State's reckless approach to energy policy

There’s a desperate haphazardness about California’s energy policy that is becoming increasingly costly to state residents and damaging to the state’s business climate.

The latest episode involves the Diablo Canyon nuclear power plant, a 37-year-old facility owned by Pacific Gas and Electric, which provides almost 9% of the electricity generated in California but is scheduled to shut down by 2025.

The state has faced the threat of summer power blackouts for the past several years. The reliability of the grid depends on having adequate resources, but political opposition to nuclear energy and fossil fuels has prevented a fully honest and rational discussion about the state’s energy needs and the cost of providing for them. Instead, politicians give us rosy speeches about transitioning to renewable energy while grid operators scramble to import electricity from other states.

In the waning days of June, the state legislature rushed to pass a slew of budget trailer bills that were negotiated in private by the governor and legislative leaders, and one of them, Assembly Bill 205, was an energy bill. The nearly 19,000-word legislation was approved as an amendment to a one-sentence budget placeholder bill introduced last year. As such, it did not have to go through any hearings in policy committees.

The trailer bill included $75 million for a reserve fund to keep aging power plants operating past the date they are scheduled to close. The money may be used to pay some of the costs of keeping the Diablo plant open, although no one knows exactly what that will cost, and PG&E hasn’t yet applied for a new license to replace the licenses that are expiring in the next two to three years.

The reserve fund also may pay some of the costs of keeping four natural-gas powered plants operating, even though they are scheduled to begin shutting down next year. State officials had already delayed the closure of the plants by three years in response to the threat of power shortages.

Yet California officials still refuse to admit the obvious, that the state needs reliable power plants not dependent on the weather in order to provide adequate electricity resources. Gov. Gavin Newsom released a statement insisting that the trailer bill “does not facilitate the renewal or extension of any permit for expiring power plants.”

That is sophistry. The bill provides the money. The renewal and extension of the permits is a separate process.

Meanwhile, a PG&E spokeswoman said Newsom requested “that we take steps to preserve Diablo as an option to promote grid reliability.”

One of those steps will be an application for funding from the U.S. Department of Energy. Thanks to a lastminute change, PG&E will be allowed to tap the $6 billion Civil Nuclear Credit Program. Energy Secretary Jennifer Granholm made the decision following a June 27 letter from a group of 37 scientists, academics and business people urging her to revise the eligibility rules to include the Diablo Canyon facility. The letter said California would have to increase renewable energy production “by an enormous 20 percent in just two years to replace the clean energy being produced at Diablo Canyon.”

Managing the state’s energy policy in this last-minute manner raises costs and risks reliability, which hurts consumers, businesses and taxpayers. The state needs more power plants. Let’s admit it.