Plans unveiled Tuesday to eventually close California's last nuclear generating plant by 2025 appear to shut out the prospect for any new natural gas-fired generation being part of the electric generation replacements.

Pacific Gas and Electric Co. (PG&E) said it has reached an agreement with labor and environmental groups to phase out its 2,200 MW Diablo Canyon nuclear generation plant along the state's central coast at Avila Beach near San Luis Obispo and replace it with a combination of energy efficiency programs, non-greenhouse gas (GHG)-emitting power sources and additional energy storage.

PG&E said the agreement with Friends of the Earth and several other environmental groups, along with International Brotherhood of Electrical Workers (IBEW) Local 1245, reflects "California's changing energy landscape." It plans to go beyond current state mandates by having 55% of its power come from efficiency programs, renewables and additional storage by 2030.

Natural gas was not mentioned in the 20-page agreement unveiled Tuesday. Friends of the Earth called it an "historic agreement" that provides "a clear blueprint for fighting climate change by replacing nuclear and fossil fuel energy."

Along with the environmental group and IBEW, parties in the agreement include the Coalition of California Utility Employees, Natural Resources Defense Council, Environment California, and the Alliance for Nuclear Responsibility.

Noting that nuclear and fossil fuels are not part of the state's long-term future, PG&E CEO Tony Earley said that as the utilities and state make the transition in the coming years and decades, Diablo Canyon's baseload power supplies no longer will be needed.

"As a result, we will not seek to relicense the facility beyond 2025 pending approval of the joint energy proposal," Earley said. "Importantly, the proposal recognizes the value of GHG-free nuclear power as an important bridge strategy to help ensure that power remains affordable and reliable and that we do not increase the use of fossil fuels while supporting California's vision of the future."

Under its current Nuclear Regulatory Commission licenses, Diablo Canyon Unit 1's operating license expires Nov. 2, 2024, and Unit 2's on Aug. 26, 2025. PG&E will drop its pending relicensing application when the California Public Utilities Commission (CPUC) approves the joint agreement.

"PG&E does not believe customer rates will increase as a result of the joint proposal because it believes it is likely that implementing the proposal will have a lower overall cost than relicensing and operating Diablo Canyon through 2044," the utility said.

The agreement includes contingencies for both PG&E and the local community in and around San Luis Obispo:

  • The utility will pay San Luis Obispo County $50 million to offset declining property taxes through 2025;
  • Approval by the State Lands Commission of a lease extension for PG&E that is needed to continue operating Diablo Canyon beyond 2018;
  • CPUC approval of Diablo's replacement with GHG-free resources;
  • CPUC confirmation that PG&E's Diablo Canyon investment will be recovered by the time of its closure in 2025; and
  • CPUC approval of cost recovery by PG&E for "appropriate" employee and community transition benefits.

The joint agreement calls for PG&E to pursue GHG-free replacement sources of power in three tranches: 2,000 GWh/year of energy efficiency, 2,000 GWh/year of renewables, and a third effort covering 2031-2045 during which the combination utility commits to providing 55% of its power supplies from renewables, exceeding the state goal of 50% renewables by 2030.

A driver for the agreement comes from a new state law (SB 350) requiring the CPUC to "identify a diverse and balanced portfolio of resources" needed to provide reliable power supplies for the state while integrating more renewables onto the grid "in a cost-effective manner." SB 350 also authorized the CPUC's creation of an integrated resources planning process (IRP).

Under the IRP, a GHG emissions reduction target was set at 40% of 1990 statewide levels by 2030, the same year renewables are mandated to equal at least half of the power supplies. The state law also recognized that PG&E and the other major utilities in the state face "the challenge of managing over-generation and intermittency conditions under a resource portfolio increasingly influenced by solar and wind production," along with increased distributed generation with the advent of rooftop solar installations and community choice power aggregation programs.

"California's energy landscape is changing dramatically with energy efficiency, renewables and storage being central to the state's energy policy," Earley said. "As we make the transition, Diablo Canyon's full output will no longer be required."

The latest twist writes a beginning of the end of the nuclear plant at Diablo Canyon, whose development in the late 1970s and early 1980s inspired an award-winning motion picture, "The China Syndrome," and an entrenched collection of anti-nuclear citizens' action groups in San Luis Obispo County. Units 1 and 2 began operations in May 1985 and March 1986, respectively.

Diablo Canyon has provided about 20% of PG&E power supplies and up to 9% of the state's generation resources.