California’s last nuclear power plant will close in 2025, after Pacific Gas & Electric Co. reached an agreement with labor and environmental groups, the parties said Tuesday.
The San Francisco-based utility, a subsidiary of PG&E Corp., will withdraw its application to renew the nuclear licenses for the Diablo Canyon Power Plant in San Luis Obispo County. The plan calls for shutting down one of the property’s reactors in November 2024 and its second reactor a year later.
The Diablo Canyon facility, which started operating in 1985, accounts for 9% of California’s annual electricity production, the company said.
PG&E will begin to invest in a new portfolio of energy efficiency, renewable energy and energy storage to make up the lost production. The company said it will commit to having 55% of its energy portfolio produced by renewable energy sources by 2031, a standard that is 5% higher than California’s targeted goal.
Some of nation’s most influential environmental groups are softening their longstanding opposition to nuclear power, viewing it as a transitionary tool toward fully renewable electricity sources. Nuclear power, which doesn’t emit greenhouse gases, provides about 20% of U.S. electricity and 60% of carbon-free electricity, according to federal data.
“This proposal recognizes the value of [greenhouse-gas free] nuclear power as an important bridge strategy to help ensure that power remains affordable and reliable and that we do not increase the use of fossil fuels while supporting California’s vision for the future,” PG&E Chief Executive Tony Earley said.
The company said California environmental regulations, over-generation and volatile supply and demand due to increased use of wind and solar power and the growth rate of distributed energy resources all contributed to the decision.
PG&E said it doesn’t expect customer rates to increase as a result of the proposal, because it anticipates the plan will have a lower overall cost than relicensing the nuclear plant and operating it through 2044.
For the agreement to proceed, PG&E needs regulatory approvals for land-use and hundreds of millions of dollars in cost recovery through special nuclear decommissioning electric rates.
PG&E currently employs more than 1,500 workers at the facility and said it would cost $350 million to retain and retrain them, all of which it hopes to recover through the special rates. It has reached a severance agreement with one union and will begin bargaining with others that have workers at the plant.
The company also will give San Luis Obispo County $50 million for the loss of property taxes associated with the declining rate base. It also will seek cost recovery for an additional $50 million related to federal and state license renewal process.
“This is an historic agreement,” said Erich Pica, president of Friends of the Earth, an environmental group that is part of the agreement. “It lays out an effective roadmap for a nuclear phaseout in the world’s sixth largest economy, while assuring a green energy replacement plan to make California a global leader in fighting climate change.”
The Nuclear Energy Institute, an industry trade group, said nuclear power remains a viable and economical energy solution. A number of other nuclear plants have been closed or announced scheduled closures in recent years.
“The Diablo Canyon nuclear energy facility will continue to be a dominant clean-air source of electricity for Californians for many years to come as PG&E begins to manage a dramatic shift in the state’s energy policy,” Marvin Fertel, chief executive of the Nuclear Energy Institute, said. “This agreement is unique to PG&E and California energy policy. In other states, energy companies have extended the operation of 80 reactors as a strategic measure to retain reliable, carbon-free electricity.”
The parties to the agreement include PG&E, the International Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, Environment California and Alliance for Nuclear Responsibility.
PG&E says the actual decommissioning of the plant will take years after it stops commercially operating and estimates it to cost $3.78 billion. As of March 31, the Diablo Canyon nuclear decommissioning trust account had a total value of $2.8 billion.
In 1957, California became the first state to commercially use power from a civilian nuclear plant, when the Sodium Reactor Experiment at Santa Susana began operations.
PG&E shares rose 0.4% to $62.79 in midday Tuesday trading.
By: Austen Hufford (The Wall Street Journal).
Photo: CBS Global.
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