Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Rally to proclaim support for Diablo Canyon Nuclear Power Plant

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Californians for Green Nuclear Power (CGNP) is hosting its 3rd annual rally in support of the continued safe operation of PG&E’s Diablo Canyon Power Plant (DCPP) a week from today on Friday, March 17, 2017 (St. Patrick’s Day).

The event starts at 11:00 AM and is schedule to conclude at 1:00 PM.

Participants are asked to gather at the plaza in front of the San Luis Obispo County Building at 1055 Monterey.

Please come to support GREEN nuclear power wearing your green!

DCPP produces 5 times the yearly output of Hoover Dam. Its traditional product is about 17-18 billion kilowatt-hours of affordable, reliable, emission-free electrical power for California residents. It has the ability to also produce a reliable supply of fresh water that can help mitigate drought conditions when they exist.

There are no smokestacks at DCPP!

CGNP maintains an informative web site at CGNP.org.

About CGNP

CGNP is an independent 501(c)(3) intervenor supporting the continued safe operation of DCPP in CPUC Proceeding A.16-08-006. CGNP continues to make history in our pro-nuclear power advocacy, which began in 2013.

Please spread the word about this important demonstration of support for the continued operation of Diablo Canyon.

Why is Diablo Canyon at risk of being shutdown by its owner?

There is a short-sighted, financially-driven plan by the plant owner and assorted self-appointed action groups to close DCPP as soon as it is fully paid off. As any homeowner know’s, the day of a mortgage payoff should be a day of celebration. It marks a time when the owner can look forward to a long period of lower cost living, especially when the house has been lovingly maintained and improved.

In the case of a power plant owned by a rate-regulated utility, the payoff date should mark the period of biggest rewards for captive customers. That’s when their 40 year long enforced investment in paying off Pacific Gas and Electric’s facility financing (mortgage) should result in rates that reflect ongoing operations and maintenance costs without significant capital repayment charges.

For the company that owns such a facility, however, benefits for the customers come with a loss of income. Since the paid-off facility is also a fully depreciated facility that is carried on the books as having no remaining capital value, the 10% premium allowed in the rate structure as a return on invested capital gets multiplied by a number that is very close to zero.

There is a very real financial incentive for the regulated utility to close the depreciated facility to establish a “need” to invest more capital in new infrastructure that will be eligible for a fresh 30-50 years worth of a guaranteed return on capital.

Of course, the utility company will never explain the situation this way or even admit that this interpretation is even close to correct. Instead, they will portray themselves as being reluctant participants in a move forced upon them by “citizen” groups that have expressed their fear of continued plant operation and their support of building new “renewable” energy facilities to try to replace part of the massive amount of power that DCPP supplies.

PG&E isn’t lying when it says that it is closing the plant for financial reasons. It is shading the truth, though, when it implies that the cost of operating the plant isn’t competitive with the proposed alternatives.

The income generated for the company is lower if DCPP continues to operate, but the cost of electricity will be higher, the average emissions per unit of power will be higher and the vulnerability of the California electric grid to power or gas shortages will increase.

Reader Interactions

Comments

  1. Rod: Thank you for explaining some of the financial drivers for PG&E that are incenting the utility to abandon a safe, highly-performing nuclear power plant. As a consequence of its robust design, DCPP was originally on a much longer-term depreciation schedule. However, PG&E took advantage of deregulation to accelerate DCPP’s depreciation in the late 1990s. PG&E’s abandonment plan further accelerates DCPP’s depreciation.

    CGNP’s direct testimony highlights this financial change. Our 140 pages of searchable California Public Utilities Commission (CPUC) direct testimony is found at our website at
    http://www.cgnp.org/CGNP_Written_Direct_Testimony_01-27-17.pdf. For additional discussion regarding the financial benefits to PG&E of deregulation, please see page 124 of 140 in CGNP’s direct testimony. CGNP also published 180 pages of relevant workpapers to support our direct testimony. Please contact me at Liaison [at] CGNP dot org to obtain a copy of CGNP’s workpapers.

