Fitch: PG&E Reaches Joint Proposal to Close the Diablo Canyon Nuclear Facility

NEW YORK--()--On June 20, 2016, Pacific Gas and Electric (PG&E) announced that it reached a joint proposal to close the 2,200-megawatt Diablo Canyon (DC) nuclear facility at the expiry of unit 1's and 2's operating licenses. Fitch Ratings does not expect the planned retirement of PG&E's DC nuclear facility to affect the utility's creditworthiness or that of its corporate parent, PG&E Corporation.

Under the joint proposal, PG&E plans to replace DC with a portfolio of energy efficiency, renewables and energy storage consistent with California energy policy. PG&E intends to retire the DC nuclear facility without raising rates and, as part of the agreement, agrees to voluntarily increase its renewable portfolio standard (RPS) to 55% in 2031 - 2045.

PG&E announced on June 20, 2016 a joint proposal with several parties to permanently close units 1 and 2 at its Diablo Canyon nuclear facility at the expiry of the units' current operating licenses in 2024 and 2025, respectively. The joint proposal is subject to CPUC authorization and contingent upon negotiation of a new short-term land lease with the California State Land Commission (SLC). PG&E's current land lease expires in 2018 and the utility will seek a lease of sufficient duration to accommodate the DC decommissioning process.

PG&E plans to file its joint proposal application with the California Public Utilities Commission (CPUC) within thirty days of approval of the long-term land lease by the SLC. Approval of the long-term land lease by the SLC and PG&E's joint proposal by the CPUC is not assured. PG&E intends to request a CPUC decision regarding its proposal to retire the DC nuclear facility by December 31, 2017.

Separately, Fitch notes that the CPUC is scheduled to conduct an open meeting June 23, 2016 at which the commission could issue a final decision in PG&E's pending 2015 natural gas transmission and storage rate case. For further information regarding this issue, please refer to the press release "Fitch: ALJ PD Brings Resolution of PG&E's 2015 GT&S Rate Case Closer" dated May 11, 2016.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Primary Analyst
Philip W. Smyth, CFA
Senior Director
+1-212-908-0531
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY, 10004
or
Secondary Analyst
Julie Jiang
Director
+1-212-908-0708
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Philip W. Smyth, CFA
Senior Director
+1-212-908-0531
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY, 10004
or
Secondary Analyst
Julie Jiang
Director
+1-212-908-0708
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: alyssa.castelli@fitchratings.com