Ed Smelloff – Clean Power Campaign

Assembly Hearing – 8-25-2022

https://www.assembly.ca.gov/media/assembly-utilities-energy-committee-20220826/video

At minute: 01:53:01;23

Re: SB 846 

Diablo Canyon powerplant: extension of operations

 leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB846

Download Smelloff PDF

Ed Smelloff (00:03):

Good morning, Chairman Garcia and members of the committee. Thank you for the opportunity to address you this morning. I’m Ed Smelloff. I’m representing the Clean Power Campaign, which is a coalition of environmental organizations and clean energy technology providers. So I want to make three points today. The first is related to reliability. The second, greenhouse gas emission reductions. And the third are some short-term suggestions on what can be done to improve reliability and reduce greenhouse gas reductions.

I completely agree with what Dr. Quirk said earlier this morning, we are seeing more severe, more frequent impacts of climate change. That is patently obvious. No one can deny that. However, I do want to make a point that if you look over the past 15 years at peak demand in California, it’s actually decreased. The peak demand for the Kaiser system occurred in 2006, it’s gone down by 12 and a half percent for the peak in 2021.

And it has not exceeded that yet in 2022. And I think we know the reason why that happened. It’s the extraordinary policies of California to invest in energy efficiency, load management, and behind the meter solar generation and battery generation. We’ve been able to manage the load in cooperation with the citizens of this state so that we haven’t increased demand on the peak, actually has a name it’s called the Rosenfeld Effect named after Art Rosenfeld, the illustrious scientist and former commissioner at the California Energy Commission has been promoted.

Karen Douglas has been a major champion of this and is deserves a lot of credit for putting this in place over the last decade and a half. It’s bipartisan. It’s been supported by Republican administrations and Democratic administrations. Governor Schwarzenegger had a key role in this when he initiated the California Solar Initiative. And so we know we have the tools to manage peak load it’s in our DNA.

We need to double down on this and I’ll have a few suggestions at the end of my presentation. Secondly, I completely agree that electric system reliability is a public good. It is a shared responsibility of all load serving entities across the state. Now, the framework for reliability in California is called Resource Adequacy, and it’s a delegated framework to specific load serving entities.

They are responsible for maintaining sufficient capacity to meet the loads within their jurisdictions. So for instance, where I live up in Trinidad, California, it’s the Redwood Coast Energy Authority where I used to work in San Francisco. It’s San Francisco Clean Energy, where I worked for developing solar power plants in Richmond. It was Marin Clean Energy. Each of these many entities, and there’s about 40 have the responsibility for Resource Adequacy. It all has to add up so that we have an adequate amount of excess reserves to keep the lights on in almost all occasions.

Now, reliability is a trade off against affordability. You just can’t have an infinite amount of resources and assure that the lights will never go off. We typically have developed a standard, and Karen Douglas mentioned this it’s called loss of load expectation. And the standard is once in 10 years, and that’s pretty much across the United States. So there’s a little bit of misinformation here that standard is no longer appropriate.

And perhaps we should revisit. Maybe it should be one in 20 years, but the kind of ad hoc approach that the administration is used in showing you that we’re at greater risk, really doesn’t undergo the kind of rigor that a probabilistic analysis done by the Public Utilities Commission would do. So, yes, it is important to understand what are the inputs and assumptions that go into these kinds of studies and they are changing because of climate change.

We are seeing more intense heat waves. We are seeing the impact of reliability on thermal power plants because of the lack of water for cooling them. So this does have an impact we can put together all of the assumptions that go into that, but the argument that we are in a severe reliability crisis, I don’t think really bear scrutiny. Last year, the Public Utilities Commission adopted the midterm reliability order.

And they ordered that the state, all of the load serving entities in proportion that their responsibilities procure 11.5 gigawatts of net qualifying capacity. And that is enough to more than replace the ones through cooling plants, the thermal plants on the South Coast, as well as Diablo Canyon. And in fact, the Public Utilities Commission said, “We’re going to move what’s called the Planning Reserve Margin,” which is the excess capacity that you need to have to assure reliability from 15% to 20.7%.

So they recognize that we are seeing more uncertainty in weather and other issues. So we need to have a higher reliability standard. So it is appropriate that we procure this 11.5 gigawatts of new resources to keep the lights on. And it will do that. It’s actually meeting a higher standard, but I do want to mention, and I think there’s something that the administration did get right in their presentation is that, if we retire Diablo Canyon at this time, we will see an increase in greenhouse gas emissions over a certain period of time after that.

In order to prevent that from happening, the 11.5 gigawatts is not going to be sufficient. We have to order additional. We have to have a procurement order to get additional clean energy resources in place, including clean firm energy, geothermal energy, which is, as we think about this, we do need clean firm energy, but a 40-year-old power plant has a lot of potential problems.

And a lot of unknown unknowns there. When we’re building a new set of geothermal power plants and other clean firm energy, this is going to be the future. It’s going to be what we can rely on for the next 20, 30 years in place, but in order to do that, and this is a really significant point I want to make. And it’s where we’ve dropped the ball in California.

We need to build new transmission so that we can bring that power from the North Coast, from the offshore resources off Humboldt County, from Imperial County, from the desert in Riverside, in San Bernardino counties into the load centers. It’s going to require a significant amount of investment in new transmission. We need to get started now.

I am concerned that this focus on the Abo Canyon and its extension is crowding out the necessary policy decisions that we need to make, to assure that long term, we’re going to be reducing greenhouse gases. And we can do this with union labor building these transmission lines and new projects. I will and my friend just wanted to address some directly on that.

