Protest of San Luis Obispo Mothers For Peace To 
The Application Of Pacific Gas And Electric Company For 
Authority To Recover Steam Generator Costs For 
The Diablo Canyon Power Plant 

04-01-009 9feb04

[More at Mothers For Peace website]

Application of Pacific Gas and Electric Company (U 39 E) for Authority to Increase Revenue Requirements to Recover the Costs to Replace Steam Generators in Units 1 and 2 of the Diablo Canyon Power Plant

Application 04-01-009 (Filed January 9, 2004)

 

Dian M. Grueneich, J.D. Theresa Cho, Of Counsel Clyde Murley, M.A.
GRUENEICH RESOURCE ADVOCATES
582 Market Street
San Francisco, CA 94104 (415) 834-2300
(415) 834-2310 facsimile
dgrueneich@gralegal.com

For:

SAN LUIS OBISPO MOTHERS FOR PEACE

February 13, 2004

The San Luis Obispo Mothers for Peace ("MFP") is a non-profit 501(C)(3) organization based in San Luis Obispo, California. For over three decades, MFP has closely monitored and studied the Diablo Canyon Nuclear Power Plant ("DCNPP") and has participated in Commission proceedings that address issues at the DCNPP. MFP files this Protest to list some of the significant deficiencies in PG&E’s Application for Authority to Increase Revenue Requirements to Recover the Costs to Replace Steam Generations in Units 1 and 2 of the Diablo Canyon Power Plant ("Application").

PG&E’s application has commenced an extremely significant case at the Commission and for the future of all Californians. If the Commission grants PG&E’s request, it will be approving the continuation of operation of DCNPP for another generation. Moreover, it will be saddling ratepayers with millions, perhaps billions of dollars in costs. Any rational decision by the Commission must be based on a thorough evidentiary record that examines a host of costs that would be triggered by continued operation of DCNPP for two decades or more. PG&E’s application is appallingly limited in that it addresses only the initial, capital costs of purchasing the steam generators and fails to address the costs and issues that will be triggered if the new steam generators are purchased and installed. PG&E’s application thus fails to include critical issues that affect the costs ratepayers will incur as well as the feasibility and appropriateness of approving PG&E’s application.

As part of the cost-benefit analysis of the Project, the Commission must undertake a thorough review of all of the ongoing costs of DCNPP to determine whether approval of the Application is appropriate. As part of this proceeding, the Commission must conduct an adequate review of the Project under the California Environmental Quality Act ("CEQA").

PG&E’s Application is seriously deficient for failing to acknowledge any cost beyond the $706 million it seeks as the initial capital cost to replace two steam generators at DCNPP and for failing to demonstrate compliance with CEQA. MFP urges the Commission to order PG&E to submit supplemental testimony on the issues addressed in this Protest.

PG&E’s "cost benefit analysis" considers hundreds of variations that could impact the costs of replacing Steam Generator Units 1 and 2 ("the Project"), but incredibly, does not address a single operation and maintenance cost for the DCNPP. This omission is especially puzzling since PG&E’s analysis looks at the operating costs of various alternative power sources, such as construction of a natural gas facility or a wind power project, and includes these numbers in its cost/benefit analysis. And, this "apples to oranges" comparison is just the beginning of the significant gaps in PG&E’s Application.

It is impossible to conduct even a nominal review of the costs and benefits of the Project and the actual cost to ratepayers without looking at the comprehensive set of costs involved in operating the DCNPP through the end of the Nuclear Regulatory Commission ("NRC") licenses in 2021 and 2025. In particular, there are a number of substantial potential costs, above and beyond routine operations and maintenance, that could seriously impact the cost effectiveness of the Project. Extending the life of DCNPP increases the probability that these costs will be incurred and increases the probability that there will be an accident at DCNPP. The Commission cannot sanction PG&E’s exercise in denial.

