California Taxpayers Gave PG&E a Huge, Supposedly Safe Loan. The Losses are Already Mounting

Source: CalMatters  |  By Malena Carollo

Two weeks before the 2022 legislative session ended, Gov. Gavin Newsom’s administration came to lawmakers with a big ask: authorize a $1.4 billion state loan to keep open California’s last nuclear power plant, Diablo Canyon. The money was supposed to be a stopgap that would be fully repaid by an expected federal award. There was even a fail-safe: if the award fell short, other federal funds or profits from Diablo Canyon’s final year could cover the difference. The bill passed. Despite promises from Newsom’s administration and legislators at the time, CalMatters found the state may be required to forgive as much as $588 million, about 42% of the loan. 

The shortfall is emerging at a time when the state’s general fund is already facing a $12 billion budget hole, and advocates, lawmakers and regulators have raised concerns about portions of the loan benefiting PG&E shareholders, which the law forbids. “It’s not a loan,” Matthew Freedman, lawyer for The Utility Reform Network, said. “It’s a gift.”