PG&E 2012 Annual Report Download - page 35

Diablo Canyon Nuclear Power Plant
In March 2012, the NRC issued several orders to the owners of all U.S. operating nuclear reactors to implement
the highest-priority recommendations issued by the NRC’s task force to incorporate the lessons learned from the
March 2011 earthquake and tsunami that caused significant damage to the Fukushima-Dai-ichi nuclear facilities in
Japan. Among other directives, the NRC requested nuclear power plant owners to provide additional information
about seismic and flooding hazards and emergency preparedness. In response to the orders, the utilities are required
to re-evaluate the models used to determine compliance with the license conditions relating to seismic and flooding
design. Each nuclear power plant owner will be required to be in full compliance with the NRC orders within two
refueling outages or by December 31, 2016, whichever comes first. The Utility has already provided the initially
requested information to the NRC and will continue to respond to the NRC orders as required. After reviewing the
information submitted by the Utility and other nuclear power plant owners, the NRC may issue further orders which
may include facility-specific orders. The Utility will incur costs to comply with Fukushima related NRC orders. The
Utility has requested that the CPUC allow the Utility to recover costs incurred in 2014 through 2016 to comply with
NRC orders through rates to be authorized by the CPUC in the Utility’s 2014 GRC.
The Utility also has filed an application at the NRC to renew the operating licenses for the two operating units
at Diablo Canyon which expire in 2024 and 2025. In May 2011, after the Fukushima-Dai-ichi event, the NRC granted
the Utility’s request to delay processing the Utility’s application until certain advanced seismic studies were
completed by the Utility. When the Utility began the studies in 2010, it was anticipated that the studies would be
completed in 2013 or 2014, depending upon whether required permits were timely obtained from environmental and
local government agencies. In November 2012, the California Coastal Commission denied the Utility’s request for
permits to conduct off-shore three-dimensional high-energy seismic studies, in part, based on the finding that,
because the studies were not necessary for NRC compliance, the potential environmental effects did not outweigh
the risks. The Utility has completed the data collection phases for the on-shore advanced seismic studies as well as
other off-shore low-energy seismic studies. The Utility is assessing whether it has sufficient seismic data without
conducting high energy off-shore studies or if other studies are needed. Depending on the outcome of the Utility’s
assessment, it is uncertain when the Utility would request the NRC to resume the relicensing proceeding. In order to
receive renewed operating licenses, the Utility also must undergo a consistency review by the California Coastal
Commission. The disposition of the Utility’s relicensing application also will be affected by the terms and timing of
the NRC’s ‘‘waste confidence’’ decision regarding the environmental impacts of the storage of spent nuclear fuel
which is not expected to be issued before September 2014. The NRC has stated that it will not take action in
licensing or re-licensing proceedings until it issues a new ‘‘waste confidence decision.’’ (See ‘‘Risk Factors’’ below.)
Finally, the CPUC is also considering the Utility’s application to recover estimated costs to decommission the
Utility’s nuclear facilities at Diablo Canyon and the retired nuclear facility located at the Utility’s Humboldt Bay
Generation Station. The Utility files an application with the CPUC every three years requesting approval of the
Utility’s estimated decommissioning costs and authorization to recover the estimated costs through rates. (See the
discussion of the 2012 Nuclear Decommissioning Cost Triennal Proceeding in Note 2 of the Notes to the
Consolidated Financial Statements.)
Other Matters
Electric Distribution Facilities
The Utility conducted a system-wide review of its patrol and inspection records for underground and overhead
electric distribution facilities after the Utility reported to the CPUC in July 2012 that some of the Utility’s facilities
were not patrolled and/or inspected at the periodic intervals required by the CPUC’s rules. The Utility concluded a
system-wide review and found that approximately 0.4% of its total electric distribution facilities had not been
patrolled and/or inspected at the intervals required by CPUC rules. The Utility has submitted the results of its review
to the SED and has completed the patrols and inspections of all such facilities.
In October 2012, the Utility also reported to the CPUC that it planned to re-inspect electric distribution
underground and overhead facilities that had been identified as inspected by a contractor after a review determined
that the inspection practices used by some of the contractor’s employees did not meet the Utility’s standards. The
re-inspections have been completed.
PG&E Corporation and the Utility are uncertain how the above matters will affect the other regulatory
proceedings and current investigations involving the Utility, or whether additional proceedings or investigations will
be commenced that could result in regulatory orders or the imposition of penalties on the Utility.
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