So I wanted to the assembly has put together a package. I don’t know all of the details in your package for addressing climate issues, but I’ve read the bullet points. And I think there’s some very important initiatives that you’ve put together. And the reason I say this is because I do want to mention one thing, and it is an important point. There is going to be a shift in cost from the Northern California load-serving entities to the Southern California load-serving entities.

Rates are going to go up for residents of Southern California and San Diego. They may go down a little bit because of the way that this agreement has been structured, but it is not, there are going to be differentiated impacts. It’s not going to do anything specifically to address the equity issues in California, the climate equity issues. And regardless of what happens on Diablo, I think this needs to be a priority that needs to be done immediately as we’re addressing the reliability.

And I think there’s some very attractive features of what you’ve put together in the assembly plan. And I’ll just support, the one is an equitable community-based solar and storage. Solar and storage can be built very quickly. I’ve done that when I worked for SunPower Corporation, we can get these projects built, particularly the ones on the local grid on the distribution system. We can get them built in less than a year.

This is going to be a new strong resource. I do want to correct one minor mistake that Ms. Douglas made earlier on the Inflation Reduction Act. Now, provides a production tax incentive and investment tax incentive for standalone storage. So we can add storage to existing solar projects. They can be charged both by the solar project and by the grid, and capture the federal tax benefits.

So we’ve really incentivized the storage being built across the state. Obviously, investors throughout the world are seeing what happened with the Inflation Reduction Act. And there’s a lot of money pouring into technologies to be able to address climate change. But let me get back to the equity issues. So you have this community-based solar and storage, $240 million. You have what I think-

Speaker 1 (10:44):

Sure.

Ed Smelloff (10:45):

… also there’s a proposal to have grants for an Equitable Building Decarbonization program that would install efficient appliances, lighting, insulation, and other infrastructure directed to low income customers in California. These are things that need to be funded, which I think, you could make a strong case that these are better uses of the $1.4 billion than a five-year extension of Diablo Canyon.

And there is a need to put this money to benefit the people who have not benefited as much from the Rosenfeld Effect. We need to make sure that this is equitable, that there’s opportunity for low income families to have solar in their communities, on their households to invest in the energy efficiency and load management technologies that are available. So I think there is a better way, and I really thank you for the opportunity to address the committee today. And I would welcome any questions later.

Thank you. And I know that our colleagues here on the [inaudible 00:11:55] are eager to ask questions and we will get there very shortly. Mark Toney is a next presenter.

 

===============

 

Q&A

At minute: 02:41:24;06

 

Ed Smeloff (00:00):

The CAISO reports that between November of 2020 and April of 2022, which is the period of the pandemic, a total of 2,360 megawatts of new grid-connected storage projects have been added and are operational on the grid. So we now have a total as of August 1st of 3,344 megawatts of storage available. In the interconnection queue, there’s an order of magnitude greater than that, particularly in the most recent interconnection so there is no shortage of opportunities to get there. All of the load-serving entities are currently they’ve put out to bid procurements, competitive solicitations, many are in active negotiations.

What is not really transparent at this time, and I’m hoping that the administration has that, is the milestones on each of the many projects, because a lot of this decision hinges on whether or not by the summer of 2025, the 11.5 gigawatts, perhaps is a little less than that because it may take longer for the geothermal and long duration storage can come online and be available when Diablo is not available in 2025.

Well, [inaudible 00:01:21] you bringing that up because Mr. Singh brought it up also this issue around interconnection. My understanding is there’s 40,000 to 60,000 megawatts waiting this second to be interconnected. What’s stopping that [inaudible 00:01:35]?

So not all of it will be connected. That is vastly in… So what’s stopping that is the studies that need to be done on deliverability network upgrades. So when you apply for an interconnection, the CAISO and the participating transmission owner does detailed studies, power flow studies on the impacts of that. That’s taken longer than should be. It could be corrected by simply more staffing.:

Then there is a need, in some cases, to actually do upgrades to the transmission system, perhaps reconductoring maybe an additional transformer. Different pieces of equipment need to be installed. That’s where we’re seeing delays in the process that aren’t sufficient to get these resources, so real-

Mr. Tang (02:22):

So I guess what do we need to do to speed that up? Because obviously that, to me, seems like low-hanging fruit where we could just be… I mean…

Ed Smeloff (02:29):

Well, I think one thing would be to, and so this is sort of the intangible about this decision is there’s so much of energy in the C-suite of an organization and what are they going to focus on doing and where are they going to get the additional staffing? So it really is in PG&E’s executive’s Southern California Edison, San Diego Gas and Electric, and the CAISO to really staff up adequately and to go through this process.

There’s also, this is sort of a little bit of a different issue, we kind of double permitting on upgrades to transmission, once at the CAISO, where they make a determination of need through their transmission planning process and a second time at the California PUC through its CPCN process, its certificate of need and convenience. So we need to streamline that. I think we need to find that these projects are needed only once and then move them through the permitting process more quickly.

Mr. Tang (03:33):

I think Mr. Stern wanted to answer that question, too.

Mr. Stern (03:36):

Well, thank you. Thank you, Mr. Tang.

Mr. Stern (03:39):

So I just wanted to add, I think Mr. Smeloff actually identified some of the problems, but I want to make it clear this is our work. We’re as frustrated as anybody about the lack of this pace in which interconnection is made.

Mr. Stern (03:54):

At the same time, I think the real problem is the way we see it and what I mean we, I mean porphyry 5NQ is that we’ve already missed the boat. There isn’t a way to accelerate this in a meaningful way to build these projects. Because once the decision is made to either build new transmission resources or reconductor expand capacity on existing, it’s still years away and then you do run into materials and equipment. Because that’s also part of the opportunity here is to implement the new technology that’s coming online so that when we do increase capacity and when we do make these decisions, we can expand the transmission system to accept much, much more renewables and clean energy in the future.

