By: Betty T. Yee

In response to forecasted grid instability, the governor recently called for an urgent five-year extension of operations at Diablo Canyon Power Plant (DCPP), the leases for which were set to expire in phases by 2025. Senate Bill 846 (Dodd, Ch. 239 of 2022), which authorized the extension, was passed and signed into law in the final hours of the legislative session. The next twelve months – as the state implements the requirements of the bill – will be critical to ensuring the state’s continued grid reliability.

Controller Yee is mindful that the agencies responsible must maintain an open, inclusive, and data-driven decision-making process. Simultaneously, California must keep an eye toward learning from this experience to avoid future risks from emergency policy decisions.

When Pacific Gas & Electric (PG&E) sought to forgo relicensing and pursue decommissioning of DCPP in 2016, Controller Yee led the State Lands Commission in safeguarding protections for ratepayers, workers, and the environment; she remains committed to these values. As the state shifts gears to take the next steps in assessing DCPP’s continued operations, California must maintain its position as a global climate leader and a model for good governance. Importantly, state policymakers must focus on thoroughly addressing outstanding questions to ensure a transparent, accountable process that is fair to all.

What is the true cost of keeping DCPP online for an additional five years?

The total price tag is still unknown. Through SB 846, the legislature committed $1.4 billion in the form of a potentially forgivable loan, with up to $600 million appropriated now and $800 million requiring future legislative action. PG&E also is competing for up to $1.2 billion from the federal Civil Nuclear Credit (CNC) program and may be eligible for other government funding, such as the $75 million set aside for retiring energy plants in Assembly Bill 205 (Committee on Budget, Ch. 61 of 2022) and up to $4.8 billion in future CNC award cycles.

How much of the cost of keeping DCPP online will be taxpayer-funded?

The fiscal impact of this action to California taxpayers and ratepayers remains unclear. There are ratepayer protections written into SB 846, but with state and federal funds involved, there will be a cost to taxpayers. With more than $1 billion already committed, Controller Yee believes it is critical that PG&E and state leaders provide a clear accounting of public dollars spent and planned, and establish mechanisms for averting inequitable impacts.

How does SB 846 compare to other investments in renewable energy and storage?

SB 846 requires a cost analysis comparing the DCPP extension to alternative options by September 30, 2023. By the time this analysis is published, it is likely that substantial funding already will be invested in the extension. A comprehensive analysis that uniformly evaluates all options is crucial for a successful outcome without unintended consequences. For example, the legislation extends DCPP’s once-through cooling compliance date, which reduces capital expenditures by billions of dollars. If reasonable exemptions exist for alternative energy solutions that may reduce capital expenditures, these should be considered for a more complete analysis.

How will SB 846 affect the development and deployment of renewables?

California has an ambitious goal of achieving 100-percent clean energy by 2045. The state must ensure extended DCPP operations will not interfere with meeting the urgent need for renewable energy.

SB 846 allocates $1 billion over three years to support renewable and clean energy resources, reduce greenhouse gas emissions, and retain grid reliability. These groundbreaking investments, along with permitting reform and other measures passed by the legislature this year, can support and accelerate the transition from fossil fuel dependence.

However, some planned renewable projects already on track for grid connection may be postponed or canceled due to the extension of DCPP operations. Developers assumed DCPP’s retirement would free up space on the grid by 2025, and numerous renewable projects have accumulated in a queue awaiting grid connection. Beyond funding, there are process and planning issues to resolve.

Who should be at the table for these decisions, and who has been left out?

Transparency and inclusion are critical to good public policy. So far, the decision to extend DCPP operations has primarily taken a top-down approach, with minimal public input. Controller Yee strongly believes the public must have ongoing opportunities for meaningful engagement throughout the process, with particular attention to communities historically excluded from such discussions. Robust engagement centered on equity creates a pathway for identifying potential negative social and environmental impacts prior to implementation.

What can be done to avoid this type of emergency decision-making in the future?

Controller Yee wants to see future planning prioritize demand-side action, in parallel with increasing renewable energy supply. Reducing overall energy usage through efficiency and conservation measures not only lessens stress on the grid, but also saves taxpayer dollars. During September’s record heatwave, California managed to keep the lights on through a combination of renewables, battery storage, and – perhaps most notably – incredible demand-side conservation from customers. Californians widely heeded the state’s call to adjust their thermostats and not use major appliances during peak hours to avoid rolling blackouts. Regularly placing such value on energy efficiency and conservation would go a long way toward reducing energy imports and natural gas reliance during peak periods, providing a tremendous opportunity for every Californian to be part of the solution.

As California aims toward the bold clean energy goals established in SB 1020 (Laird, Ch. 361 of 2022), it is critical state energy leaders conduct the appropriate planning – based on reliable data and the best available science – to ensure grid reliability. Moving forward, Controller Yee wants to see future energy decisions grounded in equity, accountability, and transparency, with an integrated understanding of the impacts to ratepayers and taxpayers.

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