California governor warms up to nuclear reactors

By Dawn Stover | May 4, 2022

Aerial view of Diablo Canyon nuclear power plantDiablo Canyon Nuclear Power Plant, Units 1 and 2, on the California coast. Photo courtesy of Pacific Gas & Electric, CC BY-NC-ND 2.0

California’s governor has launched an eleventh-hour effort to keep his state’s last two nuclear reactors operating. Gov. Gavin Newsom hopes the reactors will qualify for credits under a new $6 billion federal program designed to prevent the “premature” retirement of reactors facing economic headwinds.

Last Thursday, Newsom told the Los Angeles Times editorial board that he will pursue some of that funding to keep nuclear reactors at the Diablo Canyon Power Plant in San Luis Obispo County running past their previously announced shutdown dates of November 2024 for the first reactor, and August 2025 for the second one. Newsom said he is concerned about possible power shortfalls caused by heat waves and other climate impacts and would like to see the reactors get a short-term reprieve from their scheduled closures.

“Some would say it’s the righteous and right climate decision,” Newsom told the editorial board.

Even with the governor’s support, though, a lot of things would have to happen before Diablo Canyon could receive life-extending federal credits. The governor’s support may be more of a political talking point than a lifeline for Diablo Canyon.

Hot summers ahead. The governor did not say whether Pacific Gas & Electric (PG&E), which owns the plant, is willing to apply for the credits by the fast-approaching deadline of May 19. Only owners and operators of nuclear reactors are eligible for the program.

Erin Mellon, communications director for the governor’s office, said Newsom supports “keeping all options on the table to ensure we have a reliable grid, especially as California heads into a summer where [the California Independent System Operator, which oversees the state’s grid] expects California could have more demand than supply during the kind of extreme events that California has experienced over the past two summers.”

On an earnings call that happened the same day as the governor’s about-face on Diablo Canyon, CEO Patricia Poppe insisted PG&E is prepared for this summer, adding that the company’s 182-megawatt Moss Landing energy-storage facility is now online. “We’re very comfortable about our supply situation for this summer…even if no additional storage comes online,” she said.

In any case, the first scheduled Diablo Canyon reactor closure is still two and a half years away.

PG&E spokesperson Suzanne Hozn would not comment on whether the company plans to apply for the federal credits. “We are always open to considering all options to ensure continued safe, reliable, and clean energy delivery to our customers,” she said in an emailed statement.

Retirement plan. If the utility does apply to keep Diablo Canyon online longer than scheduled, it would be breaking agreements made in 2016 and 2018 with environmental groups that sued the plant over earthquake-related safety risks and an outdated once-through cooling system that sucks in baby fish and releases heated water into the Pacific Ocean. The environmental groups supported a seven-year extension of Diablo Canyon’s cooling water permit to allow time to replace the reactors with a mix of renewables, energy efficiency, and energy storage.

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In keeping with the 2016 agreement, the utility withdrew its application for an NRC license extension to operate the plant for another 20 years. The original licenses for the two reactors will expire on the reactors’ scheduled closing dates in 2024 and 2025.

“If they want to relicense the plant, they have to start over from scratch,” says David Weisman, outreach coordinator for the Alliance for Nuclear Responsibility, a nonprofit group based in San Luis Obispo that was part of the PG&E agreement to retire Diablo Canyon. License renewal is a costly process that typically takes a couple of years.

An application by PG&E for short-term federal credits would not violate the agreement, says Ralph Cavanagh, the Energy Co-Director of the Climate & Clean Energy Program at the Natural Resources Defense Council, another of the groups involved in the agreements with Diablo Canyon. However, he says the retirement decision and schedule “were not driven by Diablo Canyon’s short-term operating expenses, but rather by a consensus on the best and lowest-cost ways to achieve California’s long-term clean energy transition.”

The retirement agreement “has been reviewed and affirmed by state and federal officials time and time again,” Cavanagh says. “There’s no reason to change course now.”

Criteria for credits. Even if PG&E wants to apply for federal credits, it might not be eligible for the program. Under the April 2022 guidance issued by the Energy Department, an applicant must demonstrate that its nuclear reactor receives at least half of its revenue from sources exposed to electricity market competition, but Diablo Canyon operates in a regulated market. “They don’t meet the fiscal requirements,” Weisman says.

And there’s another obstacle for PG&E: The guidance states that applicants must demonstrate that their nuclear reactor “is projected to cease operations due to economic factors,” but PG&E is not anticipating economic losses at Diablo Canyon.

At an April 20 public meeting of the Diablo Canyon Decommissioning Engagement Panel, held just eight days before the governor’s surprise announcement, PG&E Vice President of Decommissioning and Technical Services Maureen Zawalick said in her update that “Diablo Canyon is not closing because of financial reasons or financial challenges like other plants in the United States are—and that [federal credit] program and that $6 billion is focused on those reasons. We are closing, as most of you know, because of the California energy policies.” Those policies make it easier to meet energy goals with renewables than with nuclear power.

The federal credit program also asks applicants to explain how they will sustain operations after the credits are curtailed in four years. Sustainability doesn’t seem to be a goal for Gov. Newsom, though. He continues to support closing Diablo Canyon in the long term, Mellon said.

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Is there any wiggle room for PG&E? An Energy Department official who is working closely with the credit program but refused to be identified by name would only say that the department would consider each application “based on the criteria laid out in the [guidance] documents.”

Shifting public opinion. In California, Diablo Canyon is a hot political issue. According to a UC Berkeley poll published on April 19, more voters (39 percent) are now opposed to shutting down the plant than are opposed to keeping it open (33 percent), with 28 percent undecided.

“I don’t think the governor is immune to the shifting winds of public opinion,” Weisman says. “It’s an election year.”

Michael Shellenberger, a pro-nuclear power advocate who placed ninth of 27 candidates in the 2018 California gubernatorial election and is running again this year, has accused Newsom of “trying to replace our last nuclear reactors with fossil fuels” and making California’s electricity prices rise faster than elsewhere in the United States. When PG&E announced in 2016 that it would shut down Diablo Canyon, “I stood up to them,” says Shellenberger, who has long championed nuclear power.

Shellenberger accused Newsom of using taxpayer money to bail out PG&E when the company declared bankruptcy after poorly maintained utility equipment was blamed for massive wildfires. But it seems he and Newsom are now on the same page when it comes to bailout money for Diablo Canyon.

The clock is ticking. Only reactors that are slated to close by September 30, 2026, are eligible for the first phase of the federal credit program. In addition to the two Diablo Canyon reactors, that includes a Michigan reactor on the verge of closing. There too, the governor is eager to see some of the credits flow to her state.

In an April 20 letter to the Energy Department, Michigan Gov. Gretchen Whitmer said it was a “top priority” to keep the Palisades nuclear reactor online in her state. She urged stakeholders to think “creatively and optimistically to keep this opportunity on the table” and said she would “work with anyone to get this done.”

However, a spokesperson for Entergy, which operates the reactor, said last week that Palisades is still on track to shut down permanently at the end of this month. The governor’s Hail Mary pass seems to have fallen short.

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