A Pacific Gas and Electric Co. attorney told California regulators they would be putting safety at risk if they slash incentives the utility wants to pay to keep skilled workers at the Diablo Canyon nuclear plant until it closes in 2025.
Without enough skilled workers willing to see the plant through to closure, the U.S. Nuclear Regulatory Commission could force the plant to shut down before the PG&E Corp. subsidiary is prepared to replace its output, and this would drive up rates as the utility scrambles to supply enough electricity to its customers from the market, PG&E Senior Director and Counselor William Manheim told the California Public Utilities Commission at a Nov. 28 hearing.
PUC Administrative Law Judge Peter Allen has proposed to cut more than half of about $350 million PG&E wants for Diablo Canyon employee retention bonuses, Manheim said. The proposed employee retention budget was reached in a multiparty settlement that was presented to the PUC in June 2016, when PG&E offered to close the plant in 2025.
The settlement called for the commission to allow PG&E to collect $1.76 billion in costs associated with the plant retirement, including employee bonuses. The settlement also included $1.3 billion for energy efficiency procurement to partially compensate for the loss of output from the plant as well as $85 million for a "community impacts mitigation program" for communities in San Luis Obispo County, Calif., where the plant is the biggest employer. Allen proposed that the PUC completely reject both those proposals.
While the procurement of replacement resources is the biggest monetary part of the settlement, Manheim directed most of his opening remarks on Allen's proposed decision at the employee incentive cuts during final oral arguments on PG&E's application for approval to retire Diablo Canyon. (PUC Docket A.16-08-006)
"Your own Diablo Canyon independent safety committee raised doubts that plant employees will remain in place," Manheim told the PUC, noting many of the plant's employees could retire immediately without financial penalty unless incentives are provided. "Failure to maintain adequate staffing could lead to temporary or permanent early shutting of Diablo if it falls out of regulatory compliance."
Manheim said PG&E negotiated the retention package with three employee unions, and 86% of the International Brotherhood of Electrical Workers members at the plant said they would stay if the bonus program was offered. However, he noted that if less than half the employees get this benefit, "what do you think that would do to the focus and morale of the excluded employees? ... It's not worth risking plant safety to save 16 cents per month on the average customer's bill."
In contrast, state Office of Ratepayer Advocates Program Manager Mark Pocta supported Allen's proposed decision, saying severance pay of up to $168 million is already available to Diablo Canyon employees through a ratepayer-supported nuclear decommissioning trust fund. He said there is no evidence that a "mass exodus" of employees will result without all the incentives PG&E wants ratepayers to support.
Pocta also spoke against the energy efficiency procurement proposal. "Ratepayers should not be saddled with an unnecessary $1.3 billion revenue increase," he said.
While PG&E still has time to submit a proposal to relicense the plant to extend operations well beyond 2025, PG&E spokesman Blair Jones declined to say whether closure of the plant by 2025 is contingent on approval of the settlement.
"We stand behind the joint proposal and its various elements," he said. "If it is not approved, then per our agreement, we will confer with the joint parties to determine the path forward."
PG&E, labor, community and leading environmental groups believe that the joint proposal is in the best interests of PG&E employees, customers and the local community because it will ensure an orderly transition to other clean energy resources and will prevent adverse economic and environmental impacts of a premature shutdown, Jones said.
PG&E has indicated the plant could become a stranded asset due to community choice aggregation, the state's 50%-by-2030 renewables requirement and other pressures. When plant retirement plans were announced, PG&E Corp. Chairman Tony Earley said the company believed the plant would eventually operate at only half its capacity, which would make it much less economical.
