Citing high costs to ratepayers, Friends of the Earth petitions CPUC for shutdown of Diablo Canyon and transition to renewable energy

Citing high costs to ratepayers, Friends of the Earth petitions CPUC for shutdown of Diablo Canyon and transition to renewable energy

WASHINGTON, D.C. – In its petition filed today with the California Public Utilities Commission, Friends of the Earth called the Diablo Canyon nuclear power plant too expensive to operate and called for its replacement with cheaper and more reliable renewable energy sources, by 2018.

Friends of the Earth’s complaint points out that despite a history of huge cost overruns and rate increases to pay for them, Diablo Canyon will also need additional billions of dollars to comply with water quality and safety upgrades. It urges the CPUC to order Pacific Gas & Electric Co. to begin selling power from Diablo Canyon on the wholesale market, ending the unfair policy of making customers pay for PG&E’s operational costs plus a guaranteed profit. It says PG&E should also be ordered to plan for an orderly transition to renewable energy, efficiency and storage, to avoid the scramble for power that followed the closure last year of the San Onofre nuclear plant in Southern California after equipment failures caused a radiation leak.

“It’s the policy of the State of California that utilities should have to compete on the open market,” said David Freeman, former head of the federal Tennessee Valley Authority, the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. “But PG&E still the enjoys the benefits of a sweetheart deal that forces consumers to pay whatever the utility spends plus a guaranteed return on investment,” said Freeman, a special advisor to Friends of the Earth. “Let’s see how willing PG&E is to keep pouring billions into Diablo Canyon if it has to compete against cheaper, safer and more reliable sources of energy.”

Diablo Canyon Unit 1 was supposed to cost $188 million, and $192 million for Unit 2. However, construction costs escalated to such an extent that by the time both reactors began operation, in 1985 and 1986 respectively, the combined cost of the plant had ballooned to $5.52 billion. According to the complaint, PG&E has also “grossly underestimated the costs of operating Diablo Canyon in the future and has seriously overestimated the costs of alternative, especially renewable, resources that could replace the energy that Diablo currently provides.”

The complaint cites a February 19, 2014 letter from CPUC President Michael Peevey raising numerous questions about the future costs of operating Diablo Canyon. The letter warns that the Commission will not authorize PG&E to spend ratepayers’ money to seek a renewal of its federal operating license unless the company can show that continued operation makes economic sense. The complaint says the commission should not take PG&E’s word on that, but, rather, should investigate its claims in open public hearings.

Among the significant costs faced by Diablo Canyon are how to fix its “once-through” cooling system. Currently, the coastal plant takes in seawater, uses it to cool the plant’s reactors, then discharges it back into the Pacific Ocean. The heated seawater is responsible for killing vast numbers of fish and other aquatic species each year, and the State Water Resources Control Board has ordered PG&E to find an alternate cooling method. The most feasible solution would be to build two huge cooling towers at an estimated cost of between $2 and 10 billion.

In addition to spending large sums on once-through cooling upgrades, PG&E will also be subject to major new safety-related upgrades in response to the Fukushima disaster three years ago in Japan. As Diablo is surrounded by active earthquake faults – several of them unknown at the time of design and construction – the costs of retrofitting Diablo to meet these post-Fukushima seismic and other safety requirements are likely to cost several additional billion dollars.

Friends of the Earth’s complaint is supported by an affidavit from Peter Bradford, a former Chairman of the New York Public Service Commission and member of the federal Nuclear Regulatory Commission, now a professor at Vermont Law School.

“California electric customers and California environmental goals will be best served by requiring that Diablo Canyon’s future revenue stream be determined by the value of its output in the California energy market,” Bradford’s affidavit says. “If PG&E must recover the costs of Diablo Canyon…in the California power market, its management will have every incentive to measure whether the operating costs and risks plus those of necessary new investments will be successful in competition with the alternatives available in the California power market.”


Expert Contacts:
Damon Moglen, Friends of the Earth: (202) 352-4223, [email protected]
David Freeman, (310) 902-2147, [email protected]

Communications Contacts:
EA Dyson, (202) 222-0730, [email protected] (East Coast)
Bill Walker, (510) 759-9911, [email protected] (West Coast)

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