LOS ANGELES — The California Legislature on Thursday signaled its intention to cancel a $400 million loan to help finance an extended lifespan of the state’s last nuclear power plant, exposing a rift with Gov. Gavin Newsom , which says the power is critical to securing energy supplies amid a warming climate.
The votes in the Senate and Assembly on funding for the twin-dome Diablo Canyon plant represented an interim step as Newsom and legislative leaders, all Democrats, continue to negotiate a new budget. But it creates a public point of friction over one of the governor’s signature proposals, which he has championed alongside the state’s rapid push toward solar, wind and other renewable sources.
The dispute unfolded in Sacramento as environmentalists and antinuclear activists warned that the estimated price tag for keeping the coastal reactors running past their planned shutdown in 2025 had risen to nearly $12 billion, roughly doubling previous projections. That has also raised the prospect of higher reimbursements for taxpayers.
Operator Pacific Gas & Electric called these figures inaccurate and inflated by billions of dollars.
HD Palmer, a spokesman for the California Department of the Treasury, emphasized that budget negotiations are continuing and that the legislative votes represented an “agreement between the Senate and Assembly – and not an agreement with the governor.”
The votes in the Legislature mark the latest development in a decades-long battle over the operation and safety of the plant, which sits on a bluff above the Pacific Ocean halfway between Los Angeles and San Francisco.
Diablo Canyon, which began operating in the mid-1980s, produces up to 9% of the state’s electricity on any given day.
The battle over the future of reactors is playing out as the long-struggling U.S. nuclear industry sees a potential rebirth in the era of global warming. Nuclear energy does not cause carbon pollution like fossil fuels, but it does leave behind waste that can be left behind dangerously radioactive for centuries.
A Georgia utility just finished the first two home-built American reactors in a generation at a cost of nearly $35 billion. The price tag for expanding Plant Vogtle from two of the traditional large reactors to four includes $11 billion in cost overruns. Bill Gates and his energy company started in Wyoming build about a next-generation nuclear power plant that the tech titan believes will “revolutionize” the way energy is generated.
In 2016, P.G&E, environmental groups and factory worker unions reached an agreement to close Diablo Canyon by 2025. But the Legislature killed the deal in 2022 at the urging of Newsom, who said the power is needed to prevent blackouts as a changing climate puts pressure on the energy system. That longer-term deal included a forgivable $1.4 billion government loan for PG&E, to be paid in several installments.
California energy regulators voted in December to extend the plant’s operation for five years, until 2030.
Lawmakers’ concerns were outlined in an exchange of letters with the Newsom administration, at a time when the state is trying to close an estimated $45 billion deficit. They wondered, among other things, whether and when the state would be reimbursed by PG&E, and whether taxpayers will lose out on hundreds of millions of dollars if the proposed expansion for Diablo Canyon fails.
Construction of Diablo Canyon began in the 1960s. Critics say potential earthquakes from nearby faults were not known when the design was approved can damage equipment and release radiation. One error was only discovered in 2008. PG&E has long said that the factory is safe, an assessment that the NRC supports.
Last year, environmental groups called on federal regulators to immediately shut down one of the site’s two reactors until tests can be conducted on critical machinery that they believe could fail and cause a catastrophe. Weeks later, the Nuclear Regulatory Commission took no action on the request and instead asked agency staff to review it.
Environmentalists’ questions about the potential for rising costs stemmed from a review of government filings by PG.&E, they said. Initial estimates of about $5 billion to extend the plant’s life later rose to more than $8 billion and then nearly $12 billion, they said.
“It’s really quite shocking,” said attorney John Geesman, a former member of the California Energy Commission who represents the Alliance for Nuclear Responsibility, an advocacy group that opposes federal license renewals in California. The alliance told the state Public Utilities Commission in May that the costs “would represent by far the largest financial commitment for a single energy project that the commission has ever been asked to underwrite.”
PG&E spokesperson Suzanne Hosn said the figures incorrectly included billions of dollars in costs unrelated to the plant’s expansion of operations.
The company has estimated the cost at $8.3 billion, Hosn said, adding that “the financial benefits outweigh the costs.”