California set to loan $400 million to controversial nuclear power plant

By Benjamin Purper

California will loan $400 million to utility Pacific Gas & Electric (PG&E) to keep the state’s last nuclear power plant running, according to the final budget deal between the Legislature and Gov. Gavin Newsom. 

The agreement authorizes a $400 million loan from the state’s general fund to help PG&E continue operating the Diablo Canyon Nuclear Power Plant near San Luis Obispo, California, according to the California Department of Water Resources. 

Diablo Canyon, which accounts for about 9% of the state’s total electricity supply, became California’s last operating nuclear power plant after the closure of the San Onofre Nuclear Generating Station in 2013. The plant has been controversial from the beginning, as some environmentalist and anti-nuclear organizations fear the plant could suffer a catastrophic failure and endanger nearby communities. 

PG&E maintains that the plant is safe, citing the lack of any major accidents in its nearly 40-year history. 

The loan was a point of contention in this year’s budget process. Gov. Newsom originally included it in his budget proposal to the legislature, which then cut it from their own counterproposal in June. 

Legislators including Budget Committee Chair Scott Weiner raised concerns that the agreements with PG&E “do not provide the state with sufficient access to information to ensure fiscal accountability.” Weiner and other lawmakers worried that the state could never receive reimbursement for the loan, leaving taxpayers on the hook for hundreds of millions of dollars. 

The new loan adds to the $1.4 billion the state authorized to PG&E in 2022 to keep the plant running until 2030. The utility had planned to fully decommission the plant by next year, but the state intervened, citing projected energy shortages. 

PG&E did not respond to request for comment on the new loan. 

The utility is still in the process of applying for a renewed federal license to keep Diablo Canyon operating, though a federal court ruled in April that they can keep the plant running until 2030. If the Nuclear Regulatory Commission (NRC) grants PG&E a new license to keep operating, it could allow them to keep Diablo Canyon open until 2045. However, the utility has not announced a plan to keep the plant open that long.

It is also unclear how much it will cost to keep the plant running. The Environmental Working Group said in June that the total cost could be close to $12 billion to keep the plant open through 2030, though PG&E later said the number is closer to $8 billion. 

Meanwhile, the federal government is making a push for more US nuclear energy. The Biden Administration this year announced a plan to bolster the domestic nuclear industry, while the House of Representatives recently passed a bill to help develop new nuclear power plants.

(Featured image: The California State Capitol in Sacramento. Photo via Wikimedia Commons.)