California lawmakers break with Gov. Newsom over loan to keep state’s last nuclear power plant operating

LOS ANGELES (AP) – The California Legislature signaled its intention Thursday to cancel a $400 million loan payment to help finance a longer life for the state’s last nuclear power plant, exposing a rift with the governor Gavin Newsom who says power is critical to maintaining energy supplies amid a rising climate.

The votes in the state Senate and Assembly on funding for the twin-dome Diablo Canyon plant represented an interim step as Newsom and legislative leaders, all Democrats, continue to negotiate a new budget. But it creates a public sticking point involving one of the governor’s signature proposals, which he has supported along with the state’s rapid push toward solar, wind and other renewables.

The dispute unfolded in Sacramento after environmentalists and anti-nuclear activists warned that the estimated price tag of keeping the offshore reactors going beyond a planned shutdown by 2025 had risen to nearly $12 billion, roughly doubling previous estimates. This has also raised the prospect of higher rates for ratepayers.

Operator Pacific Gas & Electric called those numbers inaccurate and inflated by billions of dollars.

HD Palmer, a spokesman for the California Department of Finance, stressed that budget negotiations are continuing and the legislative votes represented an “agreement between the Senate and the Assembly — not an agreement with the governor.”

The votes in the Legislature mark the latest development in a decades-long battle over the operation and safety of the plant, which sits on a bluff above the Pacific Ocean midway between Los Angeles and San Francisco.

Diablo Canyon, which began operating in the mid-1980s, produces up to 9% of the state’s electricity on any given day.

The battle over the future of the reactors is playing out as the US nuclear industry struggles for a long time sees a possible renaissance in the era of global warming. Nuclear power does not produce carbon pollution like fossil fuels, but it does leave behind waste that can remain dangerously radioactive for centuries.

A Georgia service just ended the first two American scratch-built reactors in one generation at a cost of nearly $35 billion. The price tag for expanding the Vogtle plant from two of the large traditional reactors to four includes cost overruns of $11 billion. In Wyoming, Bill Gates and his energy company have started BuIldINg in a next-generation nuclear power plant that the tech titan believes will “revolutionize” the way power is generated.

In 2016, PG&E, environmental groups and the plant’s labor unions reached an agreement to close Diablo Canyon by 2025. But the Legislature canceled the deal in 2022 at the urging of Newsom, who said the power is needed to avoid interruptions as climate change stresses the energy system. That longer-term deal included a $1.4 billion forgivable state loan to PG&E, to be repaid in installments.

California energy regulators voted in December to extend the plant’s operation for five years, until 2030.

Lawmakers’ concerns were expressed in an exchange of letters with the Newsom administration at a time when the state is struggling to close an estimated $45 billion deficit. Among other concerns, they questioned if and when the state would be repaid by PG&E, and whether taxpayers could lose hundreds of millions of dollars if the proposed extension to Diablo Canyon falls through.

Construction on Diablo Canyon began in the 1960s. Critics say potential earthquakes from nearby faults not known to exist when the project was approved may damage equipment and emit radiation. A fault wasn’t discovered until 2008. PG&E has long said the plant is safe, an assessment the NRC has backed.

Last year, environmental groups called on federal regulators to immediately shut down one of the two reactors at the site pending tests on critical machinery they believe could fail and cause a catastrophe. Weeks later, the Nuclear Regulatory Commission took no action on the request and instead asked agency staff to review it.

Questions raised by environmentalists about the potential for increased costs stemmed from a review of state regulatory filings submitted by PG&E, they said. Initial estimates of about $5 billion to extend the life of the plant later rose to more than $8 billion, then nearly $12 billion, they said.

“It’s really quite shocking,” said attorney John Geesman, a former member of the California Energy Commission who represents the Alliance for Nuclear Responsibility, an advocacy group that opposes the renewal of federal licenses in California. The alliance told the state Public Utilities Commission in May that the cost would represent “the largest financial commitment to a single energy project the commission has ever been asked to approve.”

PG&E spokeswoman Suzanne Hosn said the figures incorrectly included billions of dollars in costs unrelated to expanding operations at the plant.

The company has pegged the cost at $8.3 billion, Hosn said, adding that “the financial benefits outweigh the costs.”

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