    • You’re both onto something. I have advocated, as a last resort, federal takeover of perfectly functional plants being abandoned by their owners, based on the argument that they are strategic assets. They provide fuel use diversity and assure a reliable, domestic supply of clean electricity at reasonable cost. Those are important facets for both economic and military security. Monies generated by their use should be directed towards their occasional refurbishment as well as covering O&M costs. Federal resources can be allocated for facility security. If revenues exceed costs, direct any excess towards providing additional generating capacity that is clean and reliable (i.e., nuclear, not intermittent sources).

      The operation can already be kick-started with plants like VY, Kewaunee, Palisades, Pilgrim, and maybe DC and IPEC. That’s a heck of a lot of clean generating capacity that would otherwise be thrown away. The waste of such valuable infrastructure borders on criminal, if not insanity.

      • I do agree that they are critical infrastructure, not something that should be left to the whims of the short-term market (and short-term decisions by companies based solely on profit motive). This is all especially true given the long-term consequences, and irrevocable nature of the decision.

      • Doesn’t France employ a similar approach to their nuclear power facilities — state owned / run for the benefit and security of all their citizens? If so, then it wouldn’t be an unprecedented action by this administration to take.

  3. On an unrelated, but important note, I’ve been thinking about how we can encourage more financial support for Rod’s sterling efforts.

    Making blogs and news websites pay their way with a specialist readership without putting them behind a paywall turns out to rather hard, but has been achieved, see below.

    There is a specialist website I frequent, https://lwn.net , which used to be known as “Linux Weekly News”. Like atomicinsights.com, it too is a high-quality site, which prides itself on being “detailed, technical, and timely”. It too has gathered a clientèle of very able and knowledgeable guests and subscribers (plus other hangers-on who want to have a say), was once completely open, but has now gone over to an open/subscription model. You can be a non-paying guest, or a paying subscriber at 3 different levels. Guests and subscribers can both add comments to articles, but must be registered users to do so. It is visible whether you are posting as a subscriber or not.

    The more important and detailed items are reserved for one week for subscribers only, after which anyone can read them. A paying subscriber has the ability to email a link to an otherwise-closed article to any other person so they can read it hot-off-the-press too; this feature is monitored for abuse.

    It enables a living for the proprietor and senior editor, and will pay for quality material from outside. There are some fairly unintrusive ads, but ad revenue is, I gather, only about 10% of its income – the rest is subscriptions. It trades on its integrity and depth of knowledge, something which I consider Rod has in spades!

    The above features are the result of trial and error over the last 20 years or so. I can’t help thinking that lwn and atomicinsights have enough similarities that lwn’s lessons could be of benefit to Rod too.

    hth, Simon

  4. “There is a very real financial incentive for the regulated utility to close the depreciated facility to establish a “need” to invest more capital in new infrastructure that will be eligible for a fresh 30-50 years worth of a guaranteed return on capital. ”

    Thank you for bringing to light the bizarre world of the beancounters and return on investment. I have had this explained to me before. I thought it went counter to common sense then and I do now. Why should a facility with few flaws have to be replaced by a new one due to accounting rules? This applies to more than nuclear facilities. It is a waste.

    • Look at the rules of the regulator.  If the revenue generated by a plant is set by its depreciated value and not by its actual productivity, you get silly outcomes like this.  However, they are entirely rational profit-maximizing actions under the rules of the regime.

      If DC was operated by the Feds, it would be very likely that the California authorities would refuse to buy power from it or require that it be used as e.g. balancing for wind farms.  Anything to kill it.

  5. This is plant is, historically, one of the most high-performing if not THE highest performing nuclear plant in the country, and has been for decades. Long held as the model for excellence in the industry, particularly by the NRC. PG&E should not be allowed to close this facility, based on the ridiculous promises of renewables and energy “efficiency.” By the way, I have yet to hear exactly how the plan to become more “efficient” is supposed to replace 2,200 MW of base load, non-emitting electricity. Rod, has anyone been able to coherently explain exactly what this is and the plan for getting there?

    • As far as a practical, workable plan, they have none. Its the usual litany of unfulfilled promises and undemonstrated proposals like wind power, efficiency, demand side management, blah blah blah. In the end, it will be what California always does, build more gas-fired capacity, and import more electricity from neighboring states.