For example, PG&E’s application fails to acknowledge the following costs of continued operation of the DCNPP:

1. Security upgrades to respond to threats of terrorist attacks;
2. The adequacy of the current seismic design;
3. The need to add an additional rack to the spent fuel pools;
4. Response to a Regional Water Quality Control Board case which could likely result in additional costs for remediation of thermal degradation and fish larvae entrainment;
5. Implementation of mitigation measures in the County of San Luis Obispo’s EIR on PG&E’s application to construct and operate a radioactive waste storage facility at Diablo Canyon;
6. The need for long-term storage of radioactive wastes on site;
7. The need to replace other aging components; and
8. Possible delays in obtaining NRC licenses.

The Commission has never thoroughly reviewed the reasonableness and prudence of the cost to ratepayers of DCNPP, either for the original $5.7 billion in construction costs or the many billions more required over the years to operate and maintain the facility. In fact, no governmental agency, including this Commission or the NRC, has taken a hard look at this facility and the total amount of ratepayer dollars necessary to ensure that DCNPP does not pose a substantial risk of danger to the people and the environment of this State.

1. The Commission Must Consider the Potential Cost of Security Enhancements at the DCNPP.

On December 11, 2003, the San Luis Obispo Mothers for Peace, Sierra Club, and San Luis Obispo Supervisor Peg Pinard ("Petitioners") filed a Petition for Review in the United States Court of Appeals for the Ninth Circuit requesting review of three NRC orders. The NRC issued the orders in a licensing proceeding concerning PG&E’s proposal to build and operate an Independent Spent Fuel Storage Installation ("ISFSI")¹ on the site of the DCNPP. Petitioners challenged the NRC’s refusal to hold hearings on the environmental impacts of terrorist attacks and other acts of malice or insanity against the proposed ISFSI, as well as the NRC’s refusal to take measures to improve the security of the entire Diablo Canyon site before approving a license for the proposed ISFSI. Opening briefs in this case are due on March 1, 2004, and MFP understands that Attorney General Bill Lockyer will be filing an amicus brief in support of the Petitioners on March 8, 2004. If successful, the lawsuit will force the NRC to hold full evidentiary hearings, which could result in additional security enhancements to the DCNPP.

The Application contains no mention of the proposed ISFSI or the lawsuit. Nor does it mention the fact that airports and nuclear power plants are the only facilities in this country that remain on Orange Alert for terrorist attacks. These measures can include extensive physical modifications to the DCNPP as well as yearly on-going costs. The probable cost of increased security measures and the probability that such measures will be required as the life of DCNPP is extended must be taken into consideration in a cost-benefit analysis of replacement of steam generators.

2. New Earthquake Information Could Result In Costly Seismic Retrofits for Diablo Canyon

Diablo Canyon is retrofitted to withstand a 7.5 earthquake on the Hosgri fault which has been assumed to be a slip strike or horizontal fault. On December 22, 2003, a 6.5 magnitude earthquake hit San Luis Obispo County on a reverse or thrust fault.² This earthquake was felt as far away as San Francisco and Los Angeles. If new studies confirm that the Hosgri is a thrust fault as many geologists and seismologists suspect, then costly retrofits could, and should, be required.

In September 2002, Dr. Mark Legg testified before the NRC that:

"… There are a number of serious shortcomings in the evaluation of seismic issues and design considerations that are presented in the Safety Analysis Report (SAR) and Environmental Report (ER) for the ISFSI at Diablo Canyon. The foremost problem with PG&E’s seismic analysis is its failure to consider the threat posed by large reverse or thrust fault earthquakes in the vicinity of the Diablo Canyon site…This is significant for the Diablo Canyon seismic analysis, because strong ground motion (shaking) from moderate to large reverse or thrust earthquakes tends to be greater at a specified source-to-site distance and source magnitude than for pure strike-slip earthquakes…"³

The December earthquake confirms that the seismic hazard is greater than estimated during the original licensing for Diablo Canyon. Already, Senator Barbara Boxer and the San Luis Obispo County Board of Supervisors have called for new studies of the seismic hazards in the region, and Senator Boxer has pledged to make funding available for these studies.

