Nobody disputes that the Diablo Canyon nuclear power plant plays a big role in the San Luis Obispo economy, especially in terms of the contribution to our local tax base. But the county Board of Supervisors is wise to start grappling with the risk that the Diablo gravy train won’t roll on forever. This year, residents of four different communities across the United States have been surprised by abrupt announcements from far-away utility CEOs that they were closing the local nuclear plant.
The reasons vary. Usually, the problem starts with large repairs. Age of the plant is always a factor. And the sudden decline in natural gas prices these past several years makes the managers of even a well-functioning nuclear plant start to hear competitive footsteps. The modern utility CEO wasn’t hired because of his empathy for the distant communities where his plants are sited. He’s expected to be a financial calculator, first and foremost.
Signs are starting to appear that Diablo Canyon is not immune from the cost pressures that confront every piece of aging equipment facing a repair-orreplace choice. New management — a CEO who’s only been at PG&E for two years, a chief nuclear officer new to the company in the last 18 months — seems more wary of openended financial commitments.
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“The benefit analysis of doing capital investment, we’re not looking out past the expiration of the license,” he said, adding that at this time, PG&E is focused on meeting requirements to maintain equipment to certain standards “out ’til the end of the license.”
PG&E’s written presentation was even more blunt: “Beginning in 2017, PG&E expects to see a gradual ramp down in capital spending and forecasts that base annual capital spending will stabilize at or below $100 million per year in 2009 constant dollars.”
What if the NRC’s post-Fukushima rule making requires significant investment in new upgrades? PG&E’s testimony to the CPUC was clear: because it has no idea what improvements the NRC will require, it can’t even begin to estimate the cost.
There’s reason to believe that in the seismic safety area, those retrofit costs will be massive. What else would you expect in trying to bring a 1967 building permit up to modern standards? As the NRC stated in launching the seismic portion of its industrywide, post-Fukushima investigation, “the state of knowledge of seismic hazard within the United States has evolved and the level of conservatism in the determination of the original seismic design bases should be re-examined.”
That’s not likely to lead to looser seismic requirements.
The NRC asked PG&E for a table comparing its existing seismic review analyses to the “applicable provisions” of the NRC’s Standard Review Plan, which has been applied to new plants since 1997. PG&E provided a staggering 331-page list of deviations! Nobody thinks fixing this is going to be cheap.
Alarmingly, the NRC staff testified before the California Energy Commission this past June that it expects, when the review is complete in March 2015, that Diablo Canyon will fail its original design basis test for the so-called Safe Shutdown Earthquake. What remedial requirements the NRC imposes thereafter will likely determine whether PG&E finds it too expensive to keep the plant open.
As if seismic retrofit wasn’t enough, this fall the state Water Resources Control Board will get Bechtel’s report on the technical feasibility of replacing Diablo Canyon’s ocean cooling system with one compliant with federal and state water quality standards.
The mere prospect of a similar requirement in New Jersey triggered the announcement of an early retirement of the Oyster Creek nuclear plant. In mid-September, a report by Morgan Stanley predicted that the $2 billion cost of meeting such a requirement would force the early closure of the Indian Point plant in New York.
So it’s no surprise that PG&E executives have quietly let it be known around Sacramento that they are still weighing Diablo’s relicensing. Crowing about the plant’s place in the SLO economy is one thing, but financial pragmatism sits at the head of the table in PG&E’s boardroom.
Rochelle Becker is the executive director of the Alliance for Nuclear Responsibility.