Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage. The Nuclear Facility Decommissioning Act of 1985 requires each electrical corporation owning or operating nuclear facilities to establish an externally managed, segregated fund for payment of decommissioning costs of those facilities, establishes requirements for collection of moneys for decommisioning costs in the utilitys rates and charges, and requires that the expenses associated with decommissioning of nuclear facilities be paid from those funds. Pursuant to the act, the commission ordered 2 nuclear decommissioning funds be established for the Diablo Canyon Units 1 and 2 powerplant.

This bill would require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or when the Pacific Gas and Electric Company closes the powerplant upon the expiration of its current licenses. The bill would require the commission to approve the withdrawal of $400,000 from the nuclear decommissioning funds established for the Diablo Canyon Units 1 and 2 powerplant for use by the commission for additional staffing to urgently effectuate the 3rd-party assessment.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

This bill would declare that it is to take effect immediately as an urgency statute.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage. The Nuclear Facility Decommissioning Act of 1985 requires each electrical corporation owning or operating nuclear facilities to establish an externally managed, segregated fund for payment of decommissioning costs of those facilities, establishes requirements for collection of moneys for decommisioning costs in the utilitys rates and charges, and requires that the expenses associated with decommissioning of nuclear facilities be paid from those funds. Pursuant to the act, the commission ordered 2 nuclear decommissioning funds be established for the Diablo Canyon Units 1 and 2 powerplant.

This bill would require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or when the Pacific Gas and Electric Company closes the powerplant upon the expiration of its current licenses. The bill would require the commission to approve the withdrawal of $400,000 from the nuclear decommissioning funds established for the Diablo Canyon Units 1 and 2 powerplant for use by the commission for additional staffing to urgently effectuate the 3rd-party assessment.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

This bill would declare that it is to take effect immediately as an urgency statute.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage. Existing law establishes the Public Utilities Commission Utilities Reimbursement Account and authorizes the commission to annually determine a fee to be paid by every public utility providing service directly to customers or subscribers and subject to the jurisdiction of the commission, except for a railroad corporation. The Nuclear Facility Decommissioning Act of 1985 requires each electrical corporation owning or operating nuclear facilities to establish an externally managed, segregated fund for payment of decommissioning costs of those facilities, establishes requirements for collection of moneys for decommisioning costs in the utilitys rates and charges, and requires that the expenses associated with decommissioning of nuclear facilities be paid from those funds. Pursuant to the act, the commission ordered 2 nuclear decommissioning funds be established for the Diablo Canyon Units 1 and 2 powerplant.

This bill would require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or when the Pacific Gas and Electric Company closes the powerplant upon the expiration of its current licenses. The bill would appropriate $400,000 from the account to the commission for additional staffing to urgently effectuate the third party assessment. The bill would require the commission to approve the withdrawal of $400,000 from the nuclear decommissioning funds established for the Diablo Canyon Units 1 and 2 powerplant for use by the commission for additional staffing to urgently effectuate the third-party assessment.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage. Existing law establishes the Public Utilities Commission Utilities Reimbursement Account and authorizes the commission to annually determine a fee to be paid by every public utility providing service directly to customers or subscribers and subject to the jurisdiction of the commission, except for a railroad corporation.

This bill would require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if when the Pacific Gas and Electric Company were to decide not to pursue license renewal. closes the powerplant upon the expiration of its current licenses. The bill would appropriate $400,000 from the account to the commission for additional staffing to urgently effectuate the third party assessment.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage.

This bill would require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if the Pacific Gas and Electric Company were to decide not to pursue license renewal.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage.

This bill would direct the commission to require the Pacific Gas and Electric Company to submit an assessment, require the commission to cause an assessment to be completed by no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if the Pacific Gas and Electric Company were to decide not to pursue license renewal. The bill would require the commission to consider any further assessments or reviews needed that could assist local efforts to prepare for a closure of the Diablo Canyon Units 1 and 2 powerplant.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage.