The Commission should consider the lessons of the past in this proceeding. During the original proceeding to construct Diablo Canyon, PG&E did not perform adequate seismic studies. It was the public that questioned PG&E’s work and brought the location of the Hosgri fault (2 ½ miles from Diablo’s door) to the NRC’s attention. Even then, the public had to go through expensive and prolonged NRC hearings to prove that this fault was active. Unfortunately, PG&E designed the retrofits for Unit 1 to Unit 2 specifications, the now infamous "reverse blue-print" error. The NRC did not catch this costly mistake before granting a license to operate. The result was Diablo Canyon was the first nuclear plant to have its license revoked by the NRC. The cost to ratepayers was estimated by the then Public Staff Division of this Commission at $4.4 billion dollars.

Clearly, the recent earthquake highlights the probability that Diablo Canyon has not been designed or retrofitted for higher acceleration earthquakes caused by a thrust fault. This critical safety issue is compounded by the NRC’s finding that "Fifty-six of 131 early warning system sirens lost power as a result of the earthquake."⁴ The early warning system is the heart of the emergency response plan for Diablo Canyon. The costs to our county and to ratepayers from inadequate seismic safety measures at Diablo Canyon are immeasurable. This situation must be thoroughly studied before the Commission invests $706 million ratepayer dollars into replacement of steam generators and millions or billions of dollars more in continued operation of the plant.

On December 12, 2003, PG&E met with the NRC in Bethesda, Maryland to outline its intention to add a "temporarily" rack to accommodate additional the radioactive spent fuel in pools at DCNPP if a license and permit is not granted to expand storage of high-level radioactive waste onsite at Diablo Canyon in a timely fashion. The costs of PG&E’s intent to add a "temporary" rack and the relationship of this project to the expected lifetime of DCNPP must be considered in the cost-benefit analysis of replacement of steam generators at DCNPP.

The California Regional Water Quality Control Board ("RWQCB") is currently investigating an alleged violation of the thermal discharge limits in Diablo Canyon’s National Pollutant Discharge Elimination Standards permit. It has also been alleged that, although the number of fish impinged is not significant, the amount of larvae entrained is substantial and detrimental to the ecology of the area. The RWQCB directed staff to find remediation measures that would directly compensate for the consequences of larval mortality and thermal degradation.

Although these costs have not yet been determined, it is highly likely that the costs will run into the millions of dollars as evidenced by the record in the proceedings of the RWQCB. In addition, there are potentially immeasurable costs to wildlife and habitat as a result of these violations. The sum of the impacts to the marine environment resulting from the operation of DCNPP is large and costly, and these costs must be considered in the cost-benefit analysis for the Project as well as on-going costs for environmental degradation. The MFP asks that the Commission incorporate the record of the RWQCB into this proceeding.

5. The Commission Must Consider the Costs of Mitigations for PG&E’s Proposed High-Level Radioactive Waste Storage Facility

PG&E must expand its on-site high-level radioactive waste storage facility in order to continue operation of DCNPP. PG&E has failed to address these costs and how these costs are impacted by continued operation of DCNPP through 2025. If DCNPP is operated only through 2013, obviously there will be considerably less waste to be stored on-site. In the County of San Luis Obispo’s Final Environmental Impact Report ("EIR") on the proposed radioactive storage facility, the County is considering the following mitigation measures:

a)  Expedited transfer of spent fuel assemblies to dry cask facility;
b)  Establishment of a no fly zone;
c)  A more robust dry cask system;
d)  Equipping the Diablo facility with a fire-suppression system.

The costs of the recommendations in the County of San Luis Obispo’s EIR must be considered in a cost-benefit analysis of the Project. The SLOMFP requests that the EIR be incorporated in the record of this case.

