California lawmakers vote to keep state's only nuclear plant running

© Reuters. FILE PHOTO: A flock of goats walk on a hillside above Diablo Canyon nuclear power plant at Avila Beach, California in this June 22, 2005 REUTERS/Phil Klein//File Photo

(Reuters) - California lawmakers on Thursday passed a bill approving a $1.4 billion government loan to extend the life of the state's only nuclear power plant to shore up electric reliability.

The bill, backed by Governor Gavin Newsom but opposed by some environmental groups, marks a reversal of the state's 2016 decision to retire PG&E (NYSE:PCG) Corp's Diablo Canyon power plant by 2025.

If signed by Newsom, the legislation delays Diablo Canyon's retirement by five years to 2030 and exempts some state agencies from complying with certain environmental laws to enable the extension.

The bill easily won the support of the required two-thirds of lawmakers it needed to pass.

California wants to produce all of its electricity from clean sources by 2045, but has faced challenges with that transition, such as rolling blackouts during a summer heatwave in 2020. Nuclear energy, which does not emit climate warming emissions, accounts for about 9% of the state's electricity and nearly a fifth of its carbon-free power.

The bill's passage was applauded by Carbon Free California, a group dedicated to keeping the plant open.

"By preserving the carbon-free power generation at Diablo Canyon through 2030 and advancing bold policy to expand renewables, California solidifies its place as a global leader in combating climate change," the group said.

Some environmental groups had argued the plant poses a safety threat, will be expensive to keep operating and should be replaced as quickly as possible by renewable energy.

"We have no need for this potentially dangerous power source given the unstoppable momentum toward a state running on 100% clean, safe and renewable power," Environment California State Director Laura Deehan said in an emailed statement.

The bill was introduced days before the end of the state's legislative session at the behest of Newsom, who wants PG&E to apply for new federal funding for nuclear power plants by a Sept. 6 deadline. PG&E cannot apply for the funding without a change in state law allowing for the plant's extension.

California has said the federal government is expected to cover most or all of the cost of the $1.4 billion loan.