California Says Federal Funds Key to Keeping Nuke Plant Open

(Bloomberg) -- California asked the Biden administration whether its last nuclear plant could qualify for federal funds as it grapples with potential electricity shortfalls.

In a letter to US Secretary of Energy Jennifer Granholm, California Governor Gavin Newsom’s office said federal money will be a key factor as it evaluates whether it can temporarily extend the life of the Diablo Canyon plant beyond its planned 2025 retirement.

The potential reversal of a years-long plan to shutter the plant underscores the crisis facing California as it moves toward a carbon-free electric system. Just this month, its grid operator said the state faced possible power deficits in the next few summers.

Read: California warns of possible blackouts as power runs low

In the letter Monday to the US Energy Department, Newsom cabinet secretary Ana Matosantos said the state was considering preserving Diablo Canyon due to the planned retirements of other power generators as well as expected clean-power projects that have been delayed.

PG&E Corp., which operates the plant, is willing to consider all options for it, said spokeswoman Suzanne Hosn. “We are open to applying for Department of Energy funding given the potential savings it could represent for our customers as the state considers various options to support reliability in California,” Hosn said. 

The energy department didn’t immediately address a request for comment.

Diablo Canyon, located between San Francisco and Los Angeles, is California’s largest source of around-the-clock carbon-free electricity. Shutting it down would further strain electricity supplies.

To extend the plant’s operations would require “significant transition costs over the next four years,” Matosantos said. Federal funds could help pay for the expenses that would otherwise be considered operating losses by PG&E, according to the letter.

But for Diablo Canyon to qualify for a rescue program intended to prop up financially strapped reactors, the Energy Department may need to amend requirements, Matosantos said.

(Updates with PG&E comment in the fifth paragraph)

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