PG&E seeks decommissioning head start as cost estimates rise

A deeper analysis of decommissioning work at Diablo Canyon has hiked cost estimates for waste and staffing and operator Pacific Gas and Electric (PG&E) is accelerating pre-shutdown planning to minimize permitting risks.

In December, PG&E filed its first site-specific Decommissioning Cost Estimate (DCE) for the immediate decommissioning of the 2.2 GW Diablo Canyon nuclear power plant to the California Public Utilities Commission (CPUC).

The DCE report is required for CPUC to release funding for pre-shutdown planning ahead of the closure of the two 1.1 GW units in 2024 and 2025.

The report estimates a total decommissioning cost of $4.8 billion, some $700 million higher than the estimate made in its 2015 in its Nuclear Decommissioning Cost Triennial Proceeding (NDCTP) document.

The DCE applied a more detailed “ground-up” cost assessment than the 2015 report and cost estimates rose on the back of higher "waste disposal, program oversight and site infrastructure costs," PG&E spokesperson Blair Jones told Nuclear Energy Insider.

In particular, waste disposal cost estimates more than doubled due to increases in waste disposal rates and waste volume assumptions, Jones said.

PG&E is under pressure to minimize decommissioning timelines and costs.

Decommissioning should be performed immediately after shutdown and decommissioning and decontamination (D&D) should be completed within 10 years of closure, the Diablo Canyon Decommissioning Engagement Panel (DCDEP), a local group of community members created by PG&E, said in December.

PG&E’s latest cost estimate assumes significant planning, design, licensing and permitting work will be performed ahead of shutdown.

Pre-shutdown spending is estimated at $187.8 million and PG&E expects the CPUC to issue a funding decision by mid-2020 at the latest, Jones said.

“Early planning will allow PG&E to commence active decommissioning immediately upon shutdown and will result in significant cost savings to customers," Jones said.

Fresh approach

PG&E’s nuclear decommissioning trust fund (DTF) for the Diablo Canyon plant is currently at around $3.2 billion.

In January, the utility filed for Chapter 11 bankruptcy protection after several recent deadly wildfires left it with billions of dollars of potential liabilities.

The Chapter 11 filing will not impact planning of the Diablo Canyon project as the DTF's are considered "‘bankruptcy remote’ under the law and cannot be accessed by creditors,” Jones said.

The latest decommissioning cost estimate is "fundamentally different" to the 2015 estimate as it is based on a ground-up approach, applying cost-based and historical bid-based estimating, direct experience from the decommissioning of PG&E's Humboldt Bay Power Plant, industry learnings and benchmarking, PG&E said. The report was independently reviewed by High Bridge Associates (HBA) consultancy.

The 2015 estimation was less detailed and based on similar projects in the nuclear industry and the company’s own experience with decommissioning its Humboldt Bay Power Plant (HBPP).

        Diablo Canyon decommissioning cost estimate (2018)

                                        (Thousands of dollars)

Source: Pacific Gas & Electric (PG&E), December 2018.

Higher waste disposal costs were the largest contributor to the cost increase in the latest report.

The DCE estimates include more “accurate volume analysis and more defendable waste rates,” PG&E said.

For example, the 2015 estimate did not fully quantify low activity radioactive waste, which is estimated at a volume of 5 million cubic feet, it said.

Water management and staffing costs also rose. Staffing costs increased due to more accurate, site-specific analysis and an overall extended schedule for emergency planning activities, the company said.

In addition, cost estimates for permitting and fees doubled and the DCE report identified additional site infrastructure needs.

"These include construction of waste handling facilities, construction of an Independent Spent Fuel Storage Installation (ISFSI) security building, upgrades to the rail yard in Pismo beach, and other modifications," PG&E said.

Total cost estimates could fall if existing nuclear site infrastructure, such as the site’s marina, is repurposed for alternative uses, Jones told Nuclear Energy Insider.

Repurposing decisions will include input from local community groups and will be subject to regulatory approval, he said.

Industry learnings

Overall, U.S. nuclear decommissioning cost estimates are improving as operators gain greater experience in D&D projects.

Total U.S. decommissioning cost estimates fell by 2.5% in 2017 to $88.8 billion, ending a decade of year-on-year increases, according to figures from the Callan Institute.

                                   US decommissioning cost estimates

                                                                (Click image to enlarge)

Source: Callan Institute's 2018 Nuclear Decommissioning Funding Study.

Decommissioning operators are using economies of scale and the latest technology advancements to shorten decommissioning procedures and cut costs.

More recently, growing demand for D&D services has spawned new decommissioning joint ventures and business models involving the transfer of plant ownership to specialist decommissioning groups.

In the U.S., Holtec and SNC-Lavalin created a joint company, Comprehensive Decommissioning International (CDI) while Orano (formerly Areva) and U.S. demolition specialist Northstar created Accelerated Decommissioning Partners (ADP). The newly-combined groups will offer full ownership transfer and decommissioning services.

10-year goal

The DCDEP's target of completing radiological D&D within 10 years of closure represents a "significant challenge," Thomas Magette, president of Talisman International, a consultancy group, said.

Early planning of human resources, financial management and timely licensing and permitting submittals are crucial for controlling schedules and costs, Magette said.

California's lengthy environmental permitting processes will be a key challenge for the project, he said.

Southern California Edison's San Onofre Nuclear Generating Station (SONGS), shut down in June 2013, has yet to make significant progress in decommissioning and is yet to complete the removal of spent fuel to dry storage.

SCE awarded the D&D and site restoration contract for SONGS to a joint venture held by EnergySolutions and AECOM but the operator has suffered delays in spent fuel transfer and is continuing to work through environmental assessment procedures. SCE aims to complete decommissioning and site restoration within 20 years and estimates the total decommissioning cost at $4.4 billion.

PG&E may be able to achieve the DCDEP's 10 year target if permitting and decommissioning contracts are addressed well prior to shutdown, Magette said.

The SONGS plant was shut down with little prior notice and PG&E will benefit from years of planning, he noted.

Pre-shutdown activities at Diablo Canyon will include early engagement with environmental agencies to complete required technical studies and detailed permit application packages, Jones said.

PG&E can draw from decommissioning experience at Humbolt Bay, where final decommissioning activities are underway ahead of final site surveys and NRC approval in 2020.

Operators must not underestimate the timelines required for state and federal level permit approvals, Loren Sharp, Senior Director, Nuclear Decommissioning at PG&E, told a conference in 2017.

"Even starting two or three years in advance, we were pushing very hard to try and get Humboldt Bay to the point where we could continue operations and demolition with the permits we needed," he said.

By Neil Ford