CHAPTER 6.3. Diablo Canyon Powerplant [25548 - 25548.8]
( Chapter 6.3 added by Stats. 2022, Ch. 239, Sec. 5. )
The Legislature finds and declares all of the following:
(a) The Diablo Canyon powerplant currently supplies approximately 17 percent of California’s zero-carbon electricity supply and 8.6 percent of California’s total electricity supply. The Diablo Canyon powerplant’s two units are scheduled to be retired in 2024 and 2025.
(b) Preserving the option of continued operations of the Diablo Canyon powerplant for an additional five years beyond 2025 may be necessary to improve statewide energy system reliability and to reduce the emissions of greenhouse gases while additional renewable energy and zero-carbon resources come online, until those new renewable energy and zero-carbon resources are adequate
to meet demand. Accordingly, it is the policy of the Legislature that seeking to extend the Diablo Canyon powerplant’s operations for a renewed license term is prudent, cost effective, and in the best interests of all California electricity customers. The Legislature anticipates that this stopgap measure will not be needed for more than five years beyond the current expiration dates.
(c) During the time the Diablo Canyon powerplant’s operations are extended, the state will continue to act with urgency to bring clean replacement energy online to support reliability and achieve California’s landmark climate goals. The state is accelerating efforts to bring offshore wind and other clean energy resources online, including action to streamline permitting for clean energy projects.
(d) It is the intent of the Legislature that the extension of the Diablo Canyon powerplant benefit
California’s electric customers, and if those benefits fail to materialize or costs to operate the plant increase significantly as determined by the Public Utilities Commission, the state will plan for an earlier decommissioning date that also safeguards electrical reliability in the state.
(e) The estimated costs and timelines for design and construction of alternatives that would comply with the State Water Resources Control Board’s Resolution Number 2010-0020, Water Quality Control Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling, which were presented to the State Water Resources Control Board in accordance with Section 3.D of the Water Quality Control Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling, conclusively establish that it is not practicable for the Diablo Canyon Power Plant to achieve final compliance with the “Water Quality Control Policy on the Use of Coastal and Estuarine Waters
for Power Plant Cooling” before October 31, 2030. Accordingly, it is the intent of the Legislature that the State Water Resources Control Board, through its authority pursuant to Resolution Number 2010-0020, continue to impose an interim mitigation fee, such as an interim mitigation fee of ten dollars ($10) per million gallons for water, subject to an annual increase, that it deems appropriate in its discretion and that does not exceed all reasonable costs to, or incurred by, the state to address the entrainment impacts resulting from the continued ocean water intakes at the Diablo Canyon powerplant after the current expiration dates set forth in Section 25548.1.
(f) All relevant state agencies and the operator of the Diablo Canyon powerplant must act quickly and in coordination to take all actions necessary and prudent to extend Diablo Canyon powerplant operations.
(g) California Native American tribes maintain unique cultural, political, spiritual and community ties to the lands that now make up California, including the lands upon which the Diablo Canyon powerplant is currently sited. To ensure adequate consideration of tribal interests related to the extended operation and eventual decommissioning of the Diablo Canyon powerplant, all relevant state agencies and the operator of the Diablo Canyon powerplant should consult and work collaboratively with local California Native American tribes, including, but not limited to, designating a tribal liaison, to consider tribal access, use, conservation, and comanagement of the Diablo Canyon powerplant lands and to work cooperatively with California Native American tribes that are interested in acquiring such lands.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
For purposes of this chapter, the following definitions apply:
(a) “Borrower” means the company licensed to operate the Diablo Canyon Units 1 and 2.
(b) “Current expiration dates” means the expiration dates in effect on June 1, 2022, of the United States Nuclear Regulatory Commission operating licenses for Diablo Canyon Unit 1, which is November 2, 2024, and Unit 2, which is August 26, 2025.
(c) “Department” means the Department of Water Resources.
(d) “Diablo Canyon powerplant operations” means all aspects of operating the Diablo Canyon Units 1 and 2 at the Diablo
Canyon powerplant site, including cooling operations and spent fuel management and storage facilities.
(e) “Diablo Canyon powerplant site” means the site containing the Diablo Canyon Units 1 and 2, including both reactor units, spent fuel storage facilities, and appurtenant lands leased to, or controlled by, the operator.