This bill would direct the commission to require the Pacific Gas and Electric Company to submit an assessment, no later than July 1, 2018, conducted by an independent 3rd party, selected as specified, of the adverse and beneficial economic impact impacts, and net economic effects, that could occur, and of potential ways for the state and local jurisdictions to mitigate that the adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if the Pacific Gas and Electric Company were to decide not to pursue license renewal. The bill would require the commission to consider any further assessments or reviews needed that could assist local efforts to prepare for a closure of the Diablo Canyon Units 1 and 2 powerplant.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage.

This bill would direct the commission to require the Pacific Gas and Electric Company to submit an assessment, no later than July 1, 2018, conducted by an independent third 3rd party, selected as specified, of the adverse economic impact that could occur occur, and of potential ways to mitigate that adverse economic impact, if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire. expire or if the Pacific Gas and Electric Company were to decide not to pursue license renewal. The bill would require the commission to consider any further assessments or reviews needed that could assist local efforts to prepare for a sudden closure of the Diablo Canyon Units 1 and 2 powerplant.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. The Diablo Canyon nuclear powerplant, composed of reactor Units 1 and 2, is operated by the Pacific Gas and Electric Company in the County of San Luis Obispo. Existing law requires the commission to convene, or continue, until August 26, 2025, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Units 1 and 2 powerplant, including the surrounding areas of the facility and areas of nuclear waste storage.

This bill would direct the commission to require the Pacific Gas and Electric Company to submit an assessment, conducted by an independent third party, of the adverse economic impact that could occur if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplants current operating licenses expire. The bill would require the commission to consider any further assessments or reviews needed that could assist local efforts to prepare for a sudden closure of the Diablo Canyon Units 1 and 2 powerplant.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Pacific Gas and Electric Company.

 UNFINISHED BUSINESS  

Bill No: SB 968

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 9-0, 3/29/16

AYES: Hueso, Morrell, Cannella, Gaines, Hill, Lara, Leyva, McGuire, Wolk

NO VOTE RECORDED: Hertzberg, Pavley

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

SENATE FLOOR: 36-0, 6/1/16

AYES: Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

NO VOTE RECORDED: Allen, Liu, Pan, Runner

ASSEMBLY FLOOR: 78-0, 8/24/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires an assessment of the regional economic effect that would result from closure of the Diablo Canyon Power Plant.

Assembly Amendments require the California Public Utilities Commission (CPUC) (1) to distribute copies to relevant state and local jurisdictions, and convene a public forum in the County of San Luis Obispo on the findings and recommendations of the assessment; and (2) to authorize Pacific Gas and Electric (PG&E) to withdraw $400,000 from the nuclear decommissioning trust funds to pay for additional staffing to urgently effectuate the third-party assessment required by this bill.

ANALYSIS:

Existing law:

1. Authorizes the CPUC to fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities, including electrical and gas corporations, subject to its jurisdiction. (Article 12 of the California Constitution)
2. Requires that all charges demanded or received by any public utility for any product, commodity or service be just and reasonable, and that every unjust or unreasonable charge is unlawful. (Public Utilities Code §451)
3. Authorizes the collection of funds, on a nonbypassable basis, required for site restoration when an electrical corporation’s nuclear powerplant is removed from service. (Public Utilities Code §379)
4. Requires each electrical corporation owning or operating nuclear facilities to establish an externally managed, segregated fund for expenses associated with decommissioning of nuclear facilities. (Public Utilities Code §8321)

This bill:

1. Directs the CPUC to cause an assessment, including potential mitigation actions, to be completed by no later than July 1, 2018, of the adverse and beneficial economic effects, and net economic effects, for the County of San Luis Obispo and the surrounding regions that could occur if Diablo Canyon nuclear powerplant permanently shut down before the powerplant’s current operating licenses from the Nuclear Regulatory Commission expire or when PG&E closes the powerplant upon the expiration of its current licenses.
2. Requires the assessment to be conducted by an independent third party, selected by the CPUC from among qualified entities who respond to a request for proposal by the CPUC.
3. Requires the independent third party to consult with governmental and community-based entities in San Luis Obispo County, as well as the Center for Labor Research and Education at University of California Berkeley.
4. Requires the CPUC to make the assessment publicly available on its Web site, distribute copies to relevant state and local jurisdictions, and convene a public forum in the County of San Luis Obispo on the findings and recommendations of the assessment.
5. Requires the CPUC to approve the withdrawal of $400,000 from the nuclear decommissioning trust funds established by PG&E and to use the moneys for additional staffing to urgently effectuate the third-party assessment required by this bill.
6. Declares the need for a special law: Diablo Canyon is the only nuclear powerplant operating in California.