Mr. Tang (04:46):

Thanks. I wanted to ask Mr. Smeloff and then go back to administration with the same question.

Mr. Tang (04:51):

With the charts the administration, I think, provided, you’re looking at five to six days or seven days in September that are going to be major issues. Is this really a base load issue? Or this is just a peak, a peak load issue, meaning obviously if it’s a base load issue, that’s why you would need something like a Diablo. But if it’s a peak load issue, could we use something that’s more flexible that you can ramp up, ramp down for those particular days?

Ed Smeloff (05:24):

Well, reliability is always a peak issue and it has some varying components to it, both capacity and energy for charging the batteries. This will be more of an issue in the future.

But typically we are most concerned about the months of August and September and we’re concerned about the hours now as the sun is setting that we have sufficient capacity, particularly storage capacity that can ramp fast, that can modulate very quickly to address the needs because we have to balance the system second by second. Nuclear plant doesn’t do that. Other resources do and batteries do that very, very well because they can quickly adjust to what the load requirements are.

Mr. Tang (06:10):

Thank you. I don’t know if the administration wanted to-

Speaker 4 (06:16):

[inaudible 00:06:16] thing, sorry-

Mr. Tang (06:16):

Please.

Speaker 4 (06:16):

Because the hybrid format [inaudible 00:06:17] awkward if I could just add in on the interconnection question that you asked previously.

Speaker 4 (06:22):

I think Ed actually touched on some specifics that are causing delays, but I will say from the generator side of things, we have been experiencing persistent interconnection delays from transmission operators and not having the transparency as to why and when things are going to come online.

Speaker 4 (06:39):

One good advancement that occurred amongst the agencies and with the task force that the governor’s office mentioned today and with the leadership of people like CPUC president Reynolds is, frankly, a measure-and-manage approach of tell us what’s going on with every interconnection, tell us where you’re at consistently. That is a step in the right direction. That hadn’t been happening kind of self-regulatory, shall I say, by the transmission operators before, but things are not quite transparent as to why the delays are happening. We get COVID and supply chain hand waving, but that’s obviously not enough.

Speaker 4 (07:13):

What this does it holds back solar storage resources that could provide essential reliability functions. It holds back gigawatts scale-wise of those resources that could be online today or tomorrow that are just way behind because of that interconnection problem. So I do really want to spotlight that issue and it cannot be an issue of it’s the way it is. It’s tough to solve. That’s not sufficient and we’re squandering resources and procurements that are in place that can come online and provide the ROA we all need.

Mr. Tang (07:49):

Now…

 

 

 

Mark Toney – TURN – The Utilities Reform Network

Assembly Hearing – 8-25-2022

https://www.assembly.ca.gov/media/assembly-utilities-energy-committee-20220826/video

Re: SB 846 

Diablo Canyon powerplant: extension of operations

 leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB846

Download Mark Toney PDF

Chair Garcia (00:00):

Mark Tony, floor is yours. Dr. Tony.

Mark Tony (00:11):

Thank you. Thank you Chair Garcia and members of the committee. My name is Mark Tony. I serve as Executive Director of TURN, The Utility Reform Network. TURN understands that California has an energy reliability crisis. We also understand that California families are facing an energy affordability crisis, which this committee has had a hearing on earlier this year and we appreciate that. TURN is concerned that the governor’s proposal, that the terms of the proposal to extend Diablo Canyon Operation is a terrible deal that is going to enrich PG&E shareholders at the expense of residential, commercial, and industrial rate payers across the state, and will make the affordability crisis even worse by increasing monthly bills.

Mark Tony (01:13):

I don’t need this up right now. Thank you very much. I’ll let you know. So, the first concern is that rate payer bills will skyrocket. So, there is in this deal, a fixed management fee of a hundred million dollars a year starting in 2025. It’s collected by a non-bypassable charge on all customers in California investor owned service territories, PG&E, Edison, San Diego Gas and Electric. It includes all CCAs and all direct access customers, these funds are dedicated to PG&E shareholder profits. Two, there’s a volumetric fee of $20 per megawatt hour for production starting in 2025, estimated at $360 million a year based on historic generation levels. 50% of this volumetric fee is collected by the non-bypassable charge on customers across the state. The funds are dedicated to PG&E shareholder profits. The actual costs of the Diablo Canyon Operations will be billed to customers and exempted from CPUC Reasonableness Reviews, that concerns us.

Mark Tony (02:47):

So, starting in 2025, all Diablo Canyon costs, capital, operations, fuel, insurance, taxes, pension benefits, mitigation fees, fuel storage will be collected from electricity customers all across the state. And there are no mechanisms for constraining costs or limiting the liability of PG&E to recover unlimited spending on Diablo Canyon in electricity rate. I’m going to move to concern about windfall profits for PG&E shareholders. My first concern is that PG&E shareholders would be unreasonably insulated from liability for the first $300 million of cost stemming from outages caused by mismanagement. In 2020 and 2021, Diablo Canyon suffered almost 150 days of outages due to operational problems at unit two, resulting in replacement power costs of $179 million. Under current rate making, PG&E may be responsible for these costs if they’re found to be negligent. But under the governor’s proposal, rate payers would be liable for future outage causes even if the outage is caused by PG&E improvements, mismanagement, or negligence.

Mark Tony (04:28):

Now, I’m going to ask for page three of my presentation to be put up because I’m going to talk about the annual profits that PG&E is. So yes, if you can go to page, okay, here we go. This is it. So, what this shows is that okay from 2017 to 2021, PG&E shareholders collected about $160 million a year. Now it’s slated to go down in ’23 through ’25 to about $140 million a year. But under this new proposal, the governor’s proposal, there would be an additional $204 million on top of that of shareholder profits. And then when you get to 2026 to 2030, that goes up to $468 million a year. We just can’t figure out why PG&E shareholders should be getting so much more per year in profits for extending the plant.

