California politicians and activist groups alike have been anti-nuclear. Once home to the San Onofre Nuclear Generating Station (SONGS) and the Diablo Canyon Power Plant (DCPP), power plants, political turmoil, industrial misconduct, and bad luck have reduced that number to just one. Southern California Edison is actively decommissioning SONGS.
In 2016, DCPP was on the path of eventual shutdown and decommissioning as part of a multi-city agreement that would have found both reactor plants shut down by 2025. California's anti-nuclear movement praised the initiative to close down the last nuclear power plant in the state.
In recent years, however, the state has done an about-face regarding the benefits of nuclear power. Now, the DCPP power plants are set to pursue relicensing for another two decades at the cost of the American taxpayer.
2012 - 2016
The years in question were 2012 - 2016. Climate activities and green energy politicians touted the need for clean energy across the state. Nuclear power was not considered a part of California's energy future. These beliefs are held steadfast by a good portion of the populace despite providing approximately 9% of the state's baseload supply to millions of people.
These numbers don't matter in communities that hate nuclear. When Diablo Canyon opened its doors in the 1980s, thousands of protestors were huddled outside its entrance gate demanding the plant be shut down. With Three Mile Island in 1979 and Chernobyl occurring in 1986, California's fear of nuclear was palpable, with good reason. Unfortunately, regardless of the power plant's safety capabilities, the public wanted a complete shutdown.
Yet, the power plant continued to operate through the decades. And through the decades, communities have expressed their distaste for nuclear. Ultimately, however, the anti-nuclear sentiment had its way. After all, a business is doomed to failure if no one wants to purchase your product.
Community Choice Aggregators (CCAs)
In a legal document submitted by Pacific Gas & Electric (PG&E) to the California Public Utilities Commission (CPUC), PG&E lays the groundwork to its decision not to renew its operating licenses beyond 2024 and 2025.
The company determined renewal was unnecessary because purchasers did not want electricity generated from a nuclear power plant. Community Choice Aggregators (CCA) apparently disdain nuclear and strongly preferred renewable energy sources like solar and wind. Additionally, there was a preference for continuing and supporting geothermal power sources that could supply energy during peak evening hours.
CCAs are energy-purchasing entities that consolidate purchasing power across multiple local governments. Think of it like a group of communities that unionized to purchase, in this case, energy from desired suppliers. The CCAs can reject any power offered by nuclear and buy it from a company that provides solar power.
$1.4 Billion
Between COVID, wild-fires, and rolling blackouts a state once abundant with renewable energy production and dreams faced a harsh reality: the single largest source of carbon-free energy was going to shut down very soon.
DCPP had been preparing to shut down since 2016. They deferred maintenance with permission from the Nuclear Regulatory Commission in preparation for decommissioning. The power plant slowly reduced its workforce as people retired or left for other jobs. New jobs weren't being replaced. Preparations were underway to start decommissioning immediately after the shutdown.
The state went from a position of "shut down the power plant" to "let's keep her running" over the course of 12-months. The cost to re-fit the power plant was announced to be approximately $1.4 billion.
Uncle Sam to the Rescue
Given the regulatory nature of state power, the state has the authority to direct PG&E to keep Diablo Canyon open. However, PG&E didn't have to pay for it.
So, the state offered PG&E a sweetheart loan of $1.4 billion to re-fit the facility on the condition that DCPP applies for and receive Biden's energy credit for nuclear energy support.
The government ultimately granted PG&E $1.1 billion in taxpayer money. PG&E per their agreement with the state, PG&E paid back the nearly interest-free loan. The very state legislature that wanted to shut down DCPP voted to keep the power plant open until 2030.
The nuclear industry, however, will likely have the last laugh. The Nuclear Regulatory Commission doesn't issue 5-year operating licenses. The renewal process is currently in only 20-year increments. Also, in its hopes for a carbon-free energy future, the state isn't as efficient as they think.
Energy Market Politics
How should we invest in our energy markets? After watching California's markets for a time, I see it as predictable as it is volatile.
Taxpayers have footed the bill for Diablo Canyon's upgrades which PG&E would have already paid had the state utilized more foresight in their planning. States agencies have an understanding of all larger-scale power sources within California. They know the operating history of each power source supplying the state grid when it shuts down, and when it starts up.
I have zero doubt they knew in 2016 that DCPP was already the largest source of carbon-free energy. Fear and politics stood in the way of relicensing the plant on the company's dime. I can't discount the fears in particular. They're well-founded and we've seen the impact that past accidents have had on the industry.
The problem, however, comes when the state blatantly ignores its current capabilities against what the future has in store for its citizens.
In Closing
Image by Gerd Altmann from Pixabay
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