FERC Keeps Diablo Closure on Track, PG&E Seeks to Delay Possible Ratepayer Relief

23 Mar 2021

Federal energy regulators shot down a petition aimed at stopping the upcoming retirement of Pacific Gas & Electric’s 2,240 MW Diablo Canyon Nuclear Power Plant, approved by the California Public Utilities Commission. The complaint by Californians for Green Nuclear Power also targeted the California grid operator and other agencies. It asserted that by allowing the plant shutdown the entities failed to protect the bulk power system, in violation of the Federal Power Act and Natural Gas Act.

The Federal Energy Regulatory Commission March 18 rejected the claim that the CPUC, State Water Resources Control Board, and State Lands Commission, as well as the North American Electric Reliability Corporation and Western Energy Coordinating Council, violated a federal reliability standard. The cited law did not apply to them. Furthermore, the commission said the complaint failed to state what reliability standard is being violated.

FERC also rejected the claim that the California Independent System Operator would be responsible for unjust and unreasonable rates post closure. The decision reiterated that the pro-Diablo group failed to “make an adequate proffer of evidence including pertinent information and analysis to support its claims.”

In a concurring opinion, Commission James Danly said he shared the group’s concern about the reliability of California’s grid, including after Diablo’s retirement. But the complaining party must do “more than list a handful of entities with reliability oversight and baldly assert potential reliability violations for its pleading to be viable,” he stated.

Diablo’s two units are slated for retirement in 2024 and 2025 under an agreement PG&E reached with labor and environmental organizations in June 2016.

Delay of likely ratepayer relief sought

The same day, state utility regulators heard from the Alliance for Nuclear Responsibility on Diablo Canyon. It is protesting PG&E’s proposed postponment of expected ratepayer compensation for the cost of a rebuild of Unit 2’s main generator. A key component at Diablo Canyon was recently rebuilt for about $100 million but has malfunctioned. As a result, Unit 2’s output was only 75% last year, according to PG&E.

The utility requested a delayed accounting of its expenditures because of ongoing inspections of the “malfunctions within the main generator associated with excessive vibrations” during the current refueling process. PG&E wants to finalize its “true up” in the upcoming 2021 Energy Resources and Recovery Account compliance proceeding, instead of the current 2020 proceeding.

The Alliance objects to postponing a decision on the accounting, which it expects to result in ratepayer relief. That is because customers didn’t get their money’s worth from the rebuild last year.

“Ratepayers have been paying for the unit as if it is fully working,” David Weisman, A4NR spokesperson, said. He objected to waiting “another year to provide relief afforded to ratepayers.”

The Alliance also is seeking closer scrutiny from the CPUC on whether the fact that Unit 2 went down a few times unexpectedly resulted in it contributing to the rolling outages California experienced last summer.

Seismic risks

The pro-nuclear complaint filed at FERC last October warns that the natural gas infrastructure to be used to replace Diablo is at risk from earthquakes. But it fails to note that Diablo itself sits on a number of faults.  

The group seeking to extend Diablo’s life also points to the rolling blackouts in mid-August, saying grid imbalances will worsen post Diablo. Commissioner Danly said that concern led him to push FERC to investigate CAISO reliability after the rolling blackouts. The majority of federal regulators, however, declined to conduct an investigation.

The pro-nuclear group also claims Diablo’s closure, approved by the CPUC in August 2018, will improperly increase costs and greenhouse gas emissions. It states ratepayers will pay $3.4 billion for replacement gas generation over 20 years.

However, the Alliance for Nuclear Responsibility found that operating the plant has cost ratepayers billions of dollars in above-market electricity prices. In 2020 alone, the above market costs amounted to $1.2 billion, according to testimony to the CPUC that was uncontested.

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