Mark Tony (05:42):

Can you go to the next one, please? Thank you. I appreciate it. So, what this chart does is it shows the cumulative amount that of shareholder profits being collected. Now by 2025, underneath the current PG&E shareholders would collect about $350 million. Okay. And that stays the same for 2030 because the plant would be shut down, there’s no additional collection. But according to the terms of this plan that you see before you, by 2025 that $350 balloons to $962 million. And if you add up all of the profits year after year, by 2030 we’re talking about over $3 billion, that’s real money. Thank you very much. Those are my two slides.

Mark Tony (06:52):

My final point is going to be to share with the committee key principles for extending Diablo Canyon. That is fair to rate payers, fair to taxpayers, and also fair to shareholders without giving them windfall profits. Principle one, treat affordability as equally important as reliability. Two, no windfall profits for PG&E shareholders. Cap future annual shareholder profits from Diablo Canyon at 2023 to ’25 levels, which is no more than $140 million per year. Three, hold PG&E accountable for mismanagement or negligent if the plant goes down. Eliminate shareholder protections for replacement power cost. Four, preserve the integrity of the CPUC Reasonableness Review of all costs for operating the plant and retain exparte rules for transparency. There isn’t the governor’s proposal, a suspension of exparte rules in the first stage of the proceeding, that’s just wrong, we need transparency.

Mark Tony (08:26):

Five, protect rate payers from additional monthly bills due to keeping the Diablo Canyon open. Six, allocate any surplus funds from selling power to offset and reduce rate payer costs in recognition of tens of billions of dollars already invested in Diablo Canyon, do not let PG&E use excess funds as a slush fund to do what they want without CPUC Review, that’s important. Seven, take the time necessary, please as policy makers, to understand the consequences of the governor’s proposal and remedies to ensure the greatest public benefit financially and as a backup resource. And finally, defer action on the big question of who pays and who profits from Diablo Canyon until January to provide the legislature with sufficient time to get independent analysis. Thank you very much.

Chair Garcia (09:38):

Thank you, sir. We have our last presenter and we will jump right into questions after that.

 

Final Q&A Session re PG&E Profits

Assembly Hearing – 8-25-2022

https://www.assembly.ca.gov/media/assembly-utilities-energy-committee-20220826/video

Re: SB 846 

Diablo Canyon powerplant: extension of operations

 leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB846

Download selection PDF

Ana Matosantos (00:01):

Um, without this resource.

Tasha Boener Horvath (00:03):

And could I ask ed Maloff to also answer that question?

Ed Smellof (00:08):

So the statement that demand is increasing unexpected levels is simply wrong. And I would like to put in the record, the latest key statistics from the Kaiso, which goes back to 2000 and, uh, 10 on what the peak demand has been year by year and what it is in the month, so that you can actually see the actual historical data through 2021. So the administration is not correctly telling you the, uh, facts about where peak demand is. There is. It is I think correct to say that we are now planning for what we’re calling net peak demand, which is the period of time when the sun is setting and we’re, we’re seeing decreased solar, uh, uh, power. And that’s the reason why we need more battery storage. The, the PUC did act twice now in procurement, once in 2019, and once in 2021 and each time, at least in 2019, they were told they needed to do more and they decided not to do more.

Ed Smellof (01:21):

They were, they were advised by Southern California Edison to procure 5,000 megawatts of new capacity and made a decision to procure 3,300. They corrected that in, in June of 2021, when they made the order to procure the 11.5 gigawatts of, of 11.5 gigawatts of new resources. And I think the open question is, are there real delays, supply chain or whatever where they’re calling them? I believe it’s more the interconnection process, but are there real delays that would push those needed projects out beyond the summer summer of 2025? That’s really the key period. We’re gonna retire 3,700 megawatts, very old 1950s vintage fossil fuel plants on the south coast. Those should retire next year. And then we’re going to retire, uh, Diablo canyon. The total is 3,700 fossil, 2,200 of Diablo. So we need to replace 5,900 megawatts. The order is to get 11,500 megawatts. So the order is clearly sufficient.

Ed Smellof (02:32):

The, the PUC has recognized it and they’re adding to the reserve margin. Miss ma Santo says, well, the impact is only gonna be just the nuclear plant, the $73 or whatever it is. That’s not actually correct. You need to look at the portfolio effect. What is the combination, the changed portfolio as a result of keeping the Ablo canyon within the mix of resources and adding resources so that your reserve margin, instead of being 15% might end up because you’re double procuring the ALO plus everything else that you need to longer term reduce greenhouse gases may end up with a 25% 30% reserve margin that has a major impact on affordability. If you’re keeping assets, uh, in the rate base or requiring the load serving entities to contract for resource adequacy with these assets, that adds costs to the system. So there are real opportunity costs here that the decision makers, the key decision makers, that the PUC need to balance affordability and reliability need to be carefully balanced. And if we, if we gold plate the system and, and get super high, uh, reserve margins, you’re gonna add costs to everybody. So it, it is a real careful decision that needs to be evaluated in a rigorous way. And frankly, my view is it hasn’t been done so far, uh, here in, in this, uh, in this process.

Speaker 4 (04:01):

Thank you. I’m gonna ask maybe ma Sinai as a respond, but any follow up questions, please.

Tasha Boener Horvath (04:09):

Yeah, please. I have some other questions too. I think I asked a CCA question. So if a CCAs decides to be, um, no nuclear, will they still have to pay the nuclear fee?

