Last month, California’s largest utility unveiled a deal with environmental groups to scrap Diablo Canyon, the state’s last nuclear power plant, by 2025. Regulators may get details later this month.

The idea seems absurd, given the state’s campaign to combat climate change. Replacing the nuke’s output — cheap, zero-carbon power for 1.7 million homes — can only hurt the planet, as well as cost consumers billions of dollars that could otherwise go toward displacing fossil fuels.

Commentary More columns about Business by Dan McSwain

So the only way to understand the merits of scrapping a working nuke is to appreciate the upside for certain politicians, as well as the potential financial windfall for Diablo’s owner, Pacific Gas & Electric.

Bear in mind that PG&E in 2009 spent $842 million to upgrade its reactors so that Diablo could operate safely through 2040 — on the promise of “low-cost, zero-emission power,” the utility said at the time.

View the Video Diablo Canyon and the state carbon footprint

It was the same job later botched at San Onofre by Southern California Edison, a failure the utility seized upon to justify its permanent shutdown. Why kill the plant instead of fixing it? That’s easy; to reduce political risk and create an opportunity to build profitable replacement infrastructure. Edison blazed the trail PG&E follows.

As a bonus, closure would allow Gov. Jerry Brown and Sen. Barbara Boxer, at the end of their careers, to settle decades-old scores against the nuclear industry. Notably, Brown made sure nuclear energy doesn’t count against his mandate for utilities to get half their power by 2030 from zero-carbon, “renewable” sources. So instead of first crowding out fossil fuels, he’s killing emissions-free nuclear.

Let’s begin to untangle this saga of twisted incentives by recalling that electricity generation is the largest source of climate-changing greenhouse gases, accounting for nearly a third of U.S. emissions.

In 2012, after Edison killed San Onofre, air-quality officials reported a 24 percent jump in greenhouse-gas pollution from in-state generators; an extra 10 million metric tons of carbon dioxide, the equivalent of putting 2.1 million cars on the road for a year.

Low hydro-electric output caused some of the increase. Still, replacing giant nuclear plants — Diablo and San Onofre produced 14 percent of the state’s entire supply in 2010 — generally requires more production from generators burning fossil fuels, mostly natural gas in California.

Totally green, and expensive

Of course, executives at PG&E know this. So their deal with environmental groups offers to replace Diablo exclusively with renewable energy.

Doing so is technically possible. It would require construction of wires, roads, dams and battery stations that environmentalists typically oppose. Yet soaring cost may pose the biggest risk.

Although nuclear energy was notoriously expensive during the industry’s 1970s construction boom, decades later these old plants are mostly paid for and remarkably efficient.

And while it’s true that costs for solar and wind have declined dramatically over the years, they remain shockingly expensive.

PG&E executives predict that bills won’t rise because of Diablo’s shutdown. Yet they won’t provide details to justify this belief, saying some costs are unknown, while others are “proprietary.”

The prediction strains credulity. Let’s run some revealing numbers.

Wholesale power from Diablo Canyon costs an average 4 cents per kilowatt-hour, a PG&E spokesman said, using federal guidelines for calculating overall costs. By the way, that’s well above the U.S. average of 3.3 cents reported by the nuclear industry.

Now let’s look at renewables.

Wind power from a project built by 2020 will cost an average 7.4 cents per kilowatt-hour, says the official forecast by the Energy Information Administration.

The EIA has developed a methodology to compare “levelized” lifetime costs (including capital, operations, maintenance, decommissioning and fuel where applicable) across every feasible technology for additional electricity production. Lest we suspect the source, consider that this agency is part of the same federal government that’s subsidized and promoted renewable power under three consecutive presidents.

Solar triple nuclear cost

Solar is even worse for consumers than wind. Power would average 12.5 cents — more than triple Diablo’s 4 cents — if it comes from a new, utility-scale project using photovoltaic panels. Solar thermal would cost 24 cents per kilowatt-hour.

Those pennies add up fast. Replacing Diablo’s output of 18 billion kilowatt-hours a year with the cheapest solar, for example, would cost an extra $1.5 billion each year.

Yet we’re just getting started. Unfortunately for green ambitions, timing matters.

Nuclear reactors, and gas turbines, can run around the clock. Solar and wind produce no pollution, but they also produce no energy when the sun goes down or the wind stops.

So PG&E’s plan, like all aspirations to completely eliminate fossil and nuclear fuels, inevitably requires vast amounts of energy storage — which remains incredibly expensive after more than a century of research and development.

Unfortunately, the EIA doesn’t produce authoritative cost estimates for electricity storage. The market is still far too small, its chief analyst told me.

This omission is telling. Sure, Elon Musk can cram batteries into a Tesla selling for $70,000 and up, but mainstream power consumers seem unwilling to spend like George Clooney to keep the lights on, despite truly dazzling government subsidizes of roughly $20,000 per car.

California power consumers take note: Even with such sky-high pricing and subsidies, Tesla still loses money.

Lazard, an investment bank that raises money for green-power developers, predicted in December that rapid technological progress would yield batteries in five years that could supply electricity to big industrial customers costing a range of 25 cents to 50 cents per kilowatt-hour.

