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California, by Planning Early for Nuclear Retirement, Positioned to More Safely End its Nuclear Era

Carl Zichella

Posted June 18, 2013

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With the announcement that the two remaining San Onofre nuclear plants in southern California are being retired permanently, you may wonder what will happen to the remains, some of which retain significant levels of radioactivity, and how the costs will be covered.

My colleague Jordan Weaver blogs in detail on the mess that a failure to plan for decommissioning --and its costs -- is creating around the country. California, however, has avoided the uncertainty on how to pay for decommissioning that is plaguing others that bet on atomic energy at a time when nuclear proponents still claimed its operating costs would be so low, it would be “too cheap to meter.”  

Way back in 1983, when “nuclear dinosaurs” roamed the California Public Utilities Commission, an environmental colleague and I initiated an effort to require that utility customers’ contributions to decommissioning nuclear plants be invested in such a way that they would be available when the operational lives of these facilities were over.  

We were residents of Humboldt County at the time, and the local nuclear plant had been shuttered seven years earlier due to its proximity to earthquake faults. What would happen when it was dismantled, we wondered?  How would the utility (PG&E in this case) pay for it?  What about larger nuclear plants? We, with other locals in a group known as the “Redwood Alliance,” decided to find out. We organized the first public conferences ever held on nuclear decommissioning.

The first event at Humboldt State University was keynoted by Amory Lovins, then a rising star in the energy world, who gained notoriety for his essay in Foreign Affairs magazine entitled: “Energy Strategy, the Road Not Taken.” The second was keynoted by Ralph Nader, whose organization the Critical Mass Energy Project had begun to wonder about the nuclear end-of-life issues, too. We invited experts from the nuclear industry, government scientists, economists and contractors from Battelle Pacific National Laboratory, and private sector scientists to help us figure it out.  As we learned more, a plan began to take shape and we decided to plunge into the deep waters of the California Public Utilities Commission to propose a policy that would protect California’s people and resources when it came time to retire her nukes, big and small.

The idea was to ensure that funds for decommissioning would be protected from loss should a nuclear accident (or other factor) force the plant owner into bankruptcy. At the time, the two Diablo Canyon plants in central California represented half of all PG&E’s assets, and errors in the construction process had raised serious issues about the affordability of plant completion and operation. Having the money run out prior to completion could create a public safety challenge, we reasoned.

The proposal I made (with my friend and colleague J.A. Savage, now a prominent energy journalist and editor) was to set up an independently administered fund, external to the utilities’ assets. Contributions from ratepayers would be collected and when combined with earnings and interest over the plant’s lifetime, would pay for decommissioning when the time came. It was important that the funds be segregated from utility assets because if anything happened to the solvency of a utility (say in the event of a nuclear accident affecting a major portion of a utility’s capital investment), the fund could be protected from creditors. At the time many scoffed at the idea that a utility could ever go bankrupt. But in fact, California’s policy protected Diablo Canyon’s decommissioning fund during PG&E’s bankruptcy in April, 2001. Then- (and now) Governor Jerry Brown supported the proposal through his appointees at the California Energy Commission, and assigned Commission staff to assist us. Our proposal was adopted by the Public Utilities Commission and remains in effect. California is the only state with such a policy. The fund now contains more than $6 billion. Time will tell if it is enough.

California is not the only western state that has had to cope in recent years with the decommissioning of a large-scale nuclear reactor. Oregon’s 1130 megawatt- Trojan Nuclear Plant was retired in 1993 after 17 years of service under circumstances quite analogous to those faced by the San Onofre operators (the prospect of costly repairs persuaded the owners to cut their losses). Decommissioning began three years later and took almost nine years. The plant’s major radioactive parts were shipped to a low-level waste repository near Richland, Washington. The spent fuel will remain onsite indefinitely in protective concrete casks. The 2006 disassembly of Trojan’s giant cooling tower became a YouTube sensation.

The problem will only grow. Half of all U.S. nuclear plants are over 30 years old (and designed to last 40). The rest are all older than 20. While many have applied for (and 60 have received) 20-year license extensions, many may never take advantage as nuclear technology becomes increasingly uncompetitive with alternatives, including lower cost, less risky, renewable energy.  

You may also be wondering how California will deal with the loss of 2200 megawatts that San Onofre once supplied. My colleague Devra Wang recently blogged on strategies for replacing this energy and related grid services principally with a mix of clean renewable power, demand response, and energy efficiency.   California is crafting a clean energy solution to replace the San Onofre reactors.  Other states facing similar problems should pay attention to this strategy.

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