Cost to decommission Diablo Canyon escalates

Diablo Canyon nuclear power plant was built in the 1970s for $5.7 billion. When the plant is eventually mothballed, all of that construction will have to be dismantled and removed.
Diablo Canyon nuclear power plant was built in the 1970s for $5.7 billion. When the plant is eventually mothballed, all of that construction will have to be dismantled and removed.

Someday, the Diablo Canyon nuclear power plant will close, and when it does, PG&E will be required to remove everything, from the mammoth reactor domes to nondescript parking lots, guard shacks and restrooms.

The plant’s dismantled remains — the concrete rubble, the scrap metal, even the massive breakwater — will be loaded on trains and shipped out of state, according to a revised post-closure plan and cost estimate released this spring. (It may be possible to keep some facilities, such as the desalination plant, but that would require special approval.)

The dismantling of Diablo will cost an estimated $3.8 billion, making it one of the most expensive and complex projects in San Luis Obispo County history. To put that figure in perspective, it cost $5.7 billion to build the plant in the 1970s.

Nothing about Diablo’s dismantling — as detailed in a report by PG&E consultant TLG Services — will be routine.

One example: While it was once anticipated that most waste could be disposed of locally, that’s no longer the case, in part because of an executive order signed by Gov. Gray Davis in 2002 that prohibits disposal of low-level radioactive waste from California Class III landfills.

Now, the plan is to send scrap metal to Nevada. Low-level radioactive waste will go to Utah or Texas. Concrete rubble will be packed into bags and shipped to an out-of-state disposal site.

Spent fuel rods — classified as high-level nuclear waste — will be stored on site until they’re picked up by the Department of Energy.

Who will pay?

PG&E has been collecting money from ratepayers for years to pay for the decommissioning. It has approximately $2.6 billion in trust, according to PG&E executive Loren Sharp.

But the cost could far exceed that by the time the plant closes; in the past few years alone, estimates jumped from $2.5 billion in 2012 to $3.8 billion in 2016 — a difference of $1.3 billion.

PG&E recently asked the state Public Utilities Commission to approve a rate increase to cover the difference — a case the commission is expected to take up later this year.

Because the higher decommissioning cost will be spread among all PG&E ratepayers, the increase will barely be noticeable. According to PG&E, effective Jan. 1, 2017, the bill for a typical residential customer using 500 kilowatt hours a month will go to $97.65, from $97.14 — less than a 1 percent increase. (PG&E also is requesting a rate increase to fund Diablo Canyon seismic studies. If granted, it will add another nickel to the average bill.)

The rate increase is not a done deal; the Office of Ratepayer Advocates — OFA’s mission includes trying to get the best possible rates for utility customers — filed a protest on April 3, which sets the stage for a thorough examination of the $1.3 billion increase.

“That’s quite a large amount, and we’re very interested in how they got there,” said Truman Burns, program and project supervisor with OFA.

For its part, PG&E says it has learned from the lessons of other decommissioned plants, including its own mothballed Humboldt Bay Power Plant, as well as San Onofre Nuclear Generating Station in San Diego County and other plants around the country that have been shut down.

“PG&E recognizes that this assessment results in a substantial increase in the cost of decommissioning,” it says in its report to the Public Utilities Commission, “however, failing to take into account real-world circumstances would leave the Diablo Canyon Nuclear Decommissioning Trust insufficiently funded.”

Here are some factors contributing to the higher estimate, according to PG&E’s report:

▪  Because the federal Department of Energy is not expected to begin accepting spent fuel from Diablo until 2035 — two years later than previously anticipated — PG&E will have to buy more storage canisters for spent fuel, rather than storing some in spent fuel pools until DOE picks it up. That will require permitting and licensing another pad for the canisters.

▪  Earlier estimates did not include the cost of transporting waste out of state — a requirement that will add hundreds of millions of dollars to the decommissioning tab. For example, dismantling and transporting the breakwater alone will cost $198.5 million.

▪  Equipment and personnel costs increase over time. On top of that, PG&E proposes increasing staffing in some areas. One example: Reactor support staff would increase by 15 PG&E employees, each earning $186,222 per year (including benefits), as well as 23 contract employees, each earning $161,084 per year, for a total increase of $12 million in decommissioning costs.

▪  State-required severance pay for departing employees has increased by nearly $20 million since 2012. The average severance for 1,202 utility employees is $104,689 per person. For the 294 security staff members, it’s $42,462 per person.

