Legal & Regulatory

Battle Brewing About California’s Role in Diablo Canyon Nuclear Plant Retirement

An assortment of entities have sought to intervene in a complaint alleging that the California Independent System Operator (CAISO) and California state agencies violated bulk power system reliability standards when they approved retirement of the 2,240-MW Diablo Canyon Power Plant (DCPP) by 2025. 

Before the comment deadline on Nov. 16, at least 15 entities sought intervention in the Oct. 26 complaint filed with the Federal Energy Regulatory Commission (FERC) by nonprofit nuclear advocacy group  Californians for Green Nuclear Power Inc. (CGNP) over regulatory approvals of Pacific Gas & Electric Co. (PG&E’s) voluntary plan to permanently shutter the nuclear plant near Avila Beach, California. Intervenors include nuclear advocacy organizations, trade groups, power companies, and environmental and citizen groups.

A Dispute About Resources and Reliability

PG&E announced it would shutter the 1,138-MWe Unit 1 and the 1,151-MWe Unit 2, both Westinghouse pressurized water reactor units,  in June 2016, upon the expiration of the reactors’ operating licenses—November 2024 for Unit 1 and August 2025 for Unit 2. 

The utility reached the decision after reaching a “joint proposal” with labor and environmental groups that sought to increase investment in energy efficiency, energy storage, and renewables beyond the state’s 2015 mandates to source 50% of its power from renewables, while also phasing out nuclear power in California by 2025. While the CPUC approved PG&E’s application to shutter the plant in January 2018, an initiative to replace the plant’s power with zero-carbon options was enshrined in state law by California’s former Gov. Jerry Brown in September 2018.  

But in its complaint (Docket No. EL21-13-000), CGNP claims CAISO, the California Public Utilities Commission (CPUC), the California State Water Resources Control Board (CSWRCB), and California State Lands Commission (CSLC) violated the North American Reliability Corp.’s (NERC’s) bulk power system standards when the CPUC approved PG&E’s plan to close the two-unit plant by 2025 “without first properly analyzing the adverse bulk electric system and adverse bulk natural gas system consequences, in light of known California-specific hazards, including those caused by seismic activity and the Public Safety Power Shutoff (PSPS) policies enacted by” the CPUC. 

The complaint also alleges NERC and the Western Electricity Coordinating Council (WECC) “failed to conduct proper oversight or enforced NERC’s reliability standards,” which “will be violated” by removing Diablo Canyon’s 2,240 MW from California’s grid. “Recent events, including the August 2020 blackouts that affected millions of California utility customers, point to the underlying reliability issue facing California’s electric grid, even with DCPP continuing to operate,” it says. “The premature closure of DCPP will only exacerbate current reliability issues, and is inconsistent with federal law.”

Located in San Luis Obispo County, Calif., opponents of the 2,240-MW Diablo Canyon facility have long pointed to seismic concerns as a reason that the plant should be closed. Pacific Gas and Electric (PG&E) announced on June 21, 2016, that it would not seek license extensions for the units, which entered commercial operations May 7, 1985, and March 13, 1986, respectively, and would instead focus on increasing renewable generation. As such, Unit 1 will retire when its current license expires on Nov. 2, 2024, with Unit 2 following on Aug. 26, 2025. Courtesy: PG&E

Risks Amplified by a Recent Power Crisis

As POWER has reported, according to a preliminary investigation released on Oct. 6 by CAISO, the CPUC, and the California Energy Commission (CEC), the state’s most recent reliability crisis is rooted in faulty resource planning targets, “which have not kept pace to lead to sufficient resources that can be relied upon to meet demand in the early evening hours.” The entities noted those challenges were “amplified” by high system demand, unanticipated loss of supply, and low net import availability, all stemming from an extreme heat wave, which sent temperatures soaring into the triple digits.

CAISO, notably, cited the extreme weather and elevated load shedding risks when it requested an intervention by the Department of Energy in September. The agency responded with a rare but drastic emergency order under Federal Power Act Section 202(c) that authorized the maximum operation of three natural gas–fired facilities on CAISO’s grid whose full capability had been stranded by federal air quality and other permits. 

California’s goal today is to procure 60% of its electricity from renewable resources by 2030, and source 100% clean energy by 2045. Currently, the state has 13.3 GW of installed large-scale solar and 6.98 GW of wind generation, which are “non-firm renewable generation resource,” the complaint notes.

