In 2016, ceding to pressures from environmentalists and state regulations that prioritized renewables over nuclear and natural gas power, Pacific Gas & Electric announced the planned closure of the Diablo Canyon Power Plant, a nuclear facility that provides 18,000 GWh of electricity annually — about 10% of California’s electricity portfolio. These regulations made the plant economically unfeasible to operate, PG&E said, and targeted 2024 and 2025 to decommission its two remaining reactors.
Fast forward to 2022, California policymakers who put those regulations in place are changing their tune around nuclear power, a baseload zero-carbon source of electricity, and the proposed closure of Diablo Canyon.
The 180-degree turn on Diablo Canyon can be traced to the very policy choices that prioritized emission reductions on an arbitrary, accelerated timeline instead of ensuring a reliable transition, and the state’s powerful environmental interests are staunchly opposed to the facility. California is now struggling to provide a reliable supply of power to its citizens and grappling with multiple catastrophic wildfires each year that disrupt and damage infrastructure. Predictably, this about-face happened to coincide with the $1.7 trillion Infrastructure Investment and Jobs Act that has the Newsom administration seeking a federally funded bailout for some of the state’s missteps over the past several years.
On May 23, Newsom Cabinet Secretary Ana Matosantos sent a letter to Energy Secretary Jennifer Granholm requesting the $6 billion Civil Nuclear Credit Program under the IIJA expand its eligibility to Diablo Canyon so the plant could operate longer. The CNCP requires that eligible nuclear plants participate in competitive electricity markets, which Matosantos is pushing DOE to alter because PG&E is a regulated utility, not an independent power supplier. In addition, Matosantos is asking DOE to make funding available to nuclear plant owners who can’t pass operating losses to ratepayers and add grid reliability and decarbonization goals as considerations to extending plant operations.
To be clear, California is a competitive power market with its own RTO, the California Independent System Operator. While PG&E is indeed a regulated utility, it is also a participating member of the CAISO market. So, to sum up: California policymakers made choices that rendered nuclear power unfeasible in its market, struggled to supply its citizens with power due to those policy choices, and are now seeking federal tax dollars to fix this self-inflicted problem.
Instead of passing the buck to the rest of the country, the Golden State should stop pressuring DOE to change a new federal program to fit their needs and accommodate poor choices. California is more than capable of adjusting its market structure so that Diablo Canyon can operate economically without forcing out-of-state taxpayers, including the nearly 650,000 former California residents who left the state in 2020, to foot the bill.
California policymakers can allocate its own budget surplus, which has exceeded $68 billion, to keep Diablo Canyon operating in the short term, as it makes the right market adjustments for this facility — and others needed for reliability — to function. There is no justification for California, the world’s fifth-largest economy, to receive a federal bailout for its energy policies, especially with its coffers overflowing — much of it from COVID relief funds that America’s taxpayers are on the hook to pay.
To get its energy market in order, California must prioritize delivering reliability to its citizens instead of the current framework that focuses almost exclusively on emissions reduction and choosing preferred technologies. Unfortunately, states across the country, voluntarily or not, are adopting many of these same policies that hamper reliability and affordability in favor of arbitrary emissions reduction requirements, failing to learn the lessons of California and instead repeating those same mistakes. Reducing emissions is important, but it cannot come at the cost of reliability.
There is an easier path forward for all stakeholders in the energy transition. Competitive power markets have proven that prioritizing reliable and affordable energy can also achieve emissions reductions and air quality improvements. For example, the PJM Interconnection, which serves 65 million customers, reduced its carbon dioxide emissions by 39% from 2005 levels.
California policymakers could replicate this model and achieve their goal of reducing emissions while maintaining a reliable power system. However, that can’t happen if state leaders insist on adhering to policies that put the electric grid at risk.
Todd Snitchler is president and CEO of the Electric Power Supply Association.
