California Independent System Operator Control Room

The California Independent System Operator (CAISO) has issued two separate power deficiency warnings. The CAISO is asking for the conservation of power usage between 4pm and 9pm.

• CAISO has called a state-wide Flex Alert from 4 pm to 9 pm today due to extreme heat across the State.

• CAISO has also called an Energy Emergency Alert for hours 18 to 20 – CAISO is forecasting energy deficiency and may not be able to support exports bid into the HASP Market.

For more information: http://www.caiso.com/Documents/california-iso-issues-flex-alert-for-today-aug-31.pdf

With three days to go in the session, Governor Gavin Newsom’s “5 point climate plan,” Diablo Canyon’s re-licensing, and the “lithium valley,” now have bill numbers.  Will they all be approved?  What kind of “horse trading” is happening behind the scenes to have at least some of these or all of these survive? 

Newsom’s climate Pillars + Diablo (Bills and Links):

• Codifying the state’s goal to be carbon neutral by 2045 into law. AB 1395
• Ramp up the 2030 greenhouse gas emissions reduction target from 40 percent to 55 percent below the 1990 level. AB 2133
• Establish setbacks of 3,200 feet between new oil wells and schools, homes and parks. SB 1137
• Set clean electricity targets of 90 percent by 2035 and 95 percent by 2040 to keep the state on track to the previously-established goal of total clean electricity retail sales by 2045. SB 1020
• Establishing a regulatory framework for carbon removal and capture, utilization, and sequestration. SB 905 and AB 1279
• Diablo Canyon re-licensing. SB 846
• Budget trailer bill, which has millions for climate change, including funding for storage and the Lithium Valley. SB 126

All of these must be approved by both houses of the Legislature by midnight on 8/31.  Those measures that are approved will be sent to Newsom for action.  Newsom will have until the end of September to act.

As we have previously reported, Governor Gavin Newsom called on the Legislature to help keep the PG&E-owned Diablo Canyon nuclear power facility online for 10 more years.  With a few hours to go until the deadline on Sunday, SB 846 finally materialized.  But can he get the votes needed to pass both houses of the Legislature?

The Case for Diablo

A day after the idea was presented to the Senate, it was the Assembly’s turn to hear the reasons why Diablo Canyon needs to stay on another 10 years.

On Thursday and Friday, the Energy committees in the Senate and Assembly met to hear about Diablo Canyon.

While there was no actual legislation at the time, in a rare move, the Governor’s Office sent outgoing Cabinet Secretary Ana Matosantos to testify in both committees.

Matosantos said, “In order to be able to maintain reliability and to do in the most cost-effective way for California ratepayers and taxpayers, we need a bit more time with these resources.”  She then proceeded to discuss the importance of the Diabo Canyon extension.

While other individuals testified for and against a Diablo Canyon extension, the legislators really matter at this late date. In the Senate hearing, the proposal was lukewarm at best.

Senator Laird asked several pointed questions, including why now; will we have an adequate workforce since several employees retired recently; seismic safety; enough room for additionally spent fuel rods; extension of once-through-cooling at Diablo Canyon; and commitments to kick start renewables.

Senator Becker asked about renewables, potential delays near offshore wind near Diablo Canyon, and seismic safety concerns.

Senator Min focused on more renewable investments and Diablo Canyon’s ability to qualify for federal funds.

Senator Dahle asked whether all state ratepayers will cover the costs and why the state is in such a rush to move a problem that should have been seen.

Senator Hueso asked why ex parte rules were suspended on Diablo Canyon, waiving of some of PG&E’s liability and PG&E’s profits.

Senator Stern focused on renewables and CEQA review.

In the Assembly, the proposal was met by a more friendly audience.

Assemblyman Wood asked about the renewable market delays and whether any state agency is coordinating new renewables.

Assemblyman Mathis stated his support and asked if Diablo is cost worthy of an extension; shouldn’t the state look at expansion?

Assemblyman Muratsuchi asked why the Diablo proposal was coming at the last second, is the legislation necessary, and grid reliability.

Assemblywoman Calderon asked about the profits PG&E will make on this deal and the costs being spread amongst most Californians.

Assemblyman Quirk asked friendly questions about PG&E’s rate of return, impact on utility bills, and grid reliability, and Governor Newsom initially called for the closing of Diablo Canyon.

