The Devil's in the Diablo Details

When the decision to close California’s last nuclear power plant at Diablo Canyon was announced in 2016, anyone with a lick of sense—or basic energy literacy—knew this decision would have to be reversed. Diablo Canyon produces about 9 percent of California’s total electricity, and moreover can produce electricity 24/7 virtually year-round, unlike intermittent wind and solar power that California has been installing in a futile rush to be greener-than-thou. Removing Diablo’s reliable baseload power risked destabilizing California’s grid, if not increasing the risk of electricity shortages and blackouts.

Governor Gavin Newsom finally bowed to reality and persuaded California’s own regulators and the federal Nuclear Regulatory Commission (NRC) to extend the life of Diablo beyond the planned shutdown when its current license expires in 2025. But there is a chance this sensible decision might not stick. The technical rules of the NRC and other environmental litigation may yet prolong the farce.

Like the European nations that have recently returned to coal-fired power as reality has intruded on their green dreams, the Diablo reversal is a similar exercise in revealing the perversity of energy policy today. When the 2025 closure of Diablo Canyon was announced, Pacific Gas and Electric (PGE), the owner of the plant, simply lied to the public that it could replace Diablo Canyon’s output with more wind and solar power along with “conservation,” and that electricity rates would not rise. (Environmental groups who had pressured for the closure of Diablo Canyon claimed that it would reduce costs to consumers, which should have been another obvious sign that everything about this decision was a lie.) Yet within three months PG&E was asking California’s Public Utilities Commission for a rate increase to cope with the cost of closing the plant and replacing its output with new sources.

But PG&E actually had no choice. While the NRC was prepared to review and extend Diablo Canyon’s operating license (though this is a ten-year process which PG&E had started in 2009), the state of California indicated that it would not renew the necessary state permits for Diablo Canyon to remain open. Moreover, California’s mandates on utilities to increase their carbon-free electricity sources excludes both nuclear power and new hydropower, which meant PG&E couldn’t meet its legal mandates if it kept Diablo Canyon open.

Despite the green boilerplate that California could replace Diablo with more solar and wind power, in practice it means relying more on natural gas backup plants and power purchases from other states. Even the Washington Post was able to figure that out: “losing down Diablo Canyon would be the definition of climate incoherence.” Once Gov. Newsom and the small handful of sane climate activists realized this too, the sequence to keep Diablo open began to take shape. But there are three problems to overcome.

First, deferred capital expenditures and related costs for keeping Diablo Canyon open for an uncertain period are substantial, so the California legislature authorized a $1.4 billion loan to PG&E, with additional funding coming from Biden’s so-called “Inflation Reduction Act.”

Second, the NRC made an unprecedented decision to allow Diablo to remain in operation while PG&E started a new re-licensing application. Previously the NRC had ruled PG&E could not restart its aborted 2009 re-licensing application but had to start from scratch, which meant the plant would have had to shut down in 2025 because as mentioned the NRC review takes about a decade.

This rare example of regulatory flexibility is certainly welcome, but will it survive legal challenge? This raises the third difficulty. The usual gang of environmental fundamentalists who oppose nuclear power—Friends of the Earth, Environmental Working Group, and other groups with “peace” in their organizational names for some reason—have challenged the NRC’s forbearance. Right now this challenge is being pursued through the NRC’s administrative process, so a lawsuit is not yet ripe for filing, but once PG&E submits a formal license renewal application later this year, it is a certainty that environmental groups will rush to the courthouse with a lawsuit challenging the NRC’s legal authority to depart from its usual process, along with the go-to claim of nearly all environmental lawsuits: the insufficiency of environmental impact analysis.

Suing nuclear power plants is nothing new, and protracted litigation over insufficient environmental review is high among the reasons why the time and expense of building nuclear power plants grew prohibitively high back in the 1970s. It’s been a remarkably effective tactic for environmentalists on major projects of all kinds for 50 years, as judges have tended to give in to every environmental demand for another review, no matter how frivolous or extreme. (A 2003 lawsuit sought to shut down Diablo Canyon until the NRC conducted an environmental review of a potential terrorist strike, which the federal courts made the NRC conduct, though the plant remained online.)

If history is any guide, environmentalists are likely to succeed at some point with a sympathetic judge, setting up the lengthy appeals phase of things. The irony is that this question comes at an interesting time, when the federal judiciary is questioning decades-old deference to administrative agency decisions. While it is plausible that the NRC will prevail, the legal uncertainty is higher than ever. One thing is certain: anti-nuke environmentalists are not going to go quietly on the Diablo Canyon revival, and California electricity ratepayers will keep seeing their rates go up.