Governor Gavin Newsom’s ambitious plan to keep Diablo Canyon Nuclear Power Plant open is facing serious financial scrutiny, with taxpayers potentially on the hook for hundreds of millions of dollars. The state authorized a $1.4 billion loan to extend the plant’s operations, promising federal funds would cover the entire cost - but that promise now looks increasingly uncertain.

The loan was initially pitched as a strategic move to maintain California’s energy stability during its transition to renewable sources. Diablo Canyon currently generates about 8% of the state’s total energy and 17% of its carbon-free electricity. However, emerging details suggest the financial calculations may have been overly optimistic.

According to recent projections, the state might be required to forgive up to $588 million - approximately 42% of the original loan. The federal Department of Energy can only award $1.2 billion per cycle, which is already $200 million short of the state’s loan. PG&E has applied for even less, around $1.1 billion, creating an immediate funding gap.

Additional complications arise from PG&E’s own financial projections. The company doesn’t anticipate generating profit from the plant in its final operational year, meaning alternative repayment sources are limited. The potential federal funds for nuclear waste storage would cover only a fraction of the shortfall and may not even be legally permissible.

This financial uncertainty comes at a particularly challenging time for California, which is already facing a $12 billion budget deficit. Lawmakers like Senator Scott Wiener have expressed serious concerns about the loan’s structure and potential taxpayer risk.

Experts and advocates are increasingly critical of the deal. Matthew Freedman from The Utility Reform Network bluntly stated it’s “not a loan, but a gift” to PG&E. San Diego Assemblymember Tasha Boerner argued the process “undermines public trust” by rushing through legislation without proper due diligence.

As the state grapples with this complex financial scenario, one thing becomes clear: the seemingly straightforward plan to keep Diablo Canyon operational has turned into a high-stakes financial gamble with potentially significant consequences for California’s taxpayers.