Ana Matosantos (04:18):

Yes.

Tasha Boener Horvath (04:20):

Okay. And then, um, one of the things I think we’ve talked about this before is I’m, I’m very concerned, um, about coastal mitigation. And my read of this is that you are trying to keep all agencies, environmental reviews, but when I read the latest proposal and please correct me if I’m incorrect, is that the coastal commission review goes to the C P C. So can you talk in the proposal currently about what the coastal commission review process will be of for the extension of Diablo canyon?

Ana Matosantos (04:50):

Happy to the coastal commission, um, will require will, is, will be required to make a consistency determination. This is an element that the nuclear regulatory commission re requires that the coastal commission, uh, do, uh, the coastal agency do as part of the NRC process. So that is the one determination that is required from the coastal commission that they would do under, under the statute. The second element is a potential at this juncture. It is not projected that there is any need to expand the pad where the, where the fuel is stored, but if there was to, um, be a need to expand that, uh, that pad that would require a coastal development permit and that, uh, the legislation makes it really clear that that would be something that would have to go through the coastal commission and would be subject to the regular process. So the, the piece that we know is required is the coastal commission would be required to make the consistency determination. Um, and then depending on what happens, the coastal commission or at at a later point in time could have to consider a cha a coastal development permit, and that would be done on the regular authority.

Tasha Boener Horvath (05:55):

So, but my understanding and, and perhaps I’m incorrect, but my understanding is, um, the extension of the use itself would trigger coastal mitigation through the coastal

Ana Matosantos (06:06):

Commission. Um, the extension itself might cons would require a permit from the state water board associated with the operation of the ones through cooling plant. The determination, the, the coastal determination on the coastal role in this process would be specific to the consistency, determination. The coast, the, the ones through cooling plant would be something that would have to be considered by the state water board, not by the coastal commission. Okay. And that would require mitigation.

Taxha Boener Horvath (06:32):

And I think my colleagues have covered, uh, the, the issue around the calculation of the shareholder profits, um, for PG and E. And I just wanna echo some of those concerns. I’m very concerned that we’re, we’re giving so many free passes to get something, as I think our budget share said that to address this peak demand rather than the base load. And I think that’s our are based demand. And I think that’s a really huge concern for me. Um, and so I just, you know, we don’t have to do this, but I just wanna echo some of those comments cuz I, I share them.

Speaker 4 (07:07):

Thank you. Assembly member Korea.

Wendy Carrello (07:13):

Thank thank you, Mr. Chair. Uh, I wanna start by echoing some of the comments that have previously been made by some of my colleagues, uh, primarily, uh, earlier, uh, assembly member, Marc Sui, who is often conversations related to climate again, another proposal by the administration that was sent to the legislature at a critical time in which we are in final negotiations and any additional conversations related to budget, as well as bills that are moving between both houses. I share that frustration because the legislature in our offices are very limited with time and very limited with staff. My staff here in the capital. I have a staff of four I in the district. I also have a staff of four. We rely on the expertise of consultants and folks in the, in, in the building that have institutional knowledge on some of the issues that are much larger than what we deal with on a day to day.

Wendy Carrello (08:21):

And I will share that it is incredibly frustrating to receive these last minute, not vetted, not gone through policy committee, not gone through the process of respecting the legislative process in both houses and the assembly and in the Senate to move policy. That is huge. We can’t do this is not how we operate and it is, um, disrespectful through the process. Uh, and it is disrespectful to the offices that we, so then we get this and I’m reading this. Um, we don’t have a lot. And I, and again, I share that because we have what, 24 hours to read, you know, proposals and, and, um, just breakdowns of what it, what this is supposed to be. And here in a hearing, trying to figure it out. And how do we, how are we most, uh, respectful to all of the concerns? So I share that because I’ve heard a couple of things today that just give me pause.

Wendy Carrello (09:31):

And that is the conversation around just transition. I’ve been on some of those conversations and it is incredibly difficult. There’s one thing to actually say, just transition. And then the actual implementation of just transition with the state’s goals and of reducing our reliability on fossil fuels and what happens to workers in those, uh, particular industries and how we pivot to more carbon friendly and renewable energy alternatives is easy to talk about a just transition, unless we’re actually doing it. You can’t take a job that pays six figures and think that we’re gonna transition a worker to something that pays 15 to $20 an hour. That’s not a just transition. And then I look at the summary from turn and I’m gonna just echo very quickly and share the annual PG E profits poised to increase by three times, PG E currently earns an average of 150 million a year from Delo canyon under the governor’s proposal.

Wendy Carrello (10:34):

PG E profits from Delo canyon would rise to 275 million a year starting next year. That’s an 80% increase, 300 million in 2025. That’s a 260% increase. And 460 million started in 2026. That’s a 310% increase. Several of my colleagues have already expressed how concerning that is and how do we go back to our constituents and say that we allowed for this to happen. Um, I share and want to figure out a way in which we increase our reliability on the grid. I think that what we would, what I would have liked to have is more time and to see additional alternatives that are not necessarily, uh, reopening or extending the life of a Diablo canyon, but also creating more opportunities for wind solar, hydrogen and other alternatives. Because I do agree with the administration that we should have a diverse energy portfolio that meets the needs of the current, uh, grid, but extends even further to what we wanna accomplish, which is 100% renewable energy.

