Following last week's announcement by Pacific Gas and Electric Co. that it would phase out its Diablo Canyon nuclear facility by 2025, what are the next steps for California and its electric power sector? During today's OnPoint, Ralph Cavanagh, co-director of the Natural Resources Defense Council's energy program and a negotiator for the Diablo Canyon agreement, explains how PG&E's move could affect other regions of the country with existing nuclear facilities.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Ralph Cavanagh, co-director of the Natural Resources Defense Council's energy program. Ralph, it's nice to have you here.
Ralph Cavanagh: Good to be here.
Monica Trauzzi: Ralph, the closing of Pacific Gas and Electric Co.'s Diablo County nuclear facility marked a significant moment for existing nuclear in the United States. NRDC was one of the negotiating parties in the decision, and you were the lead negotiator.
Describe the significance of this decision in your view, and its broader impacts on energy policy.
Ralph Cavanagh: Sure. The most important thing for me to say at the onset is, it's not a decision. It's a joint proposal. None of the parties involved have the power to impose it. We have to persuade a lot of people in public proceedings that it makes sense to do it this way.
But I do think it's historic in the sense that first of all, the diversity of the parties involved. You have some of the plant's strongest historic opponents. You have the plant's principle unions, the owner of the plant, national environmental groups able to agree on a reasonable way to retire a nuclear plant at the end of its useful life and replace it with zero-carbon resources.
In addition, I think what this shows is something important about the way the grid is evolving away from giant power plants that run 24/7, and towards smaller scale, more flexible systems with more diverse portfolios, and I think that's good news.
Monica Trauzzi: So PG&E will cease operations at Diablo Canyon once its lease expires, as you said in 2025. Until then, California will continue to receive power from the facility. Is the safety of the facility adequate then in order to support the next nine years?
Ralph Cavanagh: Well none of the parties involved have waived their rights to raise safety issues. So no one is pre-judging that question, but my expectation is that the plant will continue to operate and that it will run to the end of its lifetime, if no significant safety issues arise. That's both an NRC license and a state license.
At that point we'll have a full portfolio of zero-carbon resources ready to replace it.
Monica Trauzzi: So this will be fully replaced by renewables and efficiency. What about natural gas?
Ralph Cavanagh: Well no, not natural gas. It will be the portfolio as zero-carbon resources. It will include energy efficiency, demand response, storage, sure renewables, and maybe some things we haven't thought of yet.
Monica Trauzzi: Largely an economic decision for the utility. Do you think that this is a broader signal that the economics of nuclear are no longer working in today's marketplace?
Ralph Cavanagh: It's not just nuclear. I think this says a lot about the future of giant baseload power plants that are designed to run 24/7, which all of us learned about, or as we learned electrical systems we all thought these were the mainstays, the must-haves. I think thinking on that is evolving.
Jon Wellinghoff, when he was chair of FERC, indicated his view some thought way, way sort of heretically, that the baseload era was over. And I think what this signals is that Wellinghoff was right.
That PG&E reached this decision not because it was under pressure. Not because anyone was forcing it or suing it, but because it looked at the long-term economics of the system. It looked at the needs of the grid, and it concluded that the plant should retire rather than have its life extended. And that better things would be available to replace it in terms of cost and flexibility.
Monica Trauzzi: Well you talk about this large-scale baseload power. Many utilities are investing in natural gas.
Ralph Cavanagh: Yes.
Monica Trauzzi: And looking at it as a long-term solution.
Ralph Cavanagh: Although the ones that are investing in natural gas today typically are more interested in the flexibility attributes of natural gas. I think what grids need these days much more than the old metrics of capacity and baseload is they need flexibility.
They need diversity, and they need emphasis overriding emphasis on cost-effective energy, efficiency and demand response, which is part of the calculus in replacing Diablo Canyon, because electricity growth is nowhere close to where it used to be historically.
Monica Trauzzi: Environmental Progress President Michael Shellenberger, who was behind a campaign to save Diablo Canyon, has called the process corrupt, and he says that ultimately the decision will be rejected by the people of California in the courts. What do you think about his comments following the decision?
Ralph Cavanagh: I disagree for a couple of reasons. First of all, again, this is not a decision. It's a proposal. Now Michael is right, it will be tested before public agencies. It will undergo searching review by him and a whole host of others, and we'll have to make our case together, that this is the right way forward for California. I believe that it is, but it's not going to be my call.
Monica Trauzzi: What does it mean for ratepayers?
Ralph Cavanagh: For PG&E customers and for customers generally, NRDC believes that we'll save at least a billion dollars compared to the alternative of running Diablo Canyon and extending its lifetime. And the problem is that as nuclear plants age, they need very expensive refurbishment.
At the end of its current operating license, if Diablo Canyon weren't retired for example, it would need a whole new cooling system, costing billions of dollars. If you look at the ramifications of all of those refurbishments and you compare the cost to the resources that are coming in to replace Diablo Canyon, again our bottom line is at least a billion dollars of savings.
Monica Trauzzi: So rates could go up, just not as much as they might?
Ralph Cavanagh: Well the system will cost less than it would if Diablo Canyon had its life extended. Other things may cause rates to go either up or down, and I'm not here to predict. What I know for sure is that this decision will save money for California and for PG&E.
Monica Trauzzi: Do you expect that other states will follow a similar model, and which states might we see going on the track that California is attempting to go on?
Ralph Cavanagh: I certainly, I think this is an inspiring model for other states. Everyone is at some point going to have to replace their aging -- increasingly aged nuclear power plants. The problems that Diablo Canyon was facing in terms of the cost of refurbishment and the increasingly strained relationship of giant baseload power plants to their grids, those are universal issues.
I think this is a signal that those problems can be resolved. That people who have historically had deep differences can get together to solve them, and I hope it serves a useful purpose in helping others confront the same issues.
Monica Trauzzi: All right. We'll end it right there. Thank you so much for coming on the show.
Ralph Cavanagh: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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