What Happens When the Owner of a Nuclear Plant Goes Bankrupt?

by on January 31, 2019 · 0 comments

in Energy, Environment

Nuclear Shutdown News January 2019

By Michael Steinberg / Black Rain Press

Nuclear Shutdown News chronicles the decline and fall of the nuclear power industry in the US and beyond, and highlights the efforts of those who are working for a nuclear free world.

The January 16 San Francisco Chronicle headlined, “PG&E bankruptcy coming this month.” A followup story on January 18 described Pacific Gas & Electric as “the state’s largest investor-owned utility.”

The Jan 16 lead article reported that the company was facing “$30 billion in potential wildfire liability,” had “$4.4 billion market value” as of 1-14, had lost $25 billion since last year’s Camp fire destroyed almost 19,000 structures and took 80-some lives in the Northern California  town of Paradise, and had $1.5 billion in cash as of Jan. 11.”

The opening paragraph summed up the situation well:

” Facing staggering financial pressure after California’s historically devastating wildfires (in 2017 and 2018), Pacific Gas & Electric Co. and its parent company said they would seek bankruptcy protection …on or about Jan. 29.”

They did file on January 29. The type of bankruptcy PG&E is seeking is called Chapter 11.  This  would allow the company to delay paying off some debts, but also places its financial affairs largely under the control of a bankruptcy court while it “reorganizes” its money mess.

Despite these seismic shocks, the Chronicle also reported that “PG&E CEO Geisha Williams abruptly resigned on Sunday (1-14) and will get a $2.5 million severance.”

Nuclear Shutdown Fallout

PG&E is the owner and operator of the Diablo Canyon nuclear power plant near San Luis Obispo on California’s central coast, the state’s last running nuke plant. Controversial since before it even started up in the 1980s, the plant’s two reactors are scheduled to close permanently in the next decade, one in 2024, the other the following year.

Pressure from community and environmental groups threatened the utility after a 2010 gas explosion in San Bruno in the Bay Area caused death and property destruction, aggravating the company’s financial stability. Seeing potential massive money outlays at its nuke plant, the company agreed to a shutdown deal.

As part of the deal PG&E agreed to add more renewable energy sources to its electrical power mix.

So how will the bankruptcy development affect Diablo Canyon’s permanent shutdown?

A January 14 article in the San Luis Obispo Tribune gives us some insight. Employees of were told of the imminent bankruptcy as PG&E announced it, as required by law, the newspaper reported.

“Just a month ago,” the Tribune reported, “PG&E announced it would be asking for $1.6 billion from ratepayers to pay for a ‘safe shutdown’ of Diablo Canyon.”

This matter is pending before the California Public Utilities Commission, like PG&E, headquartered in downtown San Francisco.

Asked if the bankruptcy would change this matter, utility spokesperson Blair Jones told the Tribune,

“We’ll to continue down this path.” He said he expected a decision in 12-18 months. He also said there are”no specific plans to sell or close Diablo Canyon early and no layoffs have been announced as part of the reorganization.”

John Geesman, legal counsel for the San Luis Obispo-based Alliance For Nuclear Responsibility, told the Tribune,

” This is a period of enormous uncertainty. The bankruptcy process is going to result in questions being asked that no one could have foreseen prior to the bankruptcy proceeding.

“For example, is Diablo Canyon a marketable asset? Could another company be interested in acquiring Diablo Canyon’s operating license and keeping it open? What about selling the plant to a company that specializes in decommissioning (nuke plant shutdowns)?

“These are all unknowns in the process, until you get to the process, But for better or worse, the San Luis Obispo community doesn’t have a recognized seat in the bankruptcy process. The bankruptcy code prioritizes creditors.”

Sources: San Francisco Chronicle, sfchronicle.com; San Luis Obispo Tribune, sanluisobispo.com .


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