Wendy Carrello (11:50):

And so I find myself, uh, trying to understand why this comes so last minute, um, amid everything else, and also trying to understand how do we get to a compromise in which we put workers in the space. We ensure that we are meeting our climate goals, that we are, uh, use of fossil fuels, that we are actually procuring more clean energy, that we have storage capabilities that we move forward. An agenda for California that is focused on the goals that we have, but it is very difficult to do that when we don’t have the time or we’re not given the opportunity as members of the legislature to actually vet these giant proposals. And so I’d like to know from the administration, just in a very real way, what does it look like to have partnership with the legislature for you? Because it doesn’t look like this to me and our other members of this committee had to step out to go talk and discuss and negotiate a climate package while we are here trying to figure out how do we discuss Diablo canyon, amid everything else. That’s kind of been thrown to the legislature. So I’m interested in partnership. I’m interested in policy discussions and I’m interested in respecting the legislative process. And I currently don’t see that. And I like to figure out why

Ana Matosantos (13:29):

Thank you for that. Um, we very much appreciate the partnership and respect the partnership. Um, many of the issues we, we, we see in, uh, the, the critical need to take additional actions and to expedite our actions to mitigate climate change. I think, uh, the governor, um, has, uh, has come into support legislation that generally has, um, been part of legislative deliberations, active bills this year legislation that, uh, that was proposed last year that moved out of, uh, out of one house and did not make it across the finish line. The issues that the governor has supported in terms of the five pillars of his climate package that he is supporting, given the need to take urgent action to mitigate climate change are ones that have been under discussion. And he is engaging in that discussion, supporting that legislation and proposing specific amendments in the interest of making sure that those bills that have been considered, um, get, uh, that, that there’s an opportunity to take action with a, a package that coupled with the budget investments that have been, um, before you, since January, um, expanded in may and, uh, that you have, uh, made important improvements through the policy process, um, that, that, that we see that as an opportunity to move forward on ideas that perhaps have not gotten across a finish line that we think now can, uh, that will continue California’s leadership and mitigating climate change in terms of Diablo canyon and the timing of Diablo canyon.

Ana Matosantos (15:02):

And this extension, we wish we had more time, um, the, uh, examination into where we were, um, and the mid cycle review of our, where we are in relationship to other replacement resources and what our overall needs was was, is one where, you know, it, we have been working with the energy agencies to do, as soon as the air energy agencies identified that they thought we were short. Um, in April, we engage in conversation with you on a real time basis of where we found ourselves. We’re really appreciative of the significant actions and the partnership that we had in, um, in, uh, June that yielded really important actions to put us into a better position moving forward, um, to accelerate projects and to take other elements. Unfortunately, where we are is at this juncture, we are, we are not where we need to be to maintain reliability through this decade, with the, the plan, if the plan retirements continue to move forward.

Ana Matosantos (16:02):

And the challenge we find ourselves with is that the timing to decide whether or not to keep this option open is now just in light of what is required to move in a different direction than where we’ve been. So the permits, the, the necessary approvals that, and the necessary scrutiny that would be associated with extension requires a change and that change in order to make it possible to extend it is one that is needed. Now the deadline for the federal funding and the opportunity that presented itself as recently as July, um, is one that is available at this juncture. And that was not available in January. So I, I hear you in terms of the timing I hear you in terms of the challenge, wish we were in a different position in terms of not needing to extend this resource and wish we were in a different position and relationship to time, but the, the situation is evolving in a real time basis.

Ana Matosantos (16:54):

The analysis that led the energy agencies to conclude that we were not where we needed to be, um, is, uh, happened this spring. And we shared it as quickly as possible. The opportunity for federal funding presented itself this summer, and yes, the time is short, but unfortunately we are in a position where we think that what is necessary to continue to taking the actions that we need, uh, to maintain our reliability as we continue to move towards our clean transition and continue to take actions to mitigate climate change is to, uh, to make an extension possible. And that would be something that would need to happen now, given the federal timelines and given the, the permitting timelines that would be required.

Wendy Carrello (17:37):

Follow up. Thank you for that. I, I really do appreciate you saying that there is value to partnership, but when this dropped, for lack of a better word, when we were talking about what this would look like, and the assembly offering a potential counter-proposal, that had more, more of a diversity of where we want to go. Um, you know, and I wanna share this with you, but where, where is partnership when someone, the, when someone in the administration says that the assembly proposal feels like fantasy and fairy does and reflects a lack of vision and a lack of understanding about the scope of the climate problem

Ana Matosantos (18:17):

Partnership is in continuing the conversation and looking at the opportunity for what resources can be brought forward to ensure that we are moving forward with all of the above. The focus is on figuring out what can be done, what is possible to get online, all the timing necessary, how do we move as quickly as possible on getting all the clean options online as possible, but make sure that we have the room to be able to have this resource that we believe is necessary to be able to maintain reliability. Um, you know, at this juncture,

Wendy Carrello (18:50):

Doesn’t quite answer my question, but I appreciate it. How do we respond to the 310% increase to PG E profits,

Ana Matosantos (19:00):

As I’ve mentioned? Um, the, so the first piece is the compensation structure provided in this proposal. Um, first is, you know, not allowing any degeneration of profits that would go to shareholders. There is a variable compensation where there, um, is a there, you know, PG and E could get nothing under these management fees. If they don’t perform, they could get, uh, they could get, um, revenue and a management fee paid. If the performance occurs, those dollars, those revenues have to go to funding the work associated with the extension of Diablo canyon or to fund other elements that are critical priorities. And that today are things that are subject to cost recovery from rate payers, including the interconnection, uh, the, the, some of the issues that have been raised around how to make sure that we’re doing more on the interconnection side and speeding that up things to help be able to support our clean transition as well as necessary investments to get to a place of greater safety and reliability, um, transmission, uh, uh, hardening of distribution lines and other components.