▪  The 2012 estimate did not include costs of environmental fees and permits for decommissioning activities. That’s estimated at $2.3 million per year, from the initial shutdown until 11 years after the shutdown of Unit 2.

Keep in mind, the final bill for decommissioning will depend on several factors, including the date the plant actually closes.

The licenses for the twin-reactor plant expire in 2024 and 2025. PG&E can apply for 20-year extensions, but it has not publicly announced whether it will do so. Industry observers speculate the decision will largely depend on whether PG&E will be required to install cooling towers to replace its current water circulation system. If the plant is relicensed, decommissioning estimates — which must be updated every three years — will continue to escalate.

“They’ll roll the decommissioning cost estimate forward every three years and that number will go up,” said John Geesman, an attorney with the Alliance for Nuclear Responsibility. “It doesn’t get cheaper.”

What follows decommissioning?

Once a nuclear power plant shuts down, its owners have two years to submit a decommissioning plan to the Nuclear Regulatory Commission. The decommissioning timeline depends on whether the owners opt to begin decontaminating and dismantling shortly after closure — a process known as DECON. The alternative is to put the plant in “safe storage”— referred to as SAFSTOR — for several decades, to allow radioactivity to decay to lower levels. SAFSTOR also allows more time for revenue to build up in post-closure trust funds — an advantage for companies that have not accumulated enough cash. (For planning purpose, the Diablo Canyon estimate uses the DECON alternative.)

Even with SAFSTOR, there is a time limit; the NRC requires decommissioning activities to be completed within 60 years.

The end goal of decommissioning is to restore nuclear sites to the point where they can be released for unrestricted use. Possibilities, according to the NRC website, “include restoring the natural habitat, farming, and continuing industrial use.”

It’s difficult to predict when that might occur at Diablo Canyon, not only because relicensing is up in the air, but also because it’s uncertain when — some skeptics say if — the federal Department of Energy will finally take possession of spent radioactive fuel.

PG&E’s decommissioning study assumes the DOE will begin accepting spent fuel from Diablo in 2035. If the licenses are not extended, the pickups should be complete by 2061, at which point the NRC could release the site for reuse.

Some industry watchdogs believe that timetable is far too optimistic, since the federal government is nowhere close to opening a permanent storage site. Nevada’s Yucca Mountain had at one time been identified as the location, but the Obama administration took that off the table.

In other words, PG&E is at the mercy of the federal government when it comes to long-term handling of spent fuel; PG&E executives refer questions about the timing of waste removal to federal authorities.

“This entire issue is really (a matter of) federal politics,” Sharp said.

As long as spent fuel remains on-site, a portion of Diablo Canyon will remain off-limits, but that should not preclude using the rest of the property.

Following the decommissioning of the Rancho Seco nuclear plant in Sacramento County in 2009, for example, the NRC released all but 11 acres that contain a dry-cask storage facility for spent fuel. The rest of the site has been converted to other uses, including a solar energy plant, a natural gas-fired plant and a popular recreation area that’s gotten some great reviews on Yelp, like this one:

“Cute park next to closed nuclear power plant. Great playgound and lake to fish and boat on. Plenty of parking and reasonable fee.”

The plant’s large cooling towers remain on the Rancho Seco property; it’s been suggested they be transformed into a tourist attraction. (An article in Sactown magazine points out that at decommissioned plant in Germany has been converted into an amusement park.)

As to how PG&E’s 12,000-acre site might be used when restrictions are lifted in the future is open to conjecture.

PG&E isn’t commenting: “It would be premature to speculate on the use or reuse of the property following decommissioning,” company spokesman Tom Cuddy wrote in an email to The Tribune.

The bill for San Onofre

Dismantling the shuttered San Onofre Nuclear Generating Station in San Diego County will cost an estimated $4.4 billion — possibly the most expensive decommissioning project in the history of the nuclear industry, according to the San Diego Union-Tribune. By comparison, the most recent decommissioning estimate for Diablo Canyon is $3.8 billion.

One reason for the cost difference: San Onofre must be restored to the standards of the U.S. Navy, which owns the property. That means Southern California Edison will have to remove all subsurface structures, such as foundations and piers, which will require deep excavation.

Because the Diablo Canyon plant is on private property, it comes under Nuclear Regulatory Commission standards, which require excavating to 3 feet below the surface, or deeper if necessary to remove contamination.

What it costs to close a nuclear power plant

Decommissioning costs for some nuclear plants: