Get ready for PG&E rate hike Armageddon.
The Diablo Canyon nuclear power plant is up for relicensing in 2024. It happens to also be the deadline imposed by the State Water Resources Control Board for all 19 coastal power plants in California to reduce damages their cooling systems cause to marine life by 93 percent.
The price tag for PG&E to comply is $12 billion.
It gets worse.
Federal regulators have mandated PG&E install safety equipment costing $50 million at Diablo Canyon in the aftermath of the Fukishima nuclear plant disaster that was triggered by a tsunami. There is an ongoing debate between the Nuclear Regulatory Commission, the Union of Concerned Scientists and PG&E about whether the reactors can withstand a major earthquake. The end result of that debate could add even more billions of dollars to the cost of keeping Diablo Canyon functional.
Now for the clincher: Diablo Canyon currently produces 10 percent of California’s power needs.
Anyone want to venture a guess at what this can do to your monthly PG&E bill? Remember PG&E is guaranteed historically by state law an 11.35 percent rate of return or profit on all of their investments. That means $12 billion dumped into Diablo Canyon just for mandated improvements to the cooling of ocean water that is used to keep core temperatures in check will guarantee PG&E almost $1.4 billion in profit.
Kind of makes you wonder how motivated PG&E ultimately will be when a cost analysis is done between the cost of keeping Diablo Canyon up and running and then going through expenses connected with re-licensing that will include seismic safety as opposed to simply shutting it down and mothballing the plant. If they take Diablo Canyon permanently off line ratepayers are still on the hook for the decommissioning costs. They also will pay PG&E 11.35 percent in profits on top of that cost. But rest assured based on the Humboldt reactor PG&E decommissioned and even Sacramento to Municipal Utility District’s mothballing of Rancho Seco the cost of shutting down Diablo Canyon as opposed to retrofitting it would be significantly cheaper.
Of course, the pile of money PG&E would make would be significantly smaller as well.
Not saying that PG&E is driven by profit.
The folks at PG&E are pretty sensitive these days about profits.
They were offended that a California Pacific Utilities Commission member actually questioned whether PG&E put profit above safety.
That prompted PG&E Chief Executive Officer Tony Earley to announce an independent review of company actions at the highest level to assure everyone that PG&E is more concerned about safety than profits.
That essentially means PG&E is going to audit itself to determine if it was too greedy.
Perhaps the independent review should start in the beginning of PG&E’s riding the wave with the corporate suite sending the company to the verge of bankruptcy and then handing out more than $12 million in bonuses for a job well done.
And whoever is doing the independent review they can fly them in on the $10 million corporate jet PG&E’s brass bought while they were slamming the company against the rocks and sending rates into the stratosphere.
One can hardly wait to see what an independent review says about PG&E asking and receiving rate hikes to do work the utility already received rate hikes for but didn’t do such as replacing power poles. Of course, they received the 11.35 percent guaranteed rate of return even for the phantom poles.
Who knows, an independent audit might delve into how they gave out fat bonuses to the corporate suite while trimming the jobs of the men and women who actually labor to allow us to turn our lights on.
But then again how independent is an audit going to be? If you’re a financial firm that does work for PG&E and want to get in on the action you’re not going to look at it from the viewpoint of captive ratepayers.
Aside from occasionally killing natural gas customers, leveling a neighborhood or two, natural gas fire flames shooting up through asphalt on major streets, a couple of toxic issues with drinking water, and the exploding of underground utility boxes in places like San Francisco, there’s no reason to question PG&E’s safety record.
And given their track record on rate hikes, selling a bill of goods about deregulation, paying fat bonuses to the corporate management team that almost drove the company into the ground, financing a statewide attempt to amend the California constitution to permanently freeze out all competition, and illegal campaign practices — of which they were slapped with state fines after the fact — to defeat election measures aimed at establishing lower cost public utilities, there is no reason to suspect PG&E of being willing to do anything to squeeze out another dollar.
That is why you shouldn’t worry whether PG&E will do the best thing for ratepayers and people within a mandatory evacuation radius of Diablo Canyon when the time comes to decide whether to invest at least $12 billion for an additional $1.4 billion in profit or decommission the nuclear reactors.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or (209) 249-3519.