After several months of negotiations, California Governor Gavin Newsom and legislative leaders reached an agreement on June 22 to provide a $400 million loan to Pacific Gas and Electric Company (PG&E) in the state budget for the fiscal year 2024-2025 to support the operation of the Diablo Canyon nuclear power plant. PG&E is the owner and operator of the nuclear power plant.
Under current law, nuclear power plants can receive up to $1.4 billion in loans, of which PG&E has already obtained $1 billion from the legislature in 2022 and 2023 to extend the operation life of the plant.
Such loans are required to be repaid by public utility companies. Although the repayment schedule is not explicitly specified, it requires the California Department of Water Resources to provide relevant reports and documents after negotiation with the Public Utilities Commission and the Energy Resources Conservation and Development Commission.
Ryan Endean, Deputy Director of Communications at the Department of Water Resources, stated in an email to Epoch Times on June 26 that the loan agreement for Diablo Canyon was arranged for installment payments so that the department can verify the costs, and PG&E can meet the compressed regulatory timeline.
Related agencies are required to submit reports every six months until December 31, 2030. Endean stated that these reports are to protect taxpayers and mitigate the risk of default by public utility companies.
The original federal licenses for the two nuclear reactors at the plant were set to expire in 2024 and 2025, but were approved indefinitely in December 2023 by legislative and regulatory bodies. If the public utility company decides not to seek an extension of the license due to cost considerations, federal funding necessary to repay the loan will not be available, according to Endean.
Critics argue that PG&E’s charges have negatively impacted California users, with taxpayers ultimately bearing the operating costs of the plant. Matthew Freedman, a lawyer from The Utility Reform Network, a consumer advocacy group based in San Francisco, expressed in an email to Epoch Times on June 26, “This budget agreement underscores that PG&E seems to have a firm grip on state policy, despite its poor performance and excessive charges.”
He stated that legislators and the governor should prioritize reducing electricity prices rather than generously funding PG&E with scarce taxpayer and user funds.
The governor has defended the power plant multiple times over the past two years, highlighting its role in supplying electricity to the state grid. In a press release in 2023, Newsom stated, “As we accelerate towards our clean energy and climate goals, the Diablo Canyon Power Plant is crucial in ensuring the reliability of our energy supply.”
Construction of the Diablo Canyon Nuclear Power Plant began in 1968 and took around 18 years to complete at a cost of about $5.5 billion. The facility is located in coastal San Luis Obispo County, occupying approximately 900 acres. The plant generates about 9% of California’s total electricity and 17% of the state’s zero-emission power, equivalent to 20% of the electricity generated by PG&E. The two reactors within the plant produce 18,000 gigawatt-hours of electricity annually, enough to supply the electricity needs of over 3 million people.
In 2022, Senate Bill 846, introduced by State Senator Bill Dodd, was passed, approving a $1.4 billion allocation to the plant and authorizing the California Energy Commission to assess the possibility of extending the plant’s operating license.
The Energy Commission believes that extending the operating license could be beneficial and has recommended seeking federal approval to extend the plant’s operational deadline to 2030. Siva Gunda, Vice Chair of the Energy Commission, stated in a press release in 2023, “The state government needs to keep all options open to protect public health and safety. As we strive for a long-term transition away from fossil fuels, extending (the nuclear plant’s operating license) will buy time for more clean energy projects to come online.”
Federal regulatory agencies have accepted PG&E’s application to extend the operating license of the nuclear power plant and have extended its validity for 20 years, with the two nuclear reactors extended until 2044 and 2045, respectively.
A supporter of the nuclear power plant believes that more nuclear energy is needed to protect the environment and provide a sustainable energy source. Benji Backer, founder and president of the American Conservation Coalition, stated in a post on X platform on June 20, “Now is not the time to shut down nuclear energy but to build our nuclear future.”
As Governor Newsom and legislators work to address a projected $46.8 billion budget deficit, the allocation of this loan to preserve the nuclear power plant becomes particularly crucial; a bill signed into law in April this year resolved another $17.3 billion financial shortfall in the state.