Only one coal-fired power plant operates in California—the 63-MW Argus cogen plant in San Bernardino County—and during the rolling blackouts on Aug. 14 and Aug. 15, natural gas–fired generation supplied about 56.23% and 58% of the supply during net demand peaks. Both units at Diablo Canyon, which generate about 10% of the state’s electricity, operated at 100% power, reliably supporting the grid during the mid-August blackouts, but the Palo Verde nuclear plant in Arizona, which regularly exports energy to California, also operated its three units at 100% output. 

As CGNP noted in its complaint, DCPP’s key role in helping to ensure California’s reliability, however, is rooted in its ability to operate independently of California’s “aging and vulnerable bulk natural gas transmission and storage system.” Because about 60% of the state’s dispatchable in-state power system is powered by natural gas, the state’s power system is tightly coupled to the reliability of the state’s natural gas transmission and storage system.

However, about “95% of California’s natural gas is imported from out of state via the bulk natural gas transmission system,” and “even partial disruptions to California’s bulk gas transmission system have the potential to disrupt reliable natural gas system operation to a supplied area,” it argues. 

In documents attached to the complaint, CGNP showed that it warned CAISO in 2017 about the risks to reliability, as well as the state’s eventual reliance on fossil fuels if the state lost Diablo Canyon’s 18 TWh high capacity factor, reasonably priced electricity. The DCPP, it has previously noted, can also play a role in storing electricity because it was designed in conjunction with the 1-GW Helms Pumped Storage project, with which it shares a “dedicated power pathway.”  

Complaint Asks for Diablo Canyon–Centered Reliability Analysis

CGNP asked FERC for two relief requests. First, FERC should conduct a reliability analysis “focused on how the continued safe operation of [Diablo Canyon] provides the reliability benefits” described in the complaint. FERC should also take “action to enforce NERC’s reliability standards, as well as review and initiate remediation of the significant reliability concerns raised in this complaint,” it said.

The organization’s request is supported by other nuclear groups, including the American Nuclear Society (ANS). On Monday, the international professional organization of engineers and scientists told POWER that it agrees with measures to reconsider “the shortsighted decision to shutter prematurely California’s largest clean energy resource.”

In comments filed in favor of the complaint on Nov. 12, ANS Executive Director/CEO Craig Piercy and President Mary Lou Dunzik-Gougar pointed to Diablo Canyon’s reliability. “In wake of any blackout or extreme event, Diablo Canyon’s fuel-secured, reliable and safe baseload power will surely be needed to restore power in California,” they said. “We prefer the Diablo we know over the costs, risks and uncertainty of a power grid without it.” 

Pro-nuclear group Generation Atomic also refuted common arguments against keeping the plant open, including that the DCPP cannot withstand earthquakes (it pointed to federal regulatory seismic analyses). The group also noted a major reason PG&E considered closing the units was to comply with California’s 2010–adopted once-through cooling (OTC) policy.

“In 2016, PG&E again explored strategies to come into compliance with OTC regulations, and this time, seeking a justification for closing 20% of California’s low carbon power, 1,500 good paying jobs, 6% of the tax base, manufactured an economic argument against DCPP by insisting that $2 billion dollar cooling towers would be needed instead, dramatically inflating the cost estimates of continued operation past 2025,” it said. 

CGNP also has the backing of the Climate Coalition, which said: “We reject the popular opinions and complaints that nuclear plants are somehow not safe or represent unacceptable risk. The Nuclear Regulatory Commission (NRC) is the global gold standard for nuclear safety, including seismic assessments. Over half a century of real-world evidence shows how nuclear is the safest of all reliable electricity sources.” 

But the environmental group went even further, asking Diablo Canyon’s owners to “immediately” make an application to the NRC for a 20-year operating license. It also urged for a “halt” to the dismantlement of the now-shuttered San Onofre Power Plant and an exploration of “the possibilities for refurbishment and re-licensing.” 

Other support came from as far away as New York, which, despite ambitious climate goals, is grappling with the recent shutdown of Indian Point Unit 2, and the April 2021 shutdown scheduled for Unit 3. Explaining the rationale behind its intervention, nonprofit New York Energy and Climate Advocates, whose mission is to analyze the energy and climate policies being developed by New York State, said: “[New York] has set, through legislation, a goal of achieving an electricity system in 2040 that emits no greenhouse gases. It is attempting to achieve this, as in California, with renewable sources alone, principally solar and wind, including especially offshore wind.”

But it added: “Our analyses show that such a system would be an unreliable source of electric power. Therefore, the material being developed, and any decisions reached therein, are of great material interest to us and others in New York State.” 