Background

Diablo Canyon’s uncertain future. There remains one operating nuclear powerplant in California – PG&E’s Diablo Canyon Power Plant in San Luis Obispo County. According to PG&E, the plant produces approximately 10 percent of California’s energy load and about 20 percent of PG&E’s overall electricity.

Diablo Canyon is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, respectively, for units 1 and 2. In 2009, PG&E filed an application with NRC to extend Diablo Canyon’s operation by 20 years. The outcome of the application is uncertain.

In addition to the application with NRC, continued operation of Diablo Canyon is subject to state permitting and regulation. Diablo Canyon sits on state tideland. It operates pursuant to leases, issued by the State Lands Commission, that expire in 2018 and 2019, for units 1 and 2, respectively. It is unknown whether the State Lands Commission will renew the leases. And, of course, the CPUC must approve ratepayer funding to pay for operation of Diablo Canyon.

These permitting uncertainties, along with the sudden and seemingly unexpected closure of the San Onofre Nuclear Generating Station (SONGS) in 2013, lead many in the region around Diablo Canyon to contemplate a future without the nuclear powerplant. Whatever its other effects, shuttering of Diablo Canyon would remove a major contributor to the economy of San Luis Obispo County and northern Santa Barbara County.

Bill proponents call for a study by an independent, third party that would, at a minimum, consider decreases in local tax revenues, decreases in local workforce, and indirect economic losses. Proponents conclude that such a study, informed by the experiences of SONGS and similar facilities that have shut down elsewhere, would better prepare the communities that would be most affected by closure of Diablo, thereby enabling mitigation of the worst economic effects.

Related/Prior Legislation

AB 361 (Achadjian, Chapter 399, Statutes of 2015) extended the sunset date for the Nuclear Planning Assessment Special Account (NPASA) from July 1, 2019, to August 26, 2025, to continue funding emergency service programs and planning activities for the Diablo Canyon Power Plant in San Luis Obispo County. The bill passed each house of the Legislature with zero “no” votes.

SB 657 (Monning, 2015) would have required the CPUC to convene, or continue, until August 25, 2025, the independent peer review panel to review PG&E’s seismic studies of PG&E’s Diablo Canyon Power Plant. The bill passed the Senate on a vote of 38-0. The bill was held at the Assembly Desk.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee:

• Appropriates $400,000 to the CPUC to fund the assessment and hire limited-term staff to provide oversight (Utilities Reimbursement Fund).
• The CPUC estimates it will require $250,000 to contract with an independent third party to perform the assessment and an additional $170,000 to provide oversight.

SUPPORT: (Verified 8/24/16)

Alliance for Nuclear Responsibility

City of Morro Bay

City of San Luis Obispo

Economic Vitality Corporation

Pacific Gas and Electric Company

San Luis Coastal Unified School District

San Luis Obispo County Board of Supervisors

Santa Barbara County Board of Supervisors

OPPOSITION: (Verified 8/24/16)

Azul

CodePink Women for Peace, Golden Gate Chapter

Committee to Bridge the Gap

Desert Protection Society

Ecological Options Network

Food and Water Watch

Green Action for Health and Environmental Justice

Green Party of San Luis Obispo

Greenpeace

No Nukes Action Team

Northern Chumash Tribal Council

Nuclear Energy Information Services

Nuclear Hotseat

Nuclear Information and Resource Service

Nuclear Watch South

People of Faith for Justice

People’s Democratic Club of Santa Cruz County

Physicians for Social Responsibility-Los Angeles

Physicians for Social Responsibility-San Francisco

Public Citizen

Residents Organized for Safe Energy

Rocketdyne Cleanup Coalition

San Francisco Occupy Forum Environmental Working Group

San Luis Obispo Mothers for Peace

San Onofre Safety

Southern California Federation of Scientists

Sunflower Alliance

Teens Against Toxins

Tri-Valley CAREs

West Berkeley Alliance for Clean Energy and Safe Jobs