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The Trump administration awarded PG&E with $271 million on Friday to pay off a portion of a loan that’s keeping the Diablo Canyon nuclear power plant running past its original expiration date.
In 2022, the state Legislature gave PG&E a $1.4 billion forgivable loan to cover the cost of operating the power plant through 2030 — as requested by Senate Bill 846.
State law permits PG&E to pay back the loan using Department of Energy funding and “excess electric generation market revenues in the final year of extended operations,” a PG&E spokesperson told The Tribune.
On Friday, the Department of Energy announced it was awarding PG&E $271 million to go to expenses “to help support Diablo Canyon Power Plant’s extended operations,” according to a news release.
The agency credited the funding as “a win for President Trump’s energy agenda.”
“Keeping Diablo Canyon online is critical to meeting California’s growing demand for affordable, reliable and secure electricity,” assistant secretary for nuclear energy Ted Garrish said in the release.
As part of the civilian nuclear credit program, the department pledged to pay PG&E up to $1.1 billion for expenses like “reactor component replacements, equipment upgrades and fuel procurement” or to “address unforeseen costs associated with extending the plant’s operations and maintaining continued service.”
“The civil nuclear credit program is helping preserve this vital source of base load power and ensuring that we don’t prematurely take reliable generation off the grid,” Garrish said in the release. “The Department of Energy is committed to unleashing American nuclear energy and keeping facilities like Diablo Canyon operating safely and reliably for the American people.”
PG&E celebrated the decision Friday, calling it “a win for Californians.”
“The funding will be used to repay the Department of Water Resources loan that helped enable Diablo Canyon’s extended operations through 2030, supporting reliable, affordable, carbon-free electricity as California transitions to a clean energy future,” the utility company said in a statement. “This partnership demonstrates how state and federal investments can work together to strengthen energy reliability and independence and deliver value for customers.”
Rep. Salud Carbajal also applauded the decision, adding that he helped pass the Bipartisan Infrastructure Law — which created the civilian nuclear credit program.
“Diablo Canyon has long been a critical source of carbon‑free electricity, and this $271 million award will help ensure that Diablo Canyon remains a stable part of our power grid as California continues its transition toward renewable energy,” he said in a statement. “Maintaining this facility is essential for meeting our climate goals, protecting grid reliability and supporting good‑paying jobs on the Central Coast.”
Will PG&E pay back full Diablo Canyon loan?
Though Friday’s funding marks a significant step forward for PG&E’s plans to pay off its loan, there are still questions to be determined.
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After Senate Bill 846 was signed into law, PG&E only applied for a $1.1 billion grant from the civilian nuclear credit program, leaving a potential $300 million gap between the grant and the loan balance.
PG&E is also not guaranteed to receive the full $1.1 billion — which could leave an even wider funding gap than $300 million.
In February, PG&E CEO Patti Poppe told Politico that the utility company should not have to pay the remaining amount — a move that would require the state to use taxpayer dollars to cover the deficit.
When asked if that was still the company’s stance in light of the grant funding announcement Friday, a PG&E representative would not specify whether PG&E planned to repay the entirety of the loan.
Instead, PG&E sent the Tribune a statement.
“It’s important to note that California policymakers have found it prudent and cost-effective to operate Diablo Canyon through 2030,” the statement said. “Without Diablo Canyon, we estimate electric customers throughout California would pay $2 billion more in electricity costs per year.”
Question of Diablo Canyon’s future operations still lingers
The Nuclear Regulatory Commission issued PG&E an operating license for the plant that expires in 2044 for Unit 1 and 2045 for Unit 2.
However, the state only approved operation of the plant through 2029 and 2030.
The state Legislature would need to pass a law to extend operations beyond 2030 in order for PG&E to use the entirety of its license.
Such a law is unlikely to pass this year, as Gov. Gavin Newsom said he’s leaving the decision up to the next governor.
This story was originally published August 17, 2026 at 9:25 AM with the headline “PG&E gets $271 million from Trump administration to help pay off Diablo Canyon loan.”
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