Weighing perceived economic and reliability benefits over safety concerns, the California Public Utilities Commission authorized Pacific Gas & Electric to bill ratepayers $706 million to replace the aging steam generators that cool the Diablo Canyon nuclear power plant reactors. The expectation is that the new steam generators would virtually ensure that the Nuclear Regulatory Commission would relicense Diablo Canyon?s two units for another two decades when they come up for renewal in 2024 and 2025. By a 3-0 vote February 24, the CPUC gave interim approval of the controversial project. Final approval depends on completion of an environmental impact report on the project required under the California Environmental Quality Act, expected this summer. Newly seated commissioner Dian Grueneich recused herself from the vote because she previously served as attorney for Mothers for Peace, a San Luis Obispo?based intervenor opposing PG&E in the proceedings. The CPUC adopted an administrative law judge?s findings that replacing the plant?s steam generators would be cost-effective and would generate $333 million in ratepayer benefits. The CPUC determined that PG&E?s $706 million estimated bill for the project was reasonable. Moreover, PG&E may request an additional $109 million for an $815 million cap for the project, the CPUC ruled. PG&E convinced the commissioners it would have to shut down Diablo Canyon?s two units in 2013 and 2014, respectively, if the steam generators were not replaced. They overrode fierce opposition from environmentalists, consumer groups, and independent generators. Earlier in the week, commissioner Geoffrey Brown held a contentious town meeting with all parties in San Luis Obispo. Opponents expressed concerns about the stockpile of radioactive waste from the nuclear plant built on a fault line, as well as other safety and cost risks. Opponents also argued that the funds at issue would be better spent on replacing Diablo Canyon?s 2,260 MW capacity with safe renewable energy. Ratepayers should not have to pay for replacing faulty steam generators that failed halfway into their presumed 40-year life span, said Morgan Rafferty of San Luis Obispo Mothers for Peace. ?We were never supposed to be responsible for this type of improvement. It?s like an old car?you replace one part and you need to replace another.? The CPUC?s determination that the Diablo Canyon steam generator replacement project is cost-effective is premature and violates CEQA because the draft EIR has not been completed, so the mitigation costs are still unknown, she added. PG&E argued that it needed the commission?s approval to move ahead with replacing the steam generators because it had already spent $25 million on the project. ?I think it?s a terrible mistake they?ve made because they?re going to find this is just the beginning of some very expensive modifications to keep that plant operating,? said Carl Zichella, Sierra Club western director. Although PG&E?s original investment for Diablo ended up at $5.5 billion, ratepayers have paid well over a total of $28 billion for the nuclear plant as a result of interest, subsidies, and other accounting intricacies. The CPUC concluded that the 17,000 GWh of electricity generated annually by Diablo Canyon?which supplies about 20 percent of PG&E?s total generation?would be too difficult to replace in the short term. The commissioners also argued that it would be undesirable to replace nuclear generation with natural gas and other more polluting fossil-fuel?fired power plants. ?This plant has been running for 20 years. It has one characteristic: it does not emit any greenhouse gases,? said CPUC president Michael Peevey. ?We have a bird in the hand so to speak?an operating plant that seems to be economic.? ?What it really says is the clout of PG&E at the CPUC is enormous,? Zichella said. In other action, the CPUC approved PG&E?s request to use $35.9 million from the Humboldt Bay Power Plant Unit 3 Nuclear Decommissioning Master Trusts to purchase a dry-cask storage system for temporary storage of spent nuclear fuel until the proposed Yucca Mountain waste repository in Nevada opens. The Humboldt Bay on-site storage system will enable PG&E to begin decommissioning in 2009. The plant has been closed for almost 30 years already. The Office of Ratepayer Advocates urged the CPUC to deny PG&E?s request to use the decommissioning funds until the utility recovers its spent-fuel costs from the Department of Energy. PG&E is a party in litigation against the DOE over storage of nuclear waste, but the utility anticipates that it will be many years before the litigation is settled and PG&E receives any compensation. The CPUC rejected ORA?s petition, concluding that if PG&E had to wait for the DOE funds before it began decommissioning the Humboldt Bay reactor, the decommissioning could be delayed for several more years. The commission directed PG&E to continue its lawsuit against DOE and put any money it recovers into the decommissioning trust. Meanwhile, acting on a petition by the California Large Energy Consumers Association and the California Manufacturers & Technology Association, the CPUC modified its rules for payment of exit fees by direct-access customers that install self-generation. The petitioners argued that the surcharge created a financial disincentive for direct-access customers to invest in distributed generation. The CPUC relieved departing direct-access customers that install distributed generation from paying the ongoing ?cost responsibility surcharge? to reimburse the California Department of Water Resources for its power-purchase costs for utility customers. However, the commission ordered direct-access customers to pay for past CRS undercollections they incurred prior to switching to self-generation. ?This decision properly places bundled customers and direct customers on a par,? Brown said. Peevey disagreed but ?reluctantly? voted for the rule change because only three commissioners were present to vote on the petition. ?I don?t think we have equality of treatment here,? said Peevey, who added he would file a concurrence.