Ana Matosantos (20:09):

So the, the, the, the compensation structure has, uh, you know, is we think fair, um, consistent with what we think is necessary to, um, ensure that there is a real performance incentive in making sure that we deliver and dollars based on the provisions and the statute have to go directly to pay for the cost of operating, or it has to go for other public purposes, um, that we think are important for rate payers and for Californians from a safety standpoint, from a clean transition standpoint, the dollars cannot go for profits that go to shareholders or other like things as some of the, that have been, uh, suggested that are not allowable under the statute.

Speaker 6 (20:53):

Thank you very much, Dr. Quick, um, wow. Long day, um, couple things, first of all, most of the questions have been answered. So I’ll just start out with.

 

From the Memory Hole

“I just don’t see that this plant is going to survive beyond 24, 2025…. And there is a compelling argument as to why it shouldn’t.” – Lt. Gov. Gavin Newsom – 2015

By Mary Beth Brangan & James Heddle – EON

That Was Then. This is now – Newsom has his eye on the presidency and needs nuclear industry support.

Back in December of 2015, the California Land Commission met to decide whether or not to extend PG&E’s 2 leases on the land the plant occupies. One 49-year lease issued in 1969 by the commission was set to expire on Aug. 17, 2018, and another 49-year lease in May 31, 2019.

In his then role as Lt. Gov., Gavin Newsom was a member of the State Lands Commission and he gave a speech, in which he said in part,

“…there’s this lease, which is not insignificant. Turns out perhaps very significant, if it’s not extended 18 and 19. So it gives this body enormous amount of influence, perhaps over the ultimate determination of its fate and future. And as a consequence, it’s a very serious discussion.

“This is the last remaining plant of its type in the state of California. It services an extraordinary need in terms of its a total output. It has a huge economic impact on the region, more broadly, the state, and one could argue the nation. So it’s not an insignificant question that we’re being asked….”

Mr. Newsom went on to opine, “I just don’t see that this plant is going to survive beyond 24, 2025. I don’t see that. Now I absolutely may be wrong, but that’s the punditry. And there is a compelling argument as to why it shouldn’t.”

He accurately observed, “With all of the questions of seismic instability, questions that seem to arise every few years -another fault is discovered, another fault is discovered, another question mark about its safety and its potential capacity to survive an earthquake…. . We’ve discovered quakes with proximity with in some cases less than a thousand feet from critical infrastructure [of] this plant, within certainly a few miles of other discoveries. There’s a huge population density in and around the area, over half a million people in 50 square miles.”

By denying the lease extensions, Newsom pointed out, the body was in a position at that time to shutdown Diablo within months with a single action.

Despite voicing these valid concerns, fast forward to June of 2016: just a week after the Joint Agreement to shutdown Diablo by 2025 had been reached, the California Land Commissioners – including Newsom – voted unanimously to approve two land lease extensions that would allow the Diablo Canyon Power Plant to keep running until 2025 in support of the Agreement.

 

Portrait of a ‘Corporado.’

This is the serial felon corporation that Gov. Newsom wants to award a $1.4 Billion ‘forgivable loan’ for continuing to operate the two aged reactors at Diablo Canyon in an earthquake and tsunami zone for the next 5-20 years.

If the blind-sided California legislators in the Senate and Assembly fall for Newsom’s last-minute gambit on behalf of a moribund international nuclear power industry, PG&E will stand to reap a 310% profit by the third year of the extension.

This is a challenge to California’s proud history of nuclear resistance. 

If the ‘Save Diablo’ campaign succeeds in California, the nuclear revivalist cult believes it will be empowered in its nation-wide agenda to subsidize unsafe and uneconomic nuclear utilities across the country and around the world.

The nuclear power and nuclear weapons industries are joined at the hip.

The nuclear bucks must stop here.

                                                                           James Heddle – EON

Here’s a list of some of the known PG&E actions, adapted, with additions, from a timeline put together by Energy-Net.org

* PG&E’s creation was the brain child of Southern Pacific’s William Crocker as a way to outmaneuver the city of San Francisco’s 1898 Charter that called for the public takeover of private water, transit, phone and electric companies.

* The company known as Pacific Gas and Electric was incorporated on October 10, 1905, as a consolidation of more than two dozen power and water concerns around the state. PG&E went on to consolidate power in northern California and by 1952 represented 520 merged companies;

* San Francisco supervisor’s testified that they had been given major bribes by PG&E during the 1906-9 San Francisco Graft Trials that indicted Southern Pacific’s (the Octopus) control over the state and city politics;

* SF labor leader Tom Mooney fingered by PG&E Pinkerton agents;

* In 1922, PG&E spent $220,000 of the $500,000 raised by the state’s private electric companies (that used vicious red baiting tactics) to defeat the California Initiative that would have created a statewide publicly owned water and power system that FDR eventually created – The Central Valley Project. (The initiative also lost in 1924 and 1926).

* As Part of a national compromised between public and private power interests, the 1920 Federal Power Act allowed PG&E and other companies to use eminent domain to take state and private land to build over 400 dams as long as they agreed to let these dam licenses to return to public authority every 50 years. – Latest cycle of licenses starts in 2022!

* PG&E took part in the national campaign in the 1920’s, led by the National Electric Light Association, that took over the country’s book companies and produced propaganda about the benefits of private ownership vs. publicly owned electricity.

* in 1925, PG&E convinced San Francisco’s Board of Supervisors to give it control of the city’s publicly financed Hetch Hetchy electrical system [see:
http://www.clovisnews.com/trails/hetch_hetchy_power.html ] that it has made millions of dollars on.

* In 1945, PG&E outdid its own Hetch Hetchy scandal, when republicans cut all funding for the Central Valley Project’s grid, resulting in the collapse of public electric coops statewide just as PG&E was building its own power lines up to all the system’s major dams from Shasta to Friant.