6. The Commission Must Consider the Cost of On-site, Long-Term Storage of High Level Radioactive Waste

When PG&E first applied for a Certificate of Public Convenience and Necessity from the Commission, the public believed that nuclear power plants would not result in the long-term, on-site storage of high-level radioactive waste. Unfortunately, there is still no disposal site for nuclear waste. The only site under consideration for a national repository is Yucca Mountain in Nevada; however, there is a great deal of controversy over this planned waste site and it is unclear when and if the site will ever open. The idea of a national repository of high-level radioactive waste remains just that: an idea.

The reality is that the Diablo Canyon site is a nuclear waste dump, and PG&E must be prepared to finance additional years of onsite storage of high-level radioactive waste if the Project is approved. Indeed, PG&E plans to store the old steam generators on-site in a building that will be 150 feet long, 27 feet tall, and 90 feet wide - for lack of any better disposal alternatives. The cost of maintaining a nuclear waste disposal site in a populated area located on the fragile California coast must be considered in the cost-benefit analysis for replacement of steam generators at the nuclear plant at Diablo Canyon.

7. The Commission Must Consider the Cost of Replacing Aging Components at Diablo Canyon

Yet another significant cost is the necessity of replacing other aging components at DCNPP if the steam generators are replaced. PG&E states in Chapter 5, page 28 that it has "provided the additional capital vectors…the forecasted incremental capital spending that would be necessary for DCNPP to run to the end of its license life." However, PG&E only cites "replacing the reactor heads that would not be done unless DCPP replaces its steam generators" as an additional capital project and provides absolutely no detail as to the assumptions underlying its analysis. Many other components are subject to age-related degradation and will require extensive and expensive downtime to replace. These costs must be included so the Commission can make a responsible decision on whether replacement of aging steam generators is reasonable and prudent.

The need for a variety of NRC license amendments is mentioned several times in PG&E’s testimony. See, e.g.: "PG&E’s analysis of the need for steam generator replacement…assumes that each of the elements will be in place, i.e. that all NRC approvals can be obtained. If that is not the case, then plugging limits likely will be reached earlier and the Units shutdown before the expected dates of 2013 for Unit 2 and 2014 for Unit 1." (Chapter 2, page 26, line 9-14). However, there is great uncertainty regarding the timeliness, safety and costs of the required license amendments. PG&E is overly optimistic in its expectations of NRC approvals and must factor into its costs, the possibility of shutdown due to regulatory delays in licensing.

B. Thorough Commission Review is Urgently Required

1. The Commission Must Reject PG&E’s Cost Benefit Analysis as Inadequate

In its Application, PG&E uses NRC regulation to head off questions on the safety of DCNPP. "Nuclear power plants operate within strict NRC regulations and are closely monitored. A substantial steam generator tube leak, rupture, or forced outage event would receive very close scrutiny from the NRC…" (Chapter 2, page 24, lines 13-15). However, the Commission has an independent responsibility to the ratepayers and to the public to ensure that further investments in nuclear power plants are reasonable and prudent. This requires a thorough review of not just the cost of the Project itself, but also the cost of ensuring that the Diablo Canyon Nuclear Power Plant can be operated safely.

The list of costs presented in this Protest is by no means exhaustive. Virtually every day a new problem, translating into to a new cost, is publicized for the nuclear industry, once touted as "too cheap to meter." Replacing steam generators to extend the life of this aging facility will result in billions of dollars in additional costs over and above the cost of the Project and daily operations. The reality is the costs of nuclear power are a moving and increasing target and that the Commission and the state of California can ill afford to ignore the warning signs of impending disaster.

To date, there is a serious lack of a comprehensive review by any federal, state or local governmental agency of the full costs required to ensure the safety of DCNPP. The NRC, the California Regional Water Quality Control Board, and San Luis Obispo County all have jurisdiction over their isolated pieces of the facility, but only this Commission can take a comprehensive look at all of the costs and benefits of continued, long-term operation of this aging nuclear power and waste storage facility.

