear reactor with the opportunity to demonstrate that it has operating losses notwithstanding the percentage for cost-of-service revenues and market revenues.” It added that the amendment “is consistent with Congress’ intent to provide taxpayer dollars only for amounts needed to keep nuclear reactors operational.”
The recent interplay between the DOE, Newsom, and PG&E drew mixed reactions from Diablo Canyon stakeholders. Linda Seeley, a spokesperson for SLO Mothers for Peace, an anti-nuclear group, called the shifting DOE guidelines “a monumental scam” and blasted its brief 10-day public comment period.
“Is this a deal that’s being made behind closed doors?” Seeley asked.
Seeley called the arguments for keeping Diablo Canyon running “scare tactics” and said the state is more prepared than ever to transition away from nuclear power (and its radioactive byproduct) to renewable sources, with increased battery storage for solar power.
“We have more than enough to fill in the gap,” she said.
David Weisman, outreach coordinator for the Alliance for Nuclear Responsibility, said that the DOE’s proposed revisions fly in the face of the aid’s underpinning legislation, which was to help save power plants in economic distress.
“Diablo is not the poster child of what this legislation is looking for,” Weisman said. “This isn’t just about California—this is a national program and a national plan. Go look at the reactors in Illinois or Ohio. They don’t have a guaranteed captured monopoly [like] PG&E.”
Weisman added that PG&E would face an enormous set of deferred maintenance needs, regulatory hurdles, and other investments to successfully operate the plant past 2024-25. All planning and effort since 2016 has gone toward a presumed shutdown, he said.
“How much of this stuff needs to be spun around 180 degrees, and how much time do they have?” he said.
Pro-nuclear groups gave a different take. Heather Hoff, co-founder of the local nonprofit Mothers For Nuclear, said she believes the U.S. should be trying to “save virtually all existing nuclear plants, regardless of the reason for shutdown.”
“Though shutting down Diablo Canyon never made sense in the first place, it’s even more obvious now. California doesn’t have enough electricity, period,” Hoff said in an email. “Our markets are broken in that they don’t reward nuclear plant operators for the reliable, clean, and massive generation provided. … I hope the state, our utilities, and the federal government will all work diligently to dig us out of this energy mess, and a huge first step will be continuing operation of Diablo Canyon.”