(a) It is the intent of the Legislature to make available a one billion four hundred million dollar ($1,400,000,000) loan from the General Fund to the Department of Water Resources for the purpose of being loaned to the borrower for extending operations of the Diablo Canyon powerplant facility, to dates that shall be no later than November 1, 2029, for Unit 1, and no later than November 1, 2030, for Unit 2. The Legislature intends to transfer an initial six hundred million dollars ($600,000,000) from the General Fund to the department. It is the intent of the Legislature that the remaining eight hundred million dollars ($800,000,000) shall require future legislative authorization before the transfer of funds.

(b) (1) To facilitate the extension of the operating period, the department may make a loan or loans to the borrower out of any funds that the Legislature transfers to the Diablo Canyon Extension Fund established pursuant to Section 25548.6, up to a total principal amount not to exceed one billion four hundred million dollars ($1,400,000,000). Of this amount, up to three hundred fifty million dollars ($350,000,000) may be paid out by the department upon the execution of, and according to the terms of, loan agreements described in subdivision (c). For any additional amount beyond that three hundred fifty million dollars ($350,000,000), but not more than a total of six hundred million dollars ($600,000,000), the department shall submit a written expenditure plan requesting the release of additional funding pursuant to this section to the Department of Finance and the Joint Legislative Budget Committee. The Department of Finance may provide funds not sooner than 30 days after notifying, in writing, the Joint Legislative Budget Committee, or any lesser time determined by the chairperson of the joint committee, or the chairperson’s designee.

(2) The department shall not disburse the entire loan amount in one lump sum, but shall disburse the loan amount pursuant to a loan disbursement schedule established pursuant to paragraph (3) of subdivision (c).

(c) The department may enter into a loan agreement with the borrower. In addition to any terms and conditions determined necessary by the department, the loan agreement shall include all of the following:

(1) (A) A covenant by the borrower that it shall take all steps necessary to secure a grant or other funds available for the operation of a nuclear powerplant from the United States Department of Energy, and any other potentially available federal funds, to repay the loan.

(B) If the operator is not deemed eligible by the United States Department of Energy for a federal funding program by March 1, 2023, or the earliest date set by the Department of Energy for determining eligibility pursuant to the Civil Nuclear Credit Program established by Section 18753 of Title 42 of the United States Code, the operator shall return all unexpended and uncommitted loan moneys and the department shall immediately terminate the loan.

(2) An interest rate that the department may charge, set at a rate less than the Pooled Money Investment Account rate.

(3) A provision that the loan shall be provided in tranches, with any disbursements following the initial disbursement made contingent upon the semiannual true-up review pursuant to Section 25548.4, and which shall be based on milestones set forth in annual plans for the purpose of project costs, operations and maintenance, internal and external labor, capital improvement costs, fuel purchase, fuel storage, regulatory compliance costs, transition fees, and other expenses associated with the extension of the operating periods and current expiration dates, to cover incremental costs incurred by the borrower in its efforts to extend the operating period. Covered costs shall be limited to those necessary to preserve the option of extending the Diablo Canyon powerplant or to extend the Diablo Canyon powerplant’s operation to maintain electrical reliability.

(4) Events that would trigger loan repayment obligations by the borrower, including, but not limited to, any of the following:

(A) Failure of the borrower to submit a timely and complete application for funding from the Department of Energy for determining eligibility pursuant to the Civil Nuclear Credit Program established by Section 18753 of Title 42 of the United States Code.

(B) Failure to disclose to the department any known safety risk, seismic risk, environmental hazard, or material defect that would disqualify the application of the borrower for grants or funds for the operation of a nuclear powerplant from a funding program of the United States Department of Energy or otherwise disallow or substantially delay any necessary permitting or approvals necessary for the extension of operating the Diablo Canyon powerplant.

(C) A change in ownership of the Diablo Canyon powerplant, as determined by the Public Utilities Commission pursuant to § 851 of the Public Utilities Code, before August 26, 2025.