(f) “Extension of the operating period” means license renewal by the United States Nuclear Regulatory Commission and any other licensing, permitting, or approvals by federal or state authorities necessary to allow continued operations of the Diablo Canyon powerplant beyond the current expiration date of each unit, and until a new date that shall be no later than October 31, 2029, for Unit 1 and no later than October 31, 2030, for Unit 2.
(g) “Fund” means the Diablo Canyon Extension Fund established
pursuant to Section 25548.6.
(h) “Loan” means the funds loaned to the borrower by the department for the purpose of facilitating the extension of the operating period.
(i) “Loan agreement” means the agreement and any amendments to the agreement entered into by the department and the borrower pursuant to this chapter.
(j) “Operator” means the company licensed to operate the Diablo Canyon Units 1 and 2.
(k) “State agency” means any agency, department, board, office, commission, or district of the state, including, but not limited to, the State Lands Commission, the California Coastal Commission, the State Water Resources Control Board, the Public Utilities Commission, and the State Office of Historic Preservation, or any local
government.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
For purposes of any application or request by the operator for a permit, lease, license, certification, concurrence, plan, decision, or other approval from a state agency, and of any request by the United States Nuclear Regulatory Commission for consultation or other input, that is necessary to authorize Diablo Canyon powerplant operations after the current expiration dates, all of the following shall apply:
(a) Notwithstanding any other law, the state agency shall take final action on the application or request to extend the operations of the Diablo Canyon powerplant within 180 days of submission of a complete application or request.
(b) Given the unique circumstances of this site and the
time-limited extension of operations, and in view of the precedent of World Business Academy v. State Lands Commission (2018) 24 Cal.App.5th 476, the Diablo Canyon powerplant site, and all structures, buildings, and equipment at the site or necessary to extend operations at the site, shall conclusively be deemed an existing facility or existing facilities under Section 15301 of Title 14 of the California Code of Regulations and not subject to any exception under Section 15300.2 of Title 14 of the California Code of Regulations, in any agency or judicial proceeding.
(c) At least 30 days before issuing any permit, lease, license, certification, concurrence, plan, decision, or other approval, some or all of the members of the State Lands Commission, the California Coastal Commission, the State Water Resources Control Board, and any other agency invited to participate by the Secretary of the Natural Resources Agency, shall participate in a joint
public process facilitated by the Secretary of the Natural Resources Agency to consider public input concerning the environmental impacts and mitigation of extended operations of the Diablo Canyon powerplant. The Natural Resources Agency shall conduct at least one public hearing, and shall receive written comments, upon which to base any findings and recommendations.
(d) The Secretary for Environmental Protection and the Secretary of the Natural Resources Agency shall ensure coordination among, and prioritization of review of relevant applications by, the California Coastal Commission, the State Lands Commission, the State Water Resources Control Board, regional water quality control boards, and the State Air Resources Board.
(e) Except as provided in this section, this section does not alter or limit any proceeding of the commission including, but not limited to, proceedings
planning for the decommissioning of the Diablo Canyon powerplant.
(f) The Secretary of the Natural Resources Agency, in consultation with the state agencies described in subdivisions (c) and (d) and with the Public Utilities Commission shall, by January 31, 2023, provide to the Joint Legislative Budget Committee a detailed description and plan that identifies all the actions that are necessary for the extension of the operations of the Diablo Canyon powerplant to beyond the current expiration date of each unit, and until new dates that shall be no later than December 31, 2029, for Unit 1, and no later than December 31, 2030, for Unit 2.
(g) This section shall become inoperative once the United States Nuclear Regulatory Commission concludes its review of the operator’s next applications for renewal of the licenses for Diablo Canyon Units 1 and 2, and, as of January
1 of the following year, is repealed.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022. Inoperative as prescribed by its own provisions. Repealed on January 1 following the inoperative date.)
(a) It is the intent of the Legislature to make available a one billion four hundred million dollar ($1,400,000,000) loan from the General Fund to the Department of Water Resources for the purpose of being loaned to the borrower for extending operations of the Diablo Canyon powerplant facility, to dates that shall be no later than November 1, 2029, for Unit 1, and no later than November 1, 2030, for Unit 2. The Legislature intends to transfer an initial six hundred million dollars ($600,000,000) from the General Fund to the department. It is the intent of the Legislature that the remaining eight hundred million dollars ($800,000,000) shall require future legislative authorization before the transfer of funds.
