"This is an historic agreement," said Erich Pica, president of the Friends of the Earth environmental group, founded in 1969 in opposition to Diablo Canyon.
PG&E has long said the plant is safe from the largest potential earthquake in the region. But new research has led to more questions about nearby faults, their shaking potential and how the company evaluates them.
Under the deal, the utility agreed not to renew Diablo Canyon's license. Closing the plant should be cheaper than operating the facility through 2044 as planned, meaning the utility probably won't have to increase rates, PG&E said.
"The important thing is that we ultimately got to a shared point of view about the most appropriate and responsible path forward with respect to Diablo Canyon, and how best to support the state's energy vision," PG&E President Tony Earley said in a statement.
The move ends a power source once predicted to be necessary to meet the growing energy needs of the nation's most populous state. The industry also has waned nationally amid the rising costs of building new plants and maintaining old ones.
Plans to build new nuclear facilities in the U.S. South have faced costly delays, while proposals for others elsewhere in the country have been scratched. An abundance of inexpensive natural gas has owners of older nuclear plants wondering if the expensive repairs and maintenance are worthwhile.
Southern California Edison's San Onofre nuclear plant, between San Diego and Los Angeles, shut down permanently in 2013 after a $670 million equipment swap failed. The same year, Duke Energy announced it would close the Crystal River Nuclear Plant in Florida after a botched repair job left it facing potentially billions of dollars in additional work.
The country has 61 nuclear plants, including Diablo Canyon, according to the U.S. Energy Information Administration. California already has banned construction of new facilities until the federal government finds a permanent disposal site for radioactive waste.