Diablo Canyon: PG&E Cancels License Renewal

June 22, 2016, 7:50PMANS Nuclear Cafe

Opinion by Will Davis for ANS Nuclear Cafe.

Diablo Canyon Nuclear Plant, courtesy Pacific Gas & Electric.

On the beautiful California coast lies Pacific Gas & Electric's (PG&E) Diablo Canyon Nuclear Plant - the last operating nuclear plant in the state.  On June 21, 2016, PG&E announced that it had begun a deal that, if approved, would immediately halt the already-working license renewal for the plant and -- supposedly -- replace the plant eventually with renewable energy, customer efficiency and/or interchanged power.  Some environmentalists cheered, but the more modern environmentalists loudly booed.  The final act of this play indeed has yet to be written.


PG&E ordered its first wholly-owned nuclear plant, Humboldt Bay Unit 3, in 1958 - a 68 MWe General Electric BWR plant built by Bechtel Corporation. This nuclear unit was the first ordered anywhere, based on analysis that showed it would be equivalent in cost, or better, to a fossil unit; the company was building two roughly similarly rated fossil units (Units 1 and 2) at the same site.  Experience with this project (and generating facilities at GE's Vallecitos BWR and the Sodium Reactor Experiment) showed PG&E the way in nuclear energy in those early years.

By 1966 PG&E's demand outlook had continued to grow and the company ordered a much larger, 1060 MWe Westinghouse PWR (Pressurized Water Reactor) for the Diablo Canyon site; PG&E itself would both design and construct the plant.  Two years later it ordered a second, identical NSSS (Nuclear Steam Supply System) for Unit 2 at the same site.  Caught up in the myriad delays of those years, both general to the industry and specific to the region and site, the two nuclear units did not enter commercial operation until 1985 and 1986, respectively.

California has had a mixed history with nuclear energy, to be sure.  While some early and pioneering work was done there (notably at the GE Vallecitos Atomic Power Laboratory, and at General Atomic's John Jay Hopkins center) the state's utilities who wished to build nuclear plants continuously fought some valid seismic and unjustifiably obstinate "environmental" concerns all along the way, and a number of planned and even announced nuclear plant projects in the state were cancelled (1).  Some plants were built, but shut down later because of revenue concerns or inability to update the plants to meet current standards (Humboldt Bay 3, San Onofre Unit 1) while one other, famously, was shut down after a ratepayer referendum was taken and the plant literally was voted down (Rancho Seco, in 1989).  Still others have been shut down after replacement parts proved unable to perform as advertised and after no economically workable solution was available (San Onofre 2 and 3, shut down 2013).  In all, the state has seen the operation of two early small units that provided some commercial power and seven larger utility-owned and operated nuclear units.


PG&E clearly, at least until very recently, had every intention of pushing the operation of the Diablo Canyon units out beyond the original 40-year license, in-line with the general thinking here in the United States (and which we've just seen duplicated in Japan by its nuclear regulator).  The utility applied to renew the units' licenses in November 2009. After the Fukushima accident, PG&E requested a delay in the process to incorporate lessons learned.  Work had continued through at least October 2015, with the date of the final issuance of the license renewals not yet known but probably in 2017.  PG&E has taken down its web page covering license renewal for Diablo Canyon, but the NRC page is here:

Click here to see the NRC's page on Diablo Canyon license renewal, which does not yet (as of June 22) reflect any changes in status.

At this point, the entire process is not yet finalized.  PG&E has not cleared the deal it's working on with California regulators, and there is only the likely prospect that the Diablo Canyon units will shut down in 2024/2025 at the expiration of their original licenses.  Some are already calling this into question, and believe that it can be prevented.


On the now-removed PG&E web page detailing a license extension for the plant, the statement was made that the company that "even when renewable power technologies are fully developed and ready for widespread implementation, Californians will still need an abundant supply of dependable baseload power for meeting increasing demands, minimizing severe rate increases and ensuring the reliability of the state's electric power grid."  While the company has walked back that rhetoric and issued a new outlook on how it can meet demands, some in the sector of environmental concern who are pro-nuclear are not convinced.

Environmental Progress founder Michael Shellenberger did a 'deep dive' into the numbers provided by PG&E and found that there seem to be some discrepancies in the plan.  For example, there's really only a hard commitment to about 4,000 GW-hrs/yr of compensation for the loss of Diablo Canyon's roughly 18,000 GW-hrs/yr of actual energy production.  This compensation comes mostly, it turns out, from getting people to use less of the product that PG&E sells (that's electricity, folks) voluntarily or else by "demand response," which is a modern euphemism for "we turn off your power remotely when we decide we're short on capacity."  This leaves a large amount of energy-per-year to make up for, and the only supposition Shellenberger can make is that it'll be made up for by something that you can dispatch when you need it to run -- and that's fossil power.  Probably, he suggests (and I'd believe) natural gas fired power, whether in combined cycle plants or reciprocating peakers or both.

