By John Stang
California utility Pacific Gas & Electric said this week it does not expect its impending bankruptcy filing to impact the future closure and decommissioning of the Diablo Canyon nuclear power plant.
The company announced its intent to file for federal bankruptcy protection on Jan. 29, as it tries to figure out how to pay potential damages for massive wildfires in the state that have been linked to PG&E’s power operations.
The boards of directors for Pacific Gas & Electric Corp. and subsidiary utility PG&E Co. have determined “that commencing reorganization cases under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”) is appropriate, necessary and in the best interests of all stakeholders, including wildfire claimants, PG&E’s other creditors and shareholders, and is ultimately the only viable option to restore PG&E’s financial stability to fund ongoing operations and provide safe service to customers,” according to a filing with the U.S. Securities and Exchange Commission.
The company estimated its total liability for wildfires in 2017 and 2018 at $30 billion or more. That would not cover possible punitive damages, other financial penalties, or damages from future claims, according to its filing.
“Throughout this process we will continue to operate our electric and natural gas business as usual. There are no specific plans to sell or close Diablo Canyon early,” PG&E spokesman Blair Jones said by email.
PG&E, which is among the largest utilities globally, is moving forward with plans announced in 2016 to retire the two reactors at the San Luis Obispo County facility when their Nuclear Regulatory Commission licenses expire in 2024 and 2025. That will close the state’s last operational nuclaer power plant.
The utility intends to begin decommissioning immediately after the second reactor shuts down, replacing the site with other forms of greenhouse-gas free energy.
“The bankruptcy process is going to result in questions being asked in a bankruptcy court that no one could have foreseen prior to the bankruptcy proceeding. For example, is the Diablo Canyon power plant a marketable asset?” John Geesman, attorney for the San Luis Obispo-based Alliance for Nuclear Responsibility, told the San Luis Obispo Tribune.
Jones wrote that PG&E’s creditors cannot legally touch its decommissioning trust fund for Diablo Canyon during bankruptcy proceedings.
Pacific Gas & Electric currently has $3.2 billion in its decommissioning trust fund for the two reactors, but says it will need $4.8 billion to complete the work. The $4.8 billion would cover $2.9 billion for termination of the NRC licenses for the two reactors, encompassing the majority of site decontamination and dismantlement; nearly $1.2 billion for spent fuel management; and $701 million for site restoration.
The company in December filed its triennial decommissioning cost estimate for the site with the California Public Utilities Commission (CPUC), which will decide whether to approve the ratepayer increase needed to provide the remaining $1.6 billion for decommissioning. That would translate to a $1.98 increase in an average monthly residential bill. The CPUC decision is expected in 12 to 18 months.
In its filing with the state, PG&E attributed the higher decommissioning cost projection to increased expenses for waste, transportation, and material management.
The commission said stakeholder parties in the rate decision proceedings are scheduled to meet on Feb. 6 in San Francisco to discuss how to prepare a mutually acceptable procedural schedule, identify the issues recommended by the parties to be included as part of the scope of the proceeding, and to identify any other pertinent matters.
In October and November 2018, out-of-control wild fires broke out near Paradise, Calif., and in Northern California – with PG&E’s power lines being suspected as possible causes.
The Paradise fire — called the Camp Fire — killed 86 people and destroyed 13,972 homes, 528 commercial structures, and 4,293 other buildings while burning 153,336 acres, according to the PG&E filing with the SCE. Several Northern California fires killed 44 people, destroyed 8,900 buildings, and burned 245,000 acres.
“The utility’s facilities, such as its electric distribution and transmission lines, are determined to be the substantial cause of one or more fires, and the doctrine of inverse condemnation applies, the Utility could be liable for property damage, business interruption, interest and attorneys’ fees without having been found negligent,” the company told the SEC.
The utility faces a potential 5,600 plaintiffs due to the fires, the filing said.