The Edison Electric Institute (EEI), a group that represents all the nation’s investor-owned utilities (IOU), also intervened, noting its members “may be affected by the outcome” of how the proceeding may impact NERC’s mandatory reliability standards. Though it didn’t take a position, competitive generator Calpine Corp. also intervened, citing a “direct and substantial interest in the outcome of this proceeding.”

Opposition Says Complaint is ‘Unsupported and Legally insufficient

For its part, Diablo Canyon’s IOU owner PG&E filed a joint answer opposing complaint with environmental groups Friends of the Earth and the Natural Resources Defense Council. The entities argued that FERC was “not the appropriate forum to address the issues” because responsibility for resource planning rests with state authorities.

PG&E also noted: “In its 2018 decision authorizing the retirement of Diablo Canyon, the CPUC first addressed the impacts of the plant’s retirement on grid reliability and found no adverse impacts. And, in the CPUC’s ongoing state-wide Integrated Resource Planning (IRP) proceeding, the CPUC, CAISO, and others in California are actively considering whether additional resources are needed to ensure system reliability after the closure of Diablo Canyon.”

CAISO, in its answer, also questioned the legal basis for the complaint. The grid operator places “great importance” on complying with applicable NERC/WECC planning standards,” and it is in “full compliance” with NERC’s Transmission Planning (TPL) standards, it said. CAISO also said it has modeled Diablo Canyon’s absence since 2013, including in its most recent TPL (2019-2020), and it has taken action based on planning assessments to address high voltage issues it identified when DCPP retires. This year, for example, CAISO completed competitive solicitations and awarded two 500-kV dynamic voltage projects to LS Power. CAISO also dismissed as “impermissible” a Nov. 9 request that CGNP made to CAISO asking for data related to “total ratepayer burden” associated with the dispatch and curtailment of California solar and wind generation. 

Like CAISO, NERC and WECC urged the complaint’s dismissal by FERC in their answer, mainly because they said NERC and WECC aren’t covered by the “statutory authority of Section 206 of the Federal Power Act (FPA).” NERC, which FERC certified as the electric reliability organization (ERO), and WECC, which supports NERC as a regional entity, “monitor, assess, and enforce compliance with Reliability Standards,” and FERC earlier this year found that NERC continues to satisfy the statutory and regulatory criteria for certification as ERO, the entities argued. 

CPUC, represented by the the state of California, also urged FERC to dismiss the complaint because it is “unsupported and legally insufficient.” Though the state did not address reliability shortcomings in its answer, it echoed NERC and the WECC in its emphasis that federal reliability standards do not apply to the CPUC, and it also argued that CGNP did “not identify a single federal reliability standard that the CPUC has violated.” But it went further, claiming that CGNP was “collaterally attacking the outcome of a state regulatory proceeding regarding a matter within state authority.” 

“As CGNP has acknowledged, the CPUC conducted a formal proceeding, including testimony, evidentiary hearings and briefing, to address PG&E’s application to retire its Diablo Canyon power plant. That proceeding resulted in a decision approving the retirement of Diablo Canyon. The majority of the arguments raised by CGNP here were raised by CGNP at the CPUC and were considered and rejected by the CPUC,” it said. 

California’s State Water Board and the State Lands Commission, in a lengthy explanation, also reiterated this argument. The water board said it considered potential effects on the grid when it decided to adopt its OTC policy in 2010, and it conducted special studies for Diablo Canyon and San Onofre to consider potential  compliance alternatives, it said.

“Following conclusion of the special study on OTC Policy compliance at the two nuclear plants, PG&E independently proposed retiring the DCPP at the end of its current NRC license periods. The State Water Board had no role in discussions of the proposed retirement, nor was the State Water Board involved in the proceeding before the CPUC,” it said. 

Notably, however, owing to growing grid reliability issues first identified in March 2019, the state water board in January this year convened a multi-agency statewide advisory committee to address the OTC policy’s reliability impact. On Sept. 1, four members of the state water board voted unanimously to adopt the advisory committee’s recommendations to amend the policy in order to reflect new information and forecasting on grid reliability needs in California and  grant compliance reprieves to nine aging natural gas units.

During that meeting, the board also approved amending the OTC compliance dates for Diablo Canyon’s Unit 1 by two months to November 2024 and Unit 2 by eight months to August 2025 to match their NRC operating licenses. According to the water board’s answer to the complaint, however, the “DCPP revision was clearly stated as unrelated to those [Statewide Advisory Committee on Cooling Water Intake Structures] recommendations and reflected no position on how the retirement would or would not affect the energy grid.”

Sonal Patel is a POWER senior associate editor (@sonalcpatel@POWERmagazine).

Updated Nov. 21: Adds details from CAISO’s answer.

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