SAN FRANCISCO – Even in an industry notorious for wildly underestimating costs, reviled California utility Pacific Gas & Electric may be setting a new standard with its latest price tag of almost $12 billion to keep its aging Diablo Canyon nuclear plant online until 2030.
That’s more than twice the $5.2 billion estimate PG&E provided just one year ago, and even that astronomical price tag became outdated just months later when the utility revised it to $8.1 billion. The utility buried the newest estimate, now $11.8 billion, in dense regulatory filings with the California Public Utilities Commission, or CPUC, asking it to approve another rate increase.
Captive PG&E customers already face some of the highest electricity bills in the U.S. are on the hook for shouldering the costs through paying even more for their power. Even Californians served by other utilities, who won’t receive so much as an electron from the nuclear plant, will still see their rates rise to keep the nuclear plant going long past its viable life.
It’s not just ratepayers getting bamboozled by PG&E’s rubbery math, because lawmakers and Gov. Gavin Newsom are making hundred million dollar decisions about Diablo Canyon based on the utility’s numbers. And at this pace, it wouldn’t be a surprise if the power company’s cost estimate climbs even higher.
But PG&E appears to be banking on the CPUC’s approval.
Newsom and state legislators have an opportunity to step in and tell PG&E enough is enough with its unreliable math, by calling for the CPUC to reject the rate hike request.
Dramatic change
Attorney and former California Energy Commission, or CEC, member John Geesman first noticed the dramatic change in the Diablo Canyon cost estimate.
He highlighted the astonishing upward revision in a May 8 “protest” letter submitted to the CPUC on behalf of the nonprofit Alliance for Nuclear Responsibility. Geesman noted that PG&E as recently as May 19, 2023, said the cost to keep the plant online until 2030 was an estimated $5.2 billion. Just 10 months ago, the utility then effectively said “whoops” and bumped it up to $8.1 billion. PG&E then revised it up again to $11.8 billion in its March rate hike application to the CPUC.
Any lender would laugh someone so financially irresponsible out of the bank, but lawmakers and Newsom have been hoodwinked by PG&E and its constantly changing numbers.
The skyrocketing cost for Diablo Canyon comes as politicians in Sacramento seem increasingly gripped with buyer’s remorse over the last-minute deal Newsom rammed through the legislature in 2022 to keep the plant open, ostensibly to avoid blackouts.
Without analysis of the deal from any state agency, Newsom and legislators relied instead on PG&E’s claims on Diablo Canyon’s costs and safety. They voided a 2016 agreement between the utility, labor unions and environmentalists to retire Diablo Canyon in 2025 and replace the 8.67 percent of in-state generation it then provided with wind and solar energy, and battery storage.
Lawmakers passed the 2022 measure with the understanding that the federal government would cover the cost of a state loan of $1.4 billion to PG&E to defray some of the costs of Diablo Canyon’s extension – but those federal funds never fully materialized. PG&E is now looking to use $400 million in state funding to paper over the financial gap.
But California is grappling with a deficit and painful budget cuts. A growing roster of lawmakers is resisting the request to throw good money after bad with Diablo Canyon, particularly as those hundreds of millions of dollars could be a vital lifeline for needed state programs. In a sign of mounting doubts about Diablo Canyon’s price tag, the state Senate budget committee removed the $400 million handout for PG&E from its budget bill.
Unnecessary nuclear
Moreover, Newsom’s push for renewables has been so successful in recent years that California no longer has the energy deficit that loomed in 2022 and was used to justify throwing so much money at Diablo Canyon and punishing ratepayers through the threat of even higher bills.
The facility comprises two almost 40 year-old nuclear reactors that sit atop multiple earthquake faults, and whose design is prone over time to dangerous structural weakening known as embrittlement. PG&E has denied the need for additional safety spending.
The electricity generated by these reactors is not included in the state’s power resource plans, as a May joint reliability assessment by the CEC and the CPUC notes. Instead, California counts the huge boosts in power generation from Newsom’s aggressive investment in renewable energy like wind and solar, which help the state meet its power needs while fighting the climate crisis.
It doesn’t make sense to keep treating PG&E’s fuzzy math like business as normal – and some advocates have long warned about Diablo Canyon’s ever-increasing price tag.
The Utility Reform Network, or TURN, submitted an October 2023 analysis to the CEC that said PG&E’s then-$5.1 billion cost estimate was fundamentally flawed. TURN said the estimate ignored billions of dollars in charges that the utility knew it would ultimately pass on to ratepayers, and those extra costs would bump the price tag to $10.1 billion.
Now the public knows the actual price tag (at least what PG&E is currently admitting) is closer to $12 billion. And that figure excludes all of the enormously expensive safety improvements nuclear experts insist are needed for the two nuclear reactors.
PG&E, which saw a record $2.2 billion in profits in 2023, a 25 percent increase, isn’t bashful when it comes to spending millions of ratepayers’ funds on advertisements bragging about wildfire safety measures to prevent deadly catastrophes – massive disasters the utility has caused in recent years by failing to maintain its extensive power lines.
Yet PG&E is tight-lipped when it comes to making similar public statements about the exploding costs of keeping Diablo Canyon online.
When someone shows you who they are the first time, believe them. With PG&E, Newsom and California lawmakers can see by now that the utility can’t keep its numbers straight. They need to take this message to the CPUC, calling on it to finally act as the bulwark that it can be against PG&E’s uncontrolled spending.
