Despite pledges of full federal reimbursement, a shortfall may leave taxpayers covering nearly 42% of the state’s loan to keep Diablo Canyon operating.
In a bold move two weeks before the close of the 2022 legislative session, Gov. Gavin Newsom pushed through a $1.4B state loan to keep California’s last nuclear power plant, Diablo Canyon, operating until 2030—well past its originally scheduled shutdown. The administration assured lawmakers the loan would be fully repaid through federal funding via the Department of Energy’s Civil Nuclear Credit program.
Yet as of August 2025, that promise is unraveling. The state may have to forgive approximately $588M—or nearly 42% of the loan—because the maximum federal award falls short of the total, and PG&E applied for even less due to “incentive fees” that are ineligible for reimbursement. PG&E’s projected profits from Diablo Canyon’s final year are unlikely to fill the gap, and alternative funding sources such as nuclear waste storage monies face legal and technical hurdles.
Consumer advocates view the situation skeptically. “It’s not a loan,” said Matthew Freedman, a lawyer for the Utility Reform Network. “It’s a gift,” reflecting frustration that taxpayer dollars may effectively subsidize PG&E.
The ramifications extend beyond mere numbers. Diablo Canyon supplies roughly 8% of California’s total electricity and 17-23% of its carbon-free power.
However, in a state already grappling with a multibillion-dollar budget deficit, the looming $588M “surprise bill” could erode public trust. As Minh aptly puts it: “Energy reliability matters—but such a fiscal shock is exactly what makes people lose faith in government promises. If you live here, this isn’t just about electricity—it’s about trust.”
