Environment

PG&E needs $1.6 billion more to decommission Diablo Canyon — and it’ll come from your bill

Inside Diablo Canyon nuclear power plant

Take a closer look at Diablo Canyon nuclear power plant near Avila Beach. California's last operating nuclear power plant will close in 2025, owner Pacific Gas & Electric Co. has announced.
Up Next
Take a closer look at Diablo Canyon nuclear power plant near Avila Beach. California's last operating nuclear power plant will close in 2025, owner Pacific Gas & Electric Co. has announced.

PG&E needs to collect $1.6 billion from ratepayers by 2025 to pay for Diablo Canyon nuclear power plant’s closure, according to new filings with the state.

For a typical residential customer, this would translate to about $1.98 more on your bill, though the exact amount would vary depending on usage.

In its Nuclear Decommissioning Cost Triennial Proceedings, filed on Thursday, the company said it expects the total cost of decommissioning Diablo Canyon to be about $4.8 billion — up from the $3.8 billion it estimated in its last triennial report in 2015.

“Diablo Canyon continues to be an important resource for California in achieving our clean energy goals,” Steve Malnight, PG&E Senior Vice President of Energy Supply and Policy said in a news release Thursday. “When the plant has completed its service at the end of the operating licenses, we are committed to safely decommissioning Diablo Canyon in a fashion that is consistent not only with all laws and regulations, but also recognizes its important location to the community and California. We will remain firmly focused on working with the state, local leaders and our neighbors to determine the most appropriate path forward concerning the surrounding lands and coastline.

He added: “This proposal will ensure we have the proper funding to achieve these important environmental and community goals.”

Why a rate increase?

For years PG&E has collected money from ratepayers to prepare for the eventual shutdown of the plant. The California Public Utilities Commission first approved fund payments in 1995, and PG&E last collected it in 2013.

In 2014, and again in 2017, the California Public Utilities Commission denied the utility’s request to collect decommissioning funds for Diablo Canyon, meaning ratepayers have not been paying into the fund for close to five years.

As of Thursday, the fund held $3.2 billion — about $1.6 billion short of what the company now expects it will cost to safely shutter the plant.

To make up the difference, the company is proposing a short-term rate increase from 2020 to 2025. The exact amount of the increase would vary by year and usage. A standard residential customer in 2020 would expect about a 2 percent increase on their bill.

The company says the rate increase is necessary to begin the safe and immediate shutdown of the plant once the licenses for its two nuclear reactors expire in 2024 and 2025.

What does the $4.8 billion pay for?

In short, the $4.8 billion is how much it would cost to raze and remove the entire Diablo Canyon plant and all of its associated buildings and facilities.

It covers the cost of dismantling the buildings and transporting the leftover materials away via truck. It covers the cost of removing the spent fuel. And it covers the cost of dismantling the site’s breakwater and marina — one of the biggest potential projects on the property.

According to PG&E Director of Strategic Initiatives Tom Jones, dismantling the breakwater alone amounts to about 7 percent of the decommissioning cost.

Jones noted there is some possibility that the cost of decommissioning could decrease if some of the company’s facilities — including the breakwater and the plant’s buildings — can be repurposed, as the Community Engagement Panel advised earlier this month.

Those are just possibilities, not definites, Jones cautioned, and in the meantime the company is preparing for the most-expensive alternative.

On Thursday, Third District Supervisor Adam Hill, whose district includes Diablo Canyon, said he was concerned that PG&E could leave partway through the decommissioning process, leaving another company and San Luis Obispo County with responsibility for the clean-up.

“Obviously we would like them to be fully funded so as to commence the decommissioning as soon as possible after they go offline, but my developing concern has to do with wanting PG&E to do it, with local workforce and with commitments to our local community,” Hill wrote in an email to The Tribune. “This concern comes from the fact that other decommissioned plants have been sold recently, and I am working to have the County develop a well-thought out position on such a possibility.”

What about the other Diablo Canyon rate increase?

The rate increase wouldn’t be the only Diablo Canyon-specific one showing up on your bills: PG&E expects to file for another short-term rate increase in January that would pay for some of the costs of applying to shut down the plant, like the cost of the $85 million settlement to local cities and the county and approximately $200 million for employee retention.

Diablo Canyon nuclear power plant employees have eight years to decide whether they want to stay in SLO County or move to another plant after it was announced that Diablo Canyon would close in 2025.

That increase was originally denied in January when the California Public Utilities Commission approved PG&E’s Diablo Canyon closure agreement, but new state legislation signed by Gov. Jerry Brown in September requires that the commission approve the increase.

That increase is expected to cost the average residential customer about 18 cents on their monthly bills; the money collected would be separate from the decommissioning fund.

When will this happen?

The process to approving the rate increase will be much like the process to approving Diablo Canyon’s closure.

Now that the company has filed its plans, 30 days will lapse in which concerned parties can file to be intervenors to participate in the proceedings. (PG&E expects groups like the County of San Luis Obispo and the coalition of local cities to once again be intervenors, as well as ratepayer watchdog groups.)

Soon after the filing on Thursday, the Alliance for Nuclear Responsibility announced it planned to file as an intervenor in the proceedings.

“PG&E is saying it will cost their customers significantly more to decommission Diablo Canyon than any other nuclear plant in U.S. history,” ANR Executive Director Rochelle Becker said in a news release. “Given their abysmal stewardship of our ratepayer dollars, we have absolutely no reason to believe PG&E won’t handle this undertaking with the same callous disregard they have shown gas pipeline and fire prevention safety.”

Hill said he also expects the county to apply to be an intervenor.

From there, an administrative law judge will issue a scoping order, defining exactly what is within the scope of the proceedings. At that point, the hearings can begin.

In total, the entire process is expected to last roughly 14 to 16 months.

In the meantime, the public can expect numerous opportunities to offer input through open meetings in San Luis Obispo County. People can also learn more about the procedures of decommissioning through the Decommissioning Community Engagement Panel’s quarterly meetings.

The next is scheduled for March 13 from 6:30 to 9:30 p.m. at the San Luis Obispo County Government Center. The topic will be spent fuel.

PG&E held a meeting Wednesday, July 20, 2016, at Embassy Suites in San Luis Obispo to present information about the 2025 Diablo Canyon closure, address questions and take public comment.

Related stories from San Luis Obispo Tribune

Kaytlyn Leslie writes about business and development for The San Luis Obispo Tribune. Hailing from Nipomo, she also covers city governments and happenings in the South County region, including Arroyo Grande, Pismo Beach and Grover Beach. She joined The Tribune in 2013 after graduating from Cal Poly with her journalism degree.
  Comments