(b) (1) To facilitate the extension of the operating period, the department may make a loan or loans to the borrower out of any funds that the Legislature transfers to the Diablo Canyon Extension Fund established pursuant to Section 25548.6, up to a total principal amount not to exceed one billion four hundred million dollars ($1,400,000,000). Of this amount, up to three hundred fifty million dollars ($350,000,000) may be paid out by the department upon the execution of, and according to the terms of, loan agreements described in subdivision (c). For any additional amount beyond that three hundred fifty million dollars ($350,000,000), but not more than a total of six hundred million dollars ($600,000,000), the department shall submit a written expenditure plan requesting the release of additional funding pursuant to this section to the Department of Finance and the Joint Legislative Budget Committee. The Department of Finance may provide funds not sooner than 30 days after notifying, in writing, the
Joint Legislative Budget Committee, or any lesser time determined by the chairperson of the joint committee, or the chairperson’s designee.
(2) The department shall not disburse the entire loan amount in one lump sum, but shall disburse the loan amount pursuant to a loan disbursement schedule established pursuant to paragraph (3) of subdivision (c).
(c) The department may enter into a loan agreement with the borrower. In addition to any terms and conditions determined necessary by the department, the loan agreement shall include all of the following:
(1) (A) A covenant by the borrower that it shall take all steps necessary to secure a grant or other funds available for the operation of a nuclear powerplant from the United States Department of Energy, and any other potentially available federal
funds, to repay the loan.
(B) If the operator is not deemed eligible by the United States Department of Energy for a federal funding program by March 1, 2023, or the earliest date set by the Department of Energy for determining eligibility pursuant to the Civil Nuclear Credit Program established by Section 18753 of Title 42 of the United States Code, the operator shall return all unexpended and uncommitted loan moneys and the department shall immediately terminate the loan.
(2) An interest rate that the department may charge, set at a rate less than the Pooled Money Investment Account rate.
(3) A provision that the loan shall be provided in tranches, with any disbursements following the initial disbursement made contingent upon the semiannual true-up review pursuant to Section 25548.4, and which shall be based on
milestones set forth in annual plans for the purpose of project costs, operations and maintenance, internal and external labor, capital improvement costs, fuel purchase, fuel storage, regulatory compliance costs, transition fees, and other expenses associated with the extension of the operating periods and current expiration dates, to cover incremental costs incurred by the borrower in its efforts to extend the operating period. Covered costs shall be limited to those necessary to preserve the option of extending the Diablo Canyon powerplant or to extend the Diablo Canyon powerplant’s operation to maintain electrical reliability.
(4) Events that would trigger loan repayment obligations by the borrower, including, but not limited to, any of the following:
(A) Failure of the borrower to submit a timely and complete application for funding from the Department of Energy for
determining eligibility pursuant to the Civil Nuclear Credit Program established by Section 18753 of Title 42 of the United States Code.
(B) Failure to disclose to the department any known safety risk, seismic risk, environmental hazard, or material defect that would disqualify the application of the borrower for grants or funds for the operation of a nuclear powerplant from a funding program of the United States Department of Energy or otherwise disallow or substantially delay any necessary permitting or approvals necessary for the extension of operating the Diablo Canyon powerplant.
(C) A change in ownership of the Diablo Canyon powerplant, as determined by the Public Utilities Commission pursuant to Section 851 of the Public Utilities Code, before August 26, 2025.
(5) Events that would trigger a suspension or
early termination of the loan agreement, including, but not limited to, any of the following:
(A) A determination by the department that the borrower has not obtained the necessary license renewal, permits, and approvals.
(B) A determination by the department that license renewal, permit, or approval conditions are too onerous, or will generate costs that exceed the maximum amount of loan authorized pursuant to paragraph (1) of subdivision (b).
(C) A determination by the Public Utilities Commission that an extension of the Diablo Canyon powerplant is not cost effective or imprudent, or both.
(D) A determination by the commission, pursuant to Section 25233.2 and voted upon at a commission’s business meeting, that the state’s forecasts for the calendar
years 2024 to 2030, inclusive, do not show reliability deficiencies if the Diablo Canyon powerplant is retired by 2025, or that extending the Diablo Canyon powerplant to at least 2030 is not necessary for meeting any potential supply deficiency.
(E) A unexpected early retirement of the Diablo Canyon powerplant.
(F) A determination by the department that permitted timeframes are not viable to accomplish the purposes of this chapter.
(G) A determination by the department that expenses are unexpected or too large, or that repayment is less likely than initially anticipated.