If the scenario as foreseen above actually plays out, then it duplicates the theory posted here by other authors multiple times that the EPA Clean Power Plan allows for the retirement of (greenhouse gas-free) nuclear and replacement by fossil power (which emits greenhouse gas) while still satisfying the plan.  (Click here to see that analysis.)


PG&E has made clear the fact that this deal needs to clear several hoops in order to become binding.  First, as detailed in PG&E's press release, the California State Lands Commission needs to extend PG&E's lease on the site beyond 2018.  Second, the California Public Utilities Commission needs to approve PG&E's acquisition of other generating resources, or interchange agreements.  A particluarly notable quote is contained in this reference:

"Any resource procurement PG&E makes will be subject to a non-bypassable cost allocation mechanism that ensures all users of PG&E's grid pay a fair share of the costs."

That phrase is interesting in light of a fresh Bloomberg article which states that the cost to replace Diablo Canyon with solar energy sources would be on the order of $15 billion -- or, in other words, the cost of building a brand new two unit nuclear plant which instead of replacing 18,0000 GW-hr / yr would actually ADD that much energy to the 18,000 GW-hr/ yr already being produced by Diablo Canyon.  Now, to be fair, the replacement of Diablo Canyon almost certainly won't cost that much.  Let's say that this figure is off by half.  So, in other words, you could then add just ONE nuclear unit and add 9,000 GW-hr/ yr to the already stressed grid if you've already arbitrarily decided to spend money.  The math is fairly inescapable on this point, and the statement by PG&E makes it pretty clear that whatever the costs for this plan, the ratepayers are on the hook. Also obvious is that the decision here isn't just "to spend money" -- it's a decision to shut down nuclear and replace it with renewable energy (no matter the source), with energy efficiency, with interchanged power, at some cost yet to be determined and which will be borne by the ratepayers.

Other stated requirements to be met before this new plan is finalized include, again from PG&E's press release, the confirmation by the Public Utilities Commission that PG&E's investment in Diablo Canyon will be recovered by 2025, and also approval by that body of PG&E's cost recovery "for appropriate employee and community transition benefits."  This last phrase means that when the company agrees to compensation for employees let go, and for monies formerly paid into surrounding communities by taxes and by the plant workers in commerce, that the costs for that will be rolled into the rate base, if they're approved by the PUC. Clearly, there will be many hearings on the topic, but the list of bodies who are on board with PG&E on this venture seem to make it clear that it has solid backing on the Union front, as well as generally on the traditional environmental NGO front and probably thus also on the Democratic Party front.  (The Democratic anti-nuclear bent and history in California is so obvious as to require no other comment other than to note its existence.)


Concerned environmental and pro-nuclear forces have not given up.  Mothers for Nuclear, a major new initiative begun by two women (Heather Matteson and Kristin Zaitz) who have worked at Diablo Canyon for a decade, will join Friends of Diablo Canyon and Environmental Progress to have a four day event starting tomorrow called "March for Environmental Hope."  They hope to raise awareness through this major action of the real need for this plant; their approach is one of environmental responsibility to the generations to come.  The event is intended to get the attention required to change minds, but is also meant to be fun and educational for participants; "parades, cook-outs, canoeing, camp fires, kids' games and s'mores" are just part of what's promised on this four day, multi-site event.  Those Californians in the San Francisco - Sacramento area who are concerned about the shutdown of California's last operating nuclear plant should make an effort to sign up and attend.

In the final analysis, these decisions (such as PG&E's concerning Diablo Canyon) are enormously complicated mixtures of finance and political pressure.  It's become more than obvious that, until now, the only political pressure being exerted in California one way or the other about nuclear energy was against it.  The launch of these new environmentally centered initiatives that favor the incorporation of nuclear energy into the overall energy strategy, everywhere, is a refreshing change; we shall see whether it can develop the wherewithal to reverse the momentum on Diablo Canyon.  Only time, and a great deal of effort, are required to do so.


(1) Nuclear plants ordered, announced or planned but cancelled in California include the Bodega Bay Atomic Park project, Bolsa Island 1 and 2, Malibu, Mendocino 1 and 2, San Joaquin 1, 2, 3 and 4, Stanislaus 1 and 2, Sundesert 1 and 2, and Vidal 1 and 2 for a total of sixteen units.


Will DavisWill Davis is Communications Director and board member for the N/S Savannah Association, Inc. He is a consultant to the Global America Business Institute, a contributing author for Fuel Cycle Week, and he writes his own popular blog Atomic Power Review. Davis is also a consultant and writer for the American Nuclear Society, and serves on the ANS Communications Committee and the Book Publishing Committee. He is a former US Navy reactor operator and served on SSBN-641, USS Simon Bolivar.