Finally, as ratepayers, the San Luis Obispo Mothers for Peace respectfully poses this question to the Commission: What could these hundreds of millions, and even billions of ratepayer dollars do to create new jobs and increase governmental revenues, and reduce vulnerability from a radioactive release if invested in conservation, renewable and independent energy resources rather than an aging nuclear waste site? Ratepayer dollars are not an infinite resource to which the utilities can return again and again, and the Commission must determine the best use of these resources.

2. The Commission Must Comply with the Requirements of CEQA

The Commission’s review must comply with the requirements of the California Environmental Quality Act ("CEQA"), including the requirement that projects cannot be segmented into small parts in order to avoid environmental review. (See, Bozung v. Local Agency Formation Commission (1975) 13 Cal.3d 263). Although PG&E will characterize this action as rate-setting or reconstruction of an existing structure, in fact in this proceeding the Commission will determine whether it will authorize the continued operation of Diablo Canyon through 2025. In addition, the Project meets several of the CEQA mandatory findings of significance. It achieves short-term goals to the disadvantage of long-term goals; the impacts are cumulatively significant when viewed in connection with past, current and reasonably anticipated future projects, and; it could have environmental effects that will cause substantial adverse effects on human beings. (CEQA Guidelines, §15065).

Clearly, PG&E seeks to head off any CEQA challenges by submitting its own "Environmental Assessment" that follows the outline of a full CEQA review as part of its Application. However, this document is narrowly focused and inadequate to meet CEQA standards. For example, the EA fails to acknowledge the recent seismic activity and fails to acknowledge the current RWQCB investigation of permit violations at Diablo Canyon. The Commission must conduct an independent study and determine whether it can be fairly argued in light of the whole record and based on substantial evidence, that the project will have a significant impact on the environment in order to determine whether an environmental impact report is required. (Pub.Res.Code § 21080(d).)

For the foregoing reasons, San Luis Obispo Mothers for Peace respectfully requests that the Commission order PG&E to submit supplemental testimony on the full range of costs of operating Diablo Canyon and that the Commission take such steps as are necessary to comply fully with CEQA.

February 13, 2004

Respectfully submitted: By:

__________________________

Dian M. Grueneich

Theresa Cho, Of Counsel Clyde Murley, M.A.

GRUENEICH RESOURCE ADVOCATES 582 Market Street

San Francisco, CA 94104 (415) 834-2300 telephone (415) 834-2310 facsimile dgrueneich@gralegal.com  cmurley@gralegal.com

SAN LUIS OBISPO MOTHERS FOR PEACE

I, Jack McGowan, certify that I have, on this date, caused the foregoing PROTEST OF SAN LUIS OBISPO MOTHERS FOR PEACE TO THE APPLICATION OF PACIFIC GAS AND ELECTRIC COMPANY FOR AUTHORITY TO RECOVER STEAM GENERATOR COSTS FOR THE DIABLO CANYON POWER PLANT, to be served by electronic mail, or for any party for which an electronic mail address has not been provided, by U.S. Mail on the concerned parties for the proceeding in California Public Utilities Commission Docket Number: A.04-01-009.

I declare under penalty of perjury, pursuant to the laws of the State of California, that the foregoing is true and correct.

Executed on February 13, 2004 in San Francisco, California.

__________________________
Jack McGowan

Notes:

1  An Independent Spent Fuel Storage Site is a high-level radioactive waste storage facility.

2 The only mention of seismic activity in the Application was in the Environmental Assessment ("EA"), which states the most recent activity on two adjacent faults occurred 80,000 to 120,000 years ago. Incredibly, there is no mention of the December 22 earthquake or the Hosgri fault in the EA.

3 See: www.mothersforpeace.org/data/20020718GroupPetitionISFSIContentions#a_seismic

4 USNRC letter to Gregory Rueger, VP PG&E, 1/16 /2004