May 31, 2022
In a stunning turn of events last week, Governor Gavin Newsom asked the feds to bailout PG&E‘s failing nuclear power plant under the guise of protecting California from rolling blackouts. Pacific Gas and Electric Company’s (PG&E) Diablo Canyon nuclear energy facility has been an economic disaster for years and continues to operate at a loss today.
Towards securing the money, Newsom begged the US Secretary of Energy, Hon. Jennifer Granholm, to bend rules to access a portion of $6 billion in Federal bailout money to extend the operating life of Diablo Canyon – an old, dirty, and unsafe nuclear power plant that ratepayers currently subsidize to the tune of more than $1billion annually.
The truth: Diablo is financially underwater. It costs more for PG&E to produce power than it’s actually worth. But, because of its existing subsidies, it has been able to survive.
Email Governor Newsom AGAIN, and tell him to keep his promise to close Diablo as scheduled in 2024 and 2025.
Diablo’s above-market costs were calculated to have soared beyond $1.26 billion in 2020, up to $410 million in 2018. John Geesman, former Chair of the CA Energy Commission asserts, “Diablo is costing CA ratepayers $3.44 million a day (that’s not a typo) in over-market charges (mostly because solar/wind are so much cheaper).”
According to an analysis by the financial advisory and asset management firm Lazard, the Levelized cost of energy (LCOE) in 2020:
- $151 (112 to 189)/MWh for a new nuclear plant
- $43 (29 to 56)/MWh for onshore wind
- $41 (36 to 46)/MWh for utility-scale solar (photovoltaic)
Further, PG&E’s electricity-generating resources eroded to 43% in 2020. That means more and more people are choosing to source their electricity elsewhere – e.g., through Community Choice Energy programs, which favor sustainable resources. In that event, PG&E just supplies the transmission lines.
Yet, because PG&E is guaranteed a 10.5% profit, regardless of the market, it is not in financial distress. In 2018, the California Public Utilities Commission (CPUC) agreed to include Diablo as a stranded asset in the “Power Charge Indifference Adjustment” (PCIA), and that cross-subsidy is what helps keep the plant operating today.
The Department of Energy (DOE) appears desperate for applicants for its $6 billion bailout. Its first accommodation was to extend the deadline for applications. The initial deadline to apply for the Federal subsidy was extended from May 19 to July 5.
In an audacious move to extend the operating life of Diablo Canyon, Ana Matosantos, Newsom’s cabinet secretary and “Energy Czar,” on May 23 sent Granholm a formal request to change the rules for access to the $6 billion through the Civil Nuclear Credit Program (CNC)! This bailout program is slated for nuclear power plants scheduled to shut down but ONLY in states where energy is deregulated and only for plants that are facing economic hardship. California regulates its energy. Therefore, Diablo, scheduled to shut down in 2025, is excluded. And again, the Diablo Canyon facility is not scheduled for closure due to financial duress. Maureen Zawalick, Vice President of Decommissioning and Technical Services at PG&E, stated on April 20, 2022, at the Diablo Canyon Decommissioning Engagement Panel meeting, “First and foremost, you know, Diablo Canyon is not closing because of financial reasons or financial challenges like other plants in the United States are. And that that program, that $6 billion is focused on — on those reasons.”
Amory Lovins, Cofounder and Chairman Emeritus of Rocky Mountain Institute and renowned physicist, wrote in his op-ed in Forbes in 2016, “PG&E acknowledges, market forces have made California’s last nuclear plant redundant. As customers use electricity more productively, solar roofs generate homebrew power, and competitive renewables flood the wholesale market, Diablo Canyon has become superfluous—and cheaper to close than to run.” In short, Diablo is too expensive to run.
Lovins also noted, “removing the inflexible ‘must-run’ nuclear output, which can’t easily and economically ramp down much, will help integrate more renewable power reliably into the grid.”
The Newsom administration’s aim for a Federal bailout for a private company is misguided and irresponsible.
This is the company that filed for bankruptcy in 2019 to sustain itself after incurring “billions of dollars in claims” for causing the Kincaid Fire (2019) and the Camp Fire (2018) and numerous other fires over the past decadeincluding a massive pipeline explosion in San Bruno in 2010, killing eight people.
At the time of the bankruptcy agreement, Newsom said, “…the company has to be completely transformed, culturally transformed, operationally transformed with a safety culture first…” Yet, in 2020 and 2021, PG&E was also responsible for the Zogg Fire and the Dixie Fire, respectively.
Going to bat for PG&E to secure funding for an old, dying, unsafe, money-sucking nuclear power plant does not speak to transformation on any level.