2008 Corporate Responsibility Report

How we are creating a smarter foundation for a sustainable future

Providing Nuclear Power Safely and Responsibly

In a carbon-constrained world, nuclear power is a critical part of the solution to addressing global warming. It is also a key element of our commitment to delivering safe, reliable and carbon-free energy to our customers.

An important energy resource for the state, PG&E’s Diablo Canyon Power Plant (Diablo Canyon), located along the Central Coast of California, generated 22 percent of the electricity used by our more than 5.1 million customers last year and met more than 8 percent of California’s electricity needs. With a strong safety culture, Diablo Canyon is also among the most efficient and safest nuclear plants in the country and has received top ratings from industry peers.

New steam generators will make the Diablo Canyon Power Plantís energy contribution reliable for years to come.

The power plant is an important part of the local community. Plant employees account for nearly 1,300 jobs, making PG&E the largest private-sector employer in the county and the largest property-tax payer in the county. PG&E also gives back to the local community through more than $700,000 in annual charitable contributions and employee volunteer efforts with local schools and organizations such as Habitat for Humanity, Parkinson’s Research, The People’s Kitchen and Big Brothers/Big Sisters.

PG&E completed the first half of a $700 million project last year by replacing four steam generators in one of the nuclear generating units. Steam generators drive the plant’s electric turbines. The project was an example of operational excellence, having been completed on time, within budget and with strong safety results. The final four generators were installed in early 2009, concluding the largest construction project at the plant since it was built.

Last year, we also completed the construction of Diablo Canyon’s Independent Spent Fuel Storage Installation (ISFSI). The dry cask storage facility will help ensure the continued operation of the plant through the term of its current license. The first fuel will be loaded in 2009, and we plan to safely store the used fuel on-site until the federal government fulfills its obligation to take ownership of the fuel by building a permanent storage facility. (For additional information on waste storage and other issues associated with Diablo Canyon, please see page 81 of PG&E’s 2008 Annual Report to Shareholders.)

PG&E also reached a major milestone with our Humboldt Bay Power Plant ISFSI facility—located near Eureka, California—last year when the fifth and final used fuel container was moved to its on-site dry cask storage. PG&E was granted a license by the Nuclear Regulatory Commission (NRC) to construct and operate an on-site storage facility in 2005 after we demonstrated that the system would safely store the used fuel until a permanent storage facility was available. We are now decommissioning the plant to return the site to a non-nuclear facility.

Current California law prohibits the building of any new nuclear power plants in the state until the federal government establishes a permanent national waste storage facility. PG&E currently has no plans to develop new nuclear generating capacity.

Safety Remains Top Priority

Safety continues to be the top priority for PG&E and our employees. Our safety performance in the areas of industrial, radiological and nuclear safety continue to improve, particularly in the areas of recordable and lost-time injuries. In addition to safety, Diablo Canyon has implemented a comprehensive security program, which includes training and planning with plant operations, emergency planning, local law enforcement agencies and state and federal authorities.

Partnering with the local county and the State of California on emergency preparedness, plant employees also worked side by side last year with numerous government agencies during test exercises conducted by the NRC and Federal Emergency Management Agency.