* Being the nation’s largest utility in the 1950’s PG&E was a one electric industry’s leaders (along with GE & Westhinghouse) in promoting the development of nuclear power generation.

* Holds the distinction of being the focus of the first anti-nuclear movement in history, starting in 1958 when they tried to construct a nuclear reactor at Bodega Bay, a thousand feet from the epicenter of the 1906 earthquake where ground shifts up 30 feet took place.

* As a result of fears around the 1975 Proposition 15 that would have stopped nuclear power development, the state of California passed legislation that banned further construction of more nuclear facilities until a permanent home for spent nuclear fuel was ready. PG&E took the legislation all the way to the U.S. Supreme Court and lost.

* Bribed the Sierra club into allowing the siting of Diablo Canyon at the 2nd to last coastal wilderness in California. The scandal led to David Brower leaving the Sierra Club and forming Friends of the Earth.

* The first time the reactors were turned on, 14,000 Abalone in Diablo Bay were killed. The cove was also home to a sacred Chumash burial area and was the home of the worlds largest oak trees. It was given the name Diablo after Catholic Priests felt their first earthquake in the 1700’s.

* Pushed to build over 60 nuclear reactors in its service area. But ended up taking on over 20 years of opposition to its push to build reactors all over the state.

* Opposed lifeline electric rates for poor Californians, but failed.

* PG&E failed to even acknowledge the existence of the Hosgri Fault when first proposing Diablo Canyon Construction Nor did it ever mention that:

* The Hosgri fault likely caused Millions in damages to Santa Barbara (14 deaths) including the destruction of a 400 foot dam after 1925 quake.

* Forced to rebuild the Diablo Canyon reactors 2 times, running the cost up from $300 million to $5.8 billion as a result of:

* A newly hired engineer, in 1981, discovers that PG&E had built the seismic supports for the reactors backwards, just after the Abalone Alliance had completed the largest civil disobedience action in U.S. history.

* PG&E is a major financial supporter of the Pacific Legal Foundation that filed a 1981 SLAPP suit against the Abalone Alliance in an attempt to get it to pay for the costs of its Diablo Canyon blockade. The suit went all the way to the U.S. Supreme court before being withdrawn in 1986.

* PG&E is the proud recipient of the only company to ever have an operating license (Diablo Canyon) pulled by the Nuclear Regulatory Commission.

* Ronald Reagan secretly ordered the EPA to give the financial strapped utility $2.7 billion to help PG&E finish Diablo Canyon.

* The Diablo Canyon operation was allowed to go ahead by Judge Robert Bork. He was famous for being the Nixon’s saturday night massacre lawyer that fired the Watergate prosecutor.

* The company spent $110 million in legal fees to win the Diablo Canyon rate case. The state, which had promised that it would force the utility to eat at least $2 billion of the construction costs settled a deal that allowed PG&E to set up a $54 billion 30 year contract.

* The 1989 rate settlement led to the steepest rate increases in the country, driving electric costs from 8 cents a kwh to over 14 cents by 1994.
* This huge increase led to the revolt of big electric users, that in turn caused the disastrous Wilson deregulation plan.

*When the the California Public Utilities Commission allowed TURN to put rebuttals into PG&E’s electric bill, the company took the decision to the U.S. Supreme court and won, resulting in the collapse of Ralph Nader’s nationwide Citizen Utility Board (CUB) Campaign.

* Designed and built the Helms Stored River project, that went nearly ten times over original budget and killed a handful of workers.

* Caught in PCB transformer scandals that contaminated a major San Francisco high rise and its own workers statewide.

* PG&E was a coalition partner in destroying the grassroots based alternative energy movement in the state that was culminated in their FERC appeal that killed PURPA contracts in the state in 1994.

* The San Diego team of Steve Peace and Governor Wilson led the team plan to give the state’s utilities the disastrous deregulation mess. It included a $28 billion bonus to cover all the construction costs of Diablo Canyon and SoCal Eds’ SONGS reactors.

* PG&E is a member of the Palo Alto based Electric Power Research Institute’s disastrous national electric industry deregulation agenda that cost $17 billion to state electric customers in 2001 that led to Enron’s bankruptcy.

* In the late 1990’s it was disclosed that PG&E had covered up the extent of damages to the coast and Abalone, and was given a $14 million fine. The fine was later reversed.

* Check out the Julia Roberts movie about how PG&E contaminated hundreds of families in Hinkley California with Chromium.

* PG&E has led the attack against the public power movements from 1910-1930 and 1980 to present. See Dan Berman’s “Who Owns the Sun” or read many of the San Francisco Bay Guardian’s articles on the subject.

* Between 2000 and 2010 PG&E spent $112 Million lobbying politicians.

* in 2010, the year of San Bruno gas pipeline explosion, PG&E increased its lobbying by 600% or a record breaking $44 million.

* Since the 2008 downturn, PG&E has been one of a handful of major U.S. Corporations that have not had to pay taxes yet still making sizable profits.

*PG&E accepts its criminal guilt over the 2010 San Bruno gas explosion, agreeing to a fine of $6 million vs the called for $562 million demanded.

* In 2010 PG&E puts a bill on the statewide ballot and spends $46 million in an attempt to kill the statewide Community Choice Movement but fails.

* Governor Newsom selected PG&E’s favorite law-firm (O’Melveny & Myers) that spent $100 million in legal fees during the 1985-89 CPUC Diablo Rate Case, to write up PG&E’s 2nd bankruptcy settlement plan over its role in wildfire damages.

* City’s across Northern California have been calling for the takeover of PG&E for years but to no avail.

It would be nice to run down the historic numbers of how much money PG&E has spent lobbying over the years, not to mention how much money they have made from their takeover of Hetch Hetchy and the Central Valley Project power grabs.