Feds offer $1.1 billion to keep Diablo Canyon nuke plant online

PIX Now -- Monday morning headlines from the KPIX newsroom

SACRAMENTO -- The Biden administration on Monday announced preliminary approval to spend up to $1.1 billion to help keep Diablo Canyon -- the state's last operating nuclear power plant -- operating.

Gov. Gavin Newsom has been advocating the continued operation of the plant as climate change sends a wave of challenges to California's power grid.

"Amid intensifying climate impacts in the West and across the country, California is focused on meeting our bold climate and clean energy goals while tackling the challenges of extreme weather that puts lives at risk and strains our grid," Newsom said in a release.

 "This investment creates a path forward for a limited-term extension of the Diablo Canyon Power Plant to support reliability statewide and provide an onramp for more clean energy projects to come online

The Energy Department said final terms will have to be negotiated and finalized.

 The plant, which had been scheduled to close by 2025, was chosen in the first round of funding for the administration's new civil nuclear credit program, intended to bail out financially distressed owners or operators of nuclear power reactors.

The program is part of Biden's effort to cut planet-warming greenhouse gas emissions in half by 2030, compared with 2005 levels.

"This is a critical step toward ensuring that our domestic nuclear fleet will continue providing reliable and affordable power to Americans as the nation's largest source of clean electricity," Energy Secretary Jennifer Granholm said in a statement.

Approval of the funding came as the Energy Department turned down a request by the Palisades nuclear plant in in Michigan for funding to restart operations. The plant along Lake Michigan was shut down last spring after generating electricity for more than 50 years.

Granholm served two terms as Michigan governor before becoming Energy secretary. A spokeswoman said Monday that Granholm's tenure as governor played no role in the decision on the Palisades plant.

The Biden administration launched the $6 billion effort in April to rescue nuclear power plants at risk of closing, citing the need to continue nuclear energy as a carbon-free source of power that helps to combat climate change. Nuclear power provides about 20% of electricity in the U.S., or about half the nation's carbon-free energy. The bailout program is the largest federal investment in saving financially distressed nuclear reactors.

Most U.S. nuclear plants were built between 1970 and 1990, and costs to operate the aging fleet are increasing.

PG&E, which operates Diablo Canyon, said the federal funds would be used to pay back a loan from the state  to support extending operations at the plant and lower costs for customers. PG&E spokesperson Suzanne Hosn said there are still additional federal and state approvals required to renew the plant's license and to operate past 2025.

PG&E is taking actions to seek re-licensing while also continuing to plan for the eventual decommissioning of the plant, Hosn said. 

The seaside plant located midway between Los Angeles and San Francisco produces 9% of the state's electricity. 

The Energy Department intends to accept annual applications for the civil nuclear credit program through fiscal 2031, or until the $6 billion runs out. Nuclear plant owners or operators can bid on credits for financial assistance to keep operating. To qualify, plant owners or operators have to show the reactors are projected to retire for economic reasons and emissions would increase.

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