In Reversal, PG&E Now Admits Diablo Canyon Closure Proposal Would Increase Electricity Rates

Tony Early, CEO, PG&E

Tony Early, CEO, PG&E

Geisha Williams, PG&E President and Board Member

Geisha Williams, PG&E President and Board Member

When PG&E announced the deal it had secretly negotiated with anti-nuclear groups to close Diablo Canyon, California's last nuclear plant, it claimed rates would not rise.

"PG&E does not believe customer rates will increase as a result of the Joint Proposal," the company said in a statement on June 21, 2016. 

NRDC, one of the parties to the proposal, went further, claiming "PG&E customers will save at least a billion dollars by replacing Diablo Canyon."

From PG&E's September 2016 bill insert. 

From PG&E's September 2016 bill insert. 

Now, PG&E admits that the closure would cost $1.8 billion, and that rates would rise immediately if it gets approval from the state's Public Utilities Commission.

The San Jose Mercury News reports that PG&E has announced the rate increase in a new bill insert:

“If the proposal is approved, the costs would be $1.77 billion and would be collected over an eight-year time period,” PG&E stated in the billing insert.

Hours after the deal was announced on June 21, Environmental Progress was the first to point out that "The proposal would increase electricity rates," in a statement, as well as on a conference call and in conversations with reporters.

The Mercury News quotes me:

“It’s outrageous and it is totally deceptive what PG&E said before compared with what is actually going to happen,” said Michael Shellenberger, president of the Berkeley-based advocacy group Environmental Progress.

Again on September 19, Environmental Progress noted that PG&E was asking for permission to charge higher rates. 

And yet no media outlet had until yesterday reported that the closure of the plant is also a rate hike.

There's no point in sugar-coating what happened. PG&E and NRDC deliberately lied to the public and the media. Journalists who have been covering this have been insufficiently skeptical of the claims being made by PG&E and NRDC.

And not just about not raising rates. The two organizations lied in other ways.

First, Diablo Canyon will be replaced almost entirely by natural gas, not renewables.

Why then did NRDC's John Cavanagh claim, "Natural Gas Isn't Needed To Replace Diablo Canyon."

Cavanagh is a senior attorney who has been at NRDC since the 1970s and played a central role in creating California's electricity markets through de-regulation and its renewable portfolio standard. 

He thus knows perfectly well that natural gas is indeed needed because solar and wind that produce power 20 - 30 percent of the time cannot replace a plant produces power 24 hours a day.

Second, Diablo Canyon will not require expensive cooling towers, which are at the heart of PG&E's justification for raising rates.

But both NRDC and PG&E promote the idea that cooling towers will be required in order to grossly exaggerate the future cost of Diablo Canyon to justify the rate hike.

Newspaper reporters and editorial boards repeated the claims made by PG&E and NRDC last June, even though they were clearly wrong. They covered the story as a "he said, she said" story of dueling experts, even though there are hard facts that can be verified. This appears to be due to some combination of laziness and anti-nuclear bias.

Reporters should be more suspicious going forward now that the effort to close Diablo Canyon is following the same pattern as the effort to close San Onofre, just two years ago.

Back in 2014, reporters at major media outlets repeated the claim by supposed ratepayer advocacy group, TURN, that it would result in lower rates.

From the San Diego Reader:

San Francisco–based Utility Reform Network sent out a news release blaring “$1.4 Billion in Refunds Is a Good Deal for Customers!” This so-called consumer “refund” would be a “huge win” for consumers and “hold utility shareholders accountable for the fiasco,” exulted Matthew Freedman, a lawyer for the network. Edison and SDG&E sent out releases that said consumers would get a good deal.

The Los Angeles Times repeated Utility Reform Network’s claim that consumers would get a nifty refund. So did television and radio stations. U-T San Diego said ratepayers would save money.

San Onofre's closure exposed the PUC as thoroughly corrupt, but it also exposed journalists as too trusting in what the parties involved — the CPUC, TURN, FOE, A4NR — claimed.

The US Attorney and California’s District Attorney have on-going criminal investigations into how the CPUC initiated and rushed through a settlement proposal that closed SONGS. That settlement resulted in the requirement that ratepayers pay $3.3 billion out of a $4.7 billion settlement.

TURN and CPUC defended that outcome for 18 months before finally agreeing to re-open settlement proceedings last May. 

The San Diego Union Tribune's coverage afterwards markedly improved, and the paper reported that TURN is in fact controlled by the corrupt PUC through payments the agency makes directly to TURN:

TURN has received more than $11.7 million since 2013, about 45 percent of the money awarded. Between 2008 and 2012, TURN received $12.7 million, almost half of the payments approved by the commission...


A month after the deal was announced, in April 2014, TURN learned of the undisclosed meeting in Poland but did not inform the public. TURN defended the negotiated settlement throughout a months-long review process, culminating in commission approval in November 2014. The deal assigned utility customers to cover $3.3 billion of the $4.7 billion in premature shutdown costs....

The group is seeking almost $290,000 for its work on the San Onofre case.

Friends of the Earth, another intervenor that signed onto the settlement, requested $483,000 in compensation...

None of the requests have been paid because the case remains active....

“The rewards meted out by the PUC go to the people who are most loyal and faithful to the commitment to keep rates as high as possible,” Aguirre said.

Aguirre intervened in an application from the state’s investor-owned utilities – Edison, SDG&E, Southern California Gas and Pacific Gas & Electric – when they wanted to charge customers in advance for future wildfire damages that would not be covered by insurance companies.

The application was rejected after a groundswell of opposition. Three of the four intervenors in the case received funds; Aguirre’s claim for $224,000 was rejected.

“It was a big victory,” Aguirre said. “I put in for my money and they gave me zilch.”