California legislators are considering paying Valero Energy between $80 million and $200 million to cover maintenance at its Benicia refinery in order to prevent a shutdown currently slated by April, according to people familiar with negotiations.
Under the contemplated arrangement, the state would fund routine maintenance to keep the San Francisco–area plant operating. Major overhauls every four to five years are among the largest costs for refiners and can trigger closure decisions, the sources said.
Policy posture toward refiners has recently shifted: the California Energy Commission has walked back plans to impose a profit cap on refiners, identified by industry observers as a key factor in recent California fuel-plant closures.
Meanwhile, Gov. Gavin Newsom has encouraged regulators to work with operators to maintain in-state fuel supply.
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Benicia would face roughly a $10 million budget shortfall if the refinery closes, Mayor Steve Young said. “We can’t absorb that without serious consequences for our public services,” he added.
If lawmakers can finalize and file a bill, the state could authorize a maintenance funding package aiming to keep the Benicia facility operating past the April closure date.
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