Batteries need power, too

Yet you still have to put power into these batteries. If wind energy falls to 7.4 cents as predicted, the Lazard forecast implies a best-case wholesale cost for reliable, renewable power of 32 cents per kilowatt-hour — eight times the cost of simply running Diablo Canyon for another decade or so, assuming nuclear opponents don’t politically block a federal relicensing due before 2025.

Note that solar-plus-batteries might, optimistically, cost nearly 38 cents per kilowatt hour. For perspective, the average residential charge for PG&E customers is 19 cents, a figure that includes wholesale power, distribution, transmission and utility profits.

Nuclear opponents rightly criticize the construction of new nuclear plants as horrendously expensive. That power would cost 9.5 cents per kilowatt-hour, the EIA reckons, or roughly a third of truly reliable solar.

Critics say advocates tend to hide costs to justify new nuclear construction. However, utilities have financial incentives from regulators to inflate stated capital investments in plants that have been in operation for decades.

Honest accounting for renewable energy makes both look good.

Thus we see why Americans, despite their historical passion for spending to clean up the environment, have been so reluctant to ditch traditional power sources based on the forecasts of green-energy developers.

The PG&E closure plan says engineers will rely on a broad mix of ill-defined alternatives, including conservation, pumping water into mountains at night, and “demand-response” programs that pay big consumers to shut down equipment on command.

This may not work out so well. The utility’s plan ignores another imperative of the green-energy lobby; the governor’s requirement that carmakers put 1.5 million electric cars on California’s roads by 2025.

Drive by day, charge by night

Assuming people actually drive all these cars, they’re going to want to charge them overnight. Each car uses as much as a typical house.

The resulting load will reach 7.5 billion kilowatt-hours in PG&E’s territory alone, says the mid-range forecast by Brown’s California Energy Commission.

In the real world, utilities are forced to cope with the inherent unreliability of wind and solar energy by quickly ramping up or down the old, relatively dirty, fossil-fueled plants they’ve had for years. Or they ask regulators to approve deals for new gas turbines, as San Diego Gas & Electric has done repeatedly as it expanded its green portfolio.

Such gyrations, which are mandated by state law, ensure gigantic duplication of capital. If you imagine a freight hauler buying two new trucks for a single load in case one breaks down, you glimpse why California’s utility bills are among the nation’s highest.

Indeed, federal data indicates the state’s electricity consumers paid $171 billion in higher costs over the last 20 years, compared to the national average. The deregulation debacle accounts for nearly half, while the green energy ambitions of the last two governors explains the rest.

Such is the price of environmentalists’ political support. New gas generators burn 40 percent less fuel and emit even less pollution, yet replacing old fossil plants might be misconstrued as giving up on renewable energy.

Besides, state law requires utilities only to buy green power. Actually reducing greenhouse gases is somebody else’s job.

To be sure, there’s a growing population of environmental advocates who want to save nuclear power in the U.S., precisely for its zero-carbon attributes.

Nuclear risk falls short of hype

As for safety, they point to researchers who can’t find the thousands of cancer deaths predicted from Chernobyl or Fukushima, and to actuaries who count more deaths from falling off solar rooftops than from nuclear plants. Yet reason is shouted down by 1970s-era fears of radioactive disaster.

And we mustn’t forget the financial incentives of utility executives.

In California, regulators don’t reward utilities for buying or generating power cheaply and marking it up to consumers. Instead, utility profits are set by the level of assets they hold — the stuff they build and maintain, from transmission lines to power plants.

And the rewards escalate, from about 8 percent on old, undepreciated assets to 11 percent for an equity investment in new transmission. This fat premium — a testament to utilities’ political influence — has barely budged as global returns on competing low-risk investments have plummeted.

The state’s Rube Goldberg political-regulatory system gives a utility executive little incentive to keep an efficient generator going indefinitely.

Far better to shove operational risk onto green-energy developers by signing power contracts, and then lobby to build transmission lines to distant supplies in deserts and mountain passes. Or install incredibly expensive batteries at nodes throughout an upgraded, “smart” regional grid.

I feel sorry for the engineers who were attracted to utility careers by the intellectual challenge of keeping the lights on 99.6 percent of the time, even as I can imagine the lobbyists licking their chops.

To wit, PG&E’s closure proposal depends on regulatory approval to collect Diablo’s entire $2 billion asset value from ratepayers by 2025, in the form of a special charge on bills, as well as fully recover new investments to replace the scrapped nuke.

State history this century suggests regulators and the Legislature will be happy to have consumers pay the bill. As always, the financial burden will fall hardest on the poor and middle class.

Meanwhile, the environmental movement will have squandered a chance to spend all these new billions getting rid of generators that cause climate change. Saving the planet yields to anti-nuclear passion.

“Fanaticism,” the philosopher George Santyana said, “consists of redoubling your effort when you’ve forgotten your aim.”

dan.mcswain@sduniontribune.com (619) 293-1280 Twitter: @McSwainUT