Assemblyman Ting asked about seismic safety if the state can rely on Diablo Canyon when the plant shut down for 150 days, why the rate of return is so high, reliability issues and is the future problem a peak or baseload issue. 

Assemblywoman Boerner-Horvath asked what the plan for reliability was when Diablo was first discussed about closing and the coastal commission’s involvement in the review of Diablo Canyon.

Assemblywoman Carrillo focused on why this proposal is so late and PG&E’s profits.

A Vehicle for Diablo

After the hearings ended, Capitol insiders waited and waited for bill language.  At 7:56 PM on Sunday, Senate Bill 846 was amended to address Diablo Canyon. This bill will give PG&E $1.4 billion for Diablo Canyon to potentially keep running for at least five more years, with a possible 5 more years after.

The language calls for the Department of Water Resources to issue up to a $1.4 billion loan to PG&E for the extension.  The bill also asks the California Energy Commission to present a cost comparison and operations assessment of the Diablo Canyon powerplant by late 2023.  It also establishes a three-member Independent Safety Committee for Diablo Canyon

Senate Bill 846 only extends the plant until 2030 since the once-through cooling extension for the plant expires on October 31, 2030.

The Hurdles for Passage 

The bill has several hurdles to be passed.  First, the legislature must move at lightning speed.  California has a 72-hour in-print rule for all bills, meaning the bill cannot be heard until Wednesday, August 31 at 7:56 PM.  The bill must also clear both houses before midnight since that is when this two-year legislative session ends.

Aside from having only four hours to pass the bill, the legislation also includes an urgency clause that requires two-thirds approval.  This means 27 aye votes in the Senate and 54 aye votes in the Assembly.

Note: PG&E has until September 6 to request federal funds appropriated to assist nuclear power plants.  PG&E’s CEO previously stated that the Legislature and Newsom would need legislation to assist with the efforts to seek a relicensing for the facility.  DOE will not inform recipients of the $6 billion fund for nuclear projects until January 2023.  

The California Air Resources Board (CARB) voted this week to ban the sale of new gas-powered cars and trucks by 2035, a first-in-the-nation mandate the state’s leaders hope will jolt the automotive industry and truly make electric vehicles mainstream.

In a statement, Governor Gavin Newsom said, “It’s ambitious, it’s innovative, it’s the action we must take if we’re serious about leaving this planet better off for future generations… California will continue to lead the revolution towards our zero-emission transportation future.”

The rule, which was formalized nearly two years after Newsom first announced it, will pose a significant challenge. Sales of fully electric vehicles in California, the country’s largest auto market, have made up 16 percent of the total so far in 2022.  Industry experts say reaching the new goal will require fixing supply chain issues and building charging stations — and for EV prices to come down.

The new regulation requires 35 percent of new cars sold in the state to be zero-emissions by 2026.  That number will increase to 68 percent in 2030 and 100 percent by 2035.

California’s rule has some exceptions.  Older gas-powered cars may still operate and be sold on the used-vehicle market.  In addition, some hybrids that are powered by gas and electricity will also be allowed.

The state will require permission under the federal Clean Air Act to set the requirement of 100 percent non-gas vehicle sales, and it’s unclear how long that process will take.  The Biden administration for months has been considering a separate waiver for strengthened tailpipe rules for heavy-duty trucks, with manufacturers complaining that the government did not give them the required four-year lead time.  Such a waiver could also be vulnerable under a future Republican president opposed to the ban.

The Trump administration, for example, revoked an earlier waiver allowing California to set stronger emissions standards through 2025; litigation had only just begun when the newly arrived Biden administration hit reverse and restored the state’s authority.

Note, that California previously maintained a goal of 5 million zero-emission vehicles (ZEVs) on California roads by 2030 pursuant to Executive Order B-48-18.  Under Executive Order N-79-20, Newsom changed this goal to require all new vehicles offered for sale in the state to be ZEVs by 2035 for light-duty cars and trucks, and by 2045 for heavy and medium-duty vehicles. In spite of the substantial but as-yet-unknown costs and other effects of this action including as discussed in prior reports the availability of the required battery and related materials, the state agencies are now moving ahead to implement this order administratively using the blanket authorities given to them by the legislature under the climate change program.

California’s sales mandates for ZEVs first began with the Air Board’s adoption of the LEV I regulations in 1990. After four decades, these mandates have resulted in ZEVs comprising 15.6% of new light vehicle registrations in the second quarter of 2022.