California set to loan $400 million to controversial nuclear power plant

By Benjamin Purper

California will loan $400 million to utility Pacific Gas & Electric (PG&E) to keep the state’s last nuclear power plant running, according to the final budget deal between the Legislature and Gov. Gavin Newsom.

The agreement authorizes a $400 million loan from the state’s general fund to help PG&E continue operating the Diablo Canyon Nuclear Power Plant near San Luis Obispo, California, according to the California Department of Water Resources.

Diablo Canyon, which accounts for about 9% of the state’s total electricity supply, became California’s last operating nuclear power plant after the closure of the San Onofre Nuclear Generating Station in 2013. The plant has been controversial from the beginning, as some environmentalist and anti-nuclear organizations fear the plant could suffer a catastrophic failure and endanger nearby communities.

PG&E maintains that the plant is safe, citing the lack of any major accidents in its nearly 40-year history.

The loan was a point of contention in this year’s budget process. Gov. Newsom originally included it in his budget proposal to the legislature, which then cut it from their own counterproposal in June.

Legislators including Budget Committee Chair Scott Weiner raised concerns that the agreements with PG&E “do not provide the state with sufficient access to information to ensure fiscal accountability.” Weiner and other lawmakers worried that the state could never receive reimbursement for the loan, leaving taxpayers on the hook for hundreds of millions of dollars.

The new loan adds to the $1.4 billion the state authorized to PG&E in 2022 to keep the plant running until 2030. The utility had planned to fully decommission the plant by next year, but the state intervened, citing projected energy shortages.

PG&E did not respond to request for comment on the new loan.