(H) A final determination by the United States Department of Energy that the Diablo Canyon powerplant is not eligible for the Civil Nuclear Credit Program established by Section 18753
of Title 42 of the United States Code.
(6) Conditions that would result in forgiveness, in whole or in part, of the loan by the department, provided that any amount forgiven is limited to amounts already committed or incurred and that any unspent or uncommitted remainder of the loan proceeds is required to be repaid.
(7) No loan proceeds shall be treated as shareholder profits or be paid out as dividends.
(8) A provision prohibiting shareholder dividends from being deemed eligible costs under the loan.
(9) A covenant that, if the United States Nuclear Regulatory Commission or any state agency requires, during the process of relicensing the Diablo Canyon powerplant, seismic safety or other safety modifications to the powerplant that would exceed the
loan amount specified in paragraph (1) of subdivision (a), any application or approval to extend the operation period the commission shall promptly evaluate whether the extension of the Diablo Canyon powerplant remains a cost-effective means to meet California’s mid-term reliability needs, before any subsequent authorization and appropriation by the Legislature of an amount in excess of the loan amount.
(10) A covenant that the operator shall allocate all revenues received as a result of federal or state tax credits or incentives, excluding funds specifically allocated by a federal program for the costs of extending power plant operations, on a cost-share basis of 10 and 90 percent between the operator corporation and ratepayers of a load-serving entity responsible for the costs of the continued operation, respectively.
(11) A covenant addressing circumstances in which the
operator must indemnify the department and the state for liability associated with the Diablo Canyon powerplant.
(12) A covenant requiring the operator to comply with the conditions specified in Section 25548.7.
(13) A covenant that the operator shall conduct an updated seismic assessment.
(14) A covenant that the operator shall commission a study by independent consultants to catalog and evaluate any deferred maintenance at the Diablo Canyon powerplant and to provide recommendations as to any risk posed by the deferred maintenance, potential remedies, and cost estimates of those remedies, and a timeline for undertaking those remedies.
(15) A covenant that the operator shall report to the commission no later than March 1, 2023, on the available capacity
of existing wet and dry spent fuel storage facilities and the forecasted amount of spent fuel that will be generated by powerplant operations through the retirement dates for both units as of August 1, 2022, and November 1, 2029, for Unit 1 and November 1, 2030, for Unit 2.
(16) A monthly performance-based disbursement equal to seven dollars ($7) for each megawatthour generated by the Diablo Canyon powerplant during the period before the start of extended operations. The disbursement is contingent upon the operator’s ongoing pursuit of an extension of the operating period and continued safe and reliable Diablo Canyon powerplant operations.
(d) Except for this section and the loan agreement provided for under subdivision (c), notwithstanding Section 11019 of the Government Code or any other law, the department may disburse the tranches of funds specified in paragraph (3) of
subdivision (c) to the borrower in advance of the borrower having committed to, or incurred, eligible costs.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
(a) Within 180 days after the date of the loan agreement, the department, in collaboration with the Public Utilities Commission, shall establish a methodology and process for it to conduct a semiannual true-up review of the borrower’s use of loan proceeds.
(b) The purpose of the true-up review shall be to determine all of the following:
(1) Whether the borrower used loan proceeds to pay only for eligible costs.
(2) Whether the eligible costs were reasonable.
(3) Whether the costs are in the public interest.
(4) Whether the Public Utilities Commission has not authorized rate recovery of the same costs.
(5) Other considerations deemed appropriate by the Public Utilities Commission.
(c) The review shall demonstrate the operator did not retain any revenues for shareholders from funds associated with the loan.
(d) If, upon completing a true-up review, the department determines that the borrower’s use of loan proceeds did not meet the requirements set forth in subdivision (b), those amounts shall be deemed disallowed costs.
(e) If the department finds disallowed costs pursuant to subdivision (c), the department shall notify the borrower of the amount of disallowed costs as promptly as possible and the
department shall take action to recoup the disallowed costs pursuant to the loan agreement.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
(a) The department may do any of the following as may be, in the determination of the department, necessary or appropriate for purposes of this chapter:
(1) Enter into one or more agreements with the Public Utilities Commission or other state agencies to facilitate the true-up reviews required by Section 25548.4, facilitate extension of the operating period, and further the purposes of this chapter.
(2) Engage the services of private parties to render professional and technical assistance and advice and other services in carrying out the purposes of this chapter.
(3) Contract for the services of other public
agencies.