(5) Events that would trigger a suspension or early termination of the loan agreement, including, but not limited to, any of the following:

(A) A determination by the department that the borrower has not obtained the necessary license renewal, permits, and approvals.

(B) A determination by the department that license renewal, permit, or approval conditions are too onerous, or will generate costs that exceed the maximum amount of loan authorized pursuant to paragraph (1) of subdivision (b).

(C) A determination by the Public Utilities Commission that an extension of the Diablo Canyon powerplant is not cost effective or imprudent, or both.

(D) A determination by the commission, pursuant to Section 25233.2 and voted upon at a commission’s business meeting, that the state’s forecasts for the calendar years 2024 to 2030, inclusive, do not show reliability deficiencies if the Diablo Canyon powerplant is retired by 2025, or that extending the Diablo Canyon powerplant to at least 2030 is not necessary for meeting any potential supply deficiency.

(E) A unexpected early retirement of the Diablo Canyon powerplant.

(F) A determination by the department that permitted timeframes are not viable to accomplish the purposes of this chapter.

(G) A determination by the department that expenses are unexpected or too large, or that repayment is less likely than initially anticipated.

(H) A final determination by the United States Department of Energy that the Diablo Canyon powerplant is not eligible for the Civil Nuclear Credit Program established by Section 18753 of Title 42 of the United States Code.

(6) Conditions that would result in forgiveness, in whole or in part, of the loan by the department, provided that any amount forgiven is limited to amounts already committed or incurred and that any unspent or uncommitted remainder of the loan proceeds is required to be repaid.

(7) No loan proceeds shall be treated as shareholder profits or be paid out as dividends.

(8) A provision prohibiting shareholder dividends from being deemed eligible costs under the loan.

(9) A covenant that, if the United States Nuclear Regulatory Commission or any state agency requires, during the process of relicensing the Diablo Canyon powerplant, seismic safety or other safety modifications to the powerplant that would exceed the loan amount specified in paragraph (1) of subdivision (a), any application or approval to extend the operation period the commission shall promptly evaluate whether the extension of the Diablo Canyon powerplant remains a cost-effective means to meet California’s mid-term reliability needs, before any subsequent authorization and appropriation by the Legislature of an amount in excess of the loan amount.

(10) A covenant that the operator shall allocate all revenues received as a result of federal or state tax credits or incentives, excluding funds specifically allocated by a federal program for the costs of extending power plant operations, on a cost-share basis of 10 and 90 percent between the operator corporation and ratepayers of a load-serving entity responsible for the costs of the continued operation, respectively.

(11) A covenant addressing circumstances in which the operator must indemnify the department and the state for liability associated with the Diablo Canyon powerplant.

(12) A covenant requiring the operator to comply with the conditions specified in Section 25548.7.

(13) A covenant that the operator shall conduct an updated seismic assessment.

(14) A covenant that the operator shall commission a study by independent consultants to catalog and evaluate any deferred maintenance at the Diablo Canyon powerplant and to provide recommendations as to any risk posed by the deferred maintenance, potential remedies, and cost estimates of those remedies, and a timeline for undertaking those remedies.

(15) A covenant that the operator shall report to the commission no later than March 1, 2023, on the available capacity of existing wet and dry spent fuel storage facilities and the forecasted amount of spent fuel that will be generated by powerplant operations through the retirement dates for both units as of August 1, 2022, and November 1, 2029, for Unit 1 and November 1, 2030, for Unit 2.

(16) A monthly performance-based disbursement equal to seven dollars ($7) for each megawatthour generated by the Diablo Canyon powerplant during the period before the start of extended operations. The disbursement is contingent upon the operator’s ongoing pursuit of an extension of the operating period and continued safe and reliable Diablo Canyon powerplant operations.

(d) Except for this section and the loan agreement provided for under subdivision (c), notwithstanding § 11019 of the Government Code or any other law, the department may disburse the tranches of funds specified in paragraph (3) of subdivision (c) to the borrower in advance of the borrower having committed to, or incurred, eligible costs.

(Added by Stats. 2022, Ch. 239, Sec. 5. (SB 846) Effective September 2, 2022.)