PG&E moves closer to retiring Diablo Canyon nuke with proposed decision from CPUC

Dive Brief:

A proposed decision issued to California utility regulators this week would allow Pacific Gas and Electric to retire its 2,256 MW Diablo Canyon nuclear plant but would reject the utility's plan to replace its generating capacity.
The decision, issued by an administrative law judge working for the California Public Utilities Commission, would allow PG&E to recover $241.2 million from ratepayers to fully retire the plant by 2025. Replacement capacity would be determined in a separate proceeding on the utility's integrated resource plan (IRP).
The proposed decision is not a final regulatory ruling, but CPUC commissioners often adopt such decisions without major changes. Regulators are slated to consider the issue at their open meeting on Jan. 11.

Dive Insight

In 2016, PG&E rattled the nuclear sector with the announcement that it would retire California's last power-producing reactors in the mid-2020s.

Opened in the mid-1980s, Diablo Canyon is younger than many of the nuclear plants producing power in the U.S. PG&E could apply to renew its licenses at the Nuclear Regulatory Commission in the mid-2020s, but California's 50% renewable energy mandate and growing penetrations of distributed generation led it to conclude retirement would be cheaper.

“On cooler spring and fall days, you still have to generate from renewables to meet your 50% renewable requirement, because that's the state law,” PG&E CEO Tony Earley said on a press call following the announcement. “There's just not going to be enough need to have to run your nuclear plant.”

To fill the generation gap, PG&E proposed three separate tranches of energy efficiency, renewables and energy storage procurement stretching into the 2030s.

PG&E's original plan to replace Diablo Canyon's generation

Joint Proposal for the Orderly Replacement of Diablo Canyon

A number of intervenors, including environmental organizations that support the plant's retirement, questioned the need and cost-effectiveness of PG&E's second and third tranches, leading the utility to withdraw those proposals in Feb. 2017.

Other commenters took aim at the first tranche, noting that PG&E is already under a regulatory order to purchase whatever cost-effective energy efficiency resources it can find. Those arguments led Administrative Law Judge Peter Allen to reject that round of resource procurement as well.

"[I]t is not clear that PG&E could actually procure over 50% more energy efficiency than a goal that is already supposed to include all cost-effective energy efficiency (unless PG&E procures energy efficiency that is not cost effective)," Allen wrote. "There is no reason to approve a $1.3 billion rate increase for a proposal that will most likely either fail to achieve its goal or will achieve a goal not worth reaching. Accordingly, PG&E’s Tranche 1 proposal is not adopted."

Instead, replacement resources for Diablo Canyon would be better considered in PG&E's IRP proceeding, Allen wrote, which will look at a wider set of constraints, including greenhouse gas requirements.

"Pacific Gas and Electric Company should be prepared to present scenarios for Diablo Canyon retirement in the Integrated Resource Planning proceeding that demonstrate no more than a de minimis increase in the GHG emissions of its electric portfolio," he wrote.

The full CPUC is scheduled to take up Allen's proposed decision at its next open meeting, scheduled for 9:30 a.m. PST on Thursday.