(4) Engage in activities or enter into contracts or arrangements as may be necessary or desirable to carry out the department’s duties and responsibilities pursuant to this chapter.
(5) Hire personnel necessary and desirable for the timely and successful implementation and administration of the department’s duties and responsibilities pursuant to this chapter. The State Personnel Board and the Department of Human Resources shall assist the department in expediting that hiring.
(6) Disburse funds to reimburse the department for the costs incurred in the administration of this chapter, which shall equal no more than 5 percent of the amount of funds disbursed.
(b) Contracts entered into pursuant to this chapter, amendments to those contracts
during their terms, or contracts for services reasonably related to those contracts, shall not be subject to competitive bidding or any other state contracting requirements, shall not require the review, consent, or approval of the Department of General Services or any other state department or agency, and are not subject to the requirements of the State Contracting Manual or the Public Contract Code.
(c) Any loan agreement entered into pursuant to this chapter is not a project for purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000)).
(d) The powers and responsibilities of the department established pursuant to this chapter are separate from, and not governed by, the provisions relating to the State Water Resources Development System.
(e) All state agencies and other
state entities, and their officers and employees, shall and are hereby authorized to, at the request of the department, give the department reasonable assistance or other cooperation in carrying out the purposes of this chapter.
(f) In accordance with the purposes of the loan and this chapter, the operator shall take all steps necessary to facilitate the extension of the operating period, including submitting applications for required federal and state agency approvals, notwithstanding Public Utilities Commission Decision 18-01-022 (January 16, 2018) Decision Approving Retirement of Diablo Canyon Nuclear Power Plant and pending further actions by the Public Utilities Commission.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
(a) The Diablo Canyon Extension Fund is hereby established within the State Treasury. The moneys in the fund shall be available to the department for the administration and implementation of this chapter.
(b) Repayments of the loan authorized under Section 25548.3 shall be deposited into the fund and shall remain available for further disbursement subject to subdivision (a) of Section 25548.3.
(c) Notwithstanding Section 13340 of the Government Code, the moneys in the fund are continuously appropriated to the department for purposes of this chapter.
(d) The fund and the moneys in the fund are separate and
distinct from any other funds and moneys administered by the department.
(e) Upon the early termination of, or full repayment of, the loan, all moneys remaining in the Diablo Canyon Extension Fund shall be transferred to the General Fund and subdivision (a), (c), and (d) shall become inoperative.
(f) The Department of Finance shall allocate up to six hundred million dollars ($600,000,000), pursuant to Section 25548.3, from the General Fund as loans to the Department of Water Resources for deposit into the Diablo Canyon Extension Fund. The Department of Water Resources may disburse moneys from the Diablo Canyon Extension Fund to the operator of the Diablo Canyon powerplant under a loan agreement pursuant to Section 25548.3. At the direction of the Department of Water Resources, the Controller shall draw a warrant for this purpose.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
Continued operation of the Diablo Canyon powerplant as provided in this chapter is in all respects for the welfare and the benefit of the people of the state, to protect public peace, health, and safety, and constitutes an essential governmental purpose. This chapter shall be liberally construed in a manner so as to effectuate its purposes and objectives.
(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)
(a) The department, in consultation with the Public Utilities Commission and the commission, shall provide a biannual report, on or before February 1 and August 1 of each year until December 31, 2030, to the relevant budget and policy committees of both houses of the Legislature on the status of the loan authorized pursuant to this chapter from the Diablo Canyon Extension Fund established pursuant to Section 25548.6.
(b) Each biannual report shall include, at minimum, all of the following:
(1) The amount of the loan that has been distributed to the borrower.
(2) A detailed listing of the eligible uses of the loan
that have been allowed, and those that have been deemed disallowed, as part of the required semiannual true-up review, pursuant to Section 25548.4.
(3) The amount of the unpaid loan balance.
(4) The most recent forecast of the amounts that may be repaid from the loan.
(5) A detailed listing of efforts to secure federal funding and their status, including, if applicable, the expected date of any awards.
(6) The status of the current expected shortfall of funds that may need to be absorbed by the general fund or other sources of funding.
(c) (1) A report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the
Government Code.
(2) Pursuant to Section 10231.5 of the Government Code, this section is repealed on January 1, 2033.
(Added by Stats. 2024, Ch. 72, Sec. 42. (SB 156) Effective July 2, 2024. Repealed as of January 1, 2033, by its own provisions.)