REGIONAL — East Bay Community Energy (EBCE) is scheduled this week to consider a thorny policy proposal to accept free nuclear power from Pacific Gas & Electric Co. and flip it to third-parties under a profit-sharing agreement.
Nick Chaset, the chief executive officer of Alameda County’s local electricity utility provider, pitched the revenue-generating concept to the EBCE executive committee at a special meeting Dec. 4. While the panel did not endorse the proposal, a majority of the members said the idea should advance to the full board. The board was set to consider the policy Wednesday, Dec. 16, after The Independent’s deadline.
The source of the power is PG&E’s Diablo Canyon, the state’s last remaining nuclear-power plant. It is scheduled for decommissioning in 2024 and 2025 when the operating licenses on the station’s two reactors expire.
PG&E plans to make up for the lost generation with renewable energy procurement and energy efficiency programs. Currently, the nuclear energy generated at Diablo Canyon is sent to California’s grid. The new plan would not change where the power ultimately flows. It is a paper financial transaction that determines who holds title to the power and the assignment of associated rights and obligations.
“The dollar amount means a lot to me in terms of what I would decide,” EBCE Board Chairman Dan Kalb told the committee.
Kalb, an Oakland City Councilmember, signaled he might vote for the proposal if the staff could zero in on more precise revenue estimates and dedicate the profits to local clean energy projects.
If approved, EBCE’s annual share of the nuclear power revenue is projected to range from between $500,000 to more than $1 million based on staff estimates, but actual proceeds from the sale could be considerably higher or lower based on actual sales. The initial range presented to the executive committee was between $175,000 on the low end and more than $2 million on the high end.
“A few hundred thousand dollars doesn’t seem worth the trouble, you know. A million and a half or more seems worth it,” Kalb said. “We don’t know where it’s going to land, but that’s how I’m thinking.”
The local Clean Power Alliance, which fought two previous proposals this year to add nuclear energy to EBCE’s power mix, opposes the concept of monetizing nuclear power. Opponents question whether there is a market to resell the energy and say nuclear power is not clean energy; they state the agency should focus its attention elsewhere.
They also raise the prospect of taking on a liability, noting the 2011 earthquake and tsunami that triggered the 2011 meltdown at the Fukushima Daiichi nuclear power plant in Japan. Diablo Canyon is perched on a bluff above the Pacific Ocean. PG&E says the plant is safe and would withstand any earthquakes, tsunamis and flooding that could occur at the site. EBCE staff say the proposed transaction does not carry risk.
“East Bay Clean Power Alliance opposes nuclear,” said Barbara Stebbins, a volunteer with the organization. “If it opposes nuclear, we oppose the idea of taking it and selling it to someone else.”
For proponents, the nuclear option is viewed as a way to offset the Power Charge Indifference Adjustment, known as the utility “exit fee” that PG&E charges community choice aggregators like EBCE.
Community aggregators say the fee has undercut their ability to provide clean energy to consumers at competitive rates. It has risen more than 600% since 2013 and nearly doubled since 2018, according to a Sept. 24 letter from 11 community choice aggregators to the California Public Utilities Commission.
While the previous proposals to accept nuclear power would have resulted in EBCE reporting the source in its power mix, the latest proposal would avoid that requirement.
Cynthia Landry, a union representative who serves on the EBCE’s community advisory panel, acknowledged the potential financial benefit, but likened it to money laundering.
“There’s something there that just doesn’t feel right,” she said.
Every year, entities like EBCE receive carbon-free allocations from PG&E and have the option to accept energy produced at large hydroelectric plants, or from the Diablo Canyon nuclear power plant, or both. At the board’s direction earlier this year, EBCE accepted carbon-free allocations from hydropower sources only.
Under the proposal, EBCE would elect to begin accepting nuclear energy from PG&E early next year. Prior to receiving nuclear allocations, EBCE would transfer title to the power to an energy marketer that would then attempt to resell it to a third party. EBCE would receive half of the net revenue from any sale.
In addition to the financial benefit, Chaset said, in one sense, a greater benefit potential is placing community choice aggregators in a better competitive position relative to PG&E. The reasons are complex, but the more nuclear power community choice utilities take from PG&E, the more carbon-emitting power generation PG&E will have to report to consumers.
PG&E produces more energy than it sells to retail customers. Because state energy regulations allow utilities to report only the amount of generation equal to retail sales, PG&E uses creative accounting methods to avoid disclosing its actual power mix, which includes electricity sourced from natural gas-fired power plants, a major source of greenhouse gas emissions.
“Given the level of controversy and the uncertainty around it, it’s not worth doing,” said Hayward City Councilman Al Mendall, the EBCE executive committee chair. “I worry about what that does to our branding long term and our ability to hold the moral high ground when we’re sitting in a room with assemblymembers and saying, ‘Help us out because we’re the good guys.’”
Berkeley Mayor Jesse Arreguín, the committee vice chair, said the board has had “spirited discussions” on whether the agency should accept any nuclear power in the allocations.
“I just am nervous about the agency playing a role in promoting nuclear energy, even if it’s not for our customers,” he said.
Emeryville City Councilwoman Dianne Martinez, a member of the executive committee, said she was persuaded that the benefits of the proposal are worth considering.
“This nuclear is going to be on the grid no matter what and I feel like it’s a giveaway to PG&E, and even if we’re not making a huge impact by selling this off, if we are able to set off a chain of other CCAs making similar actions, that will force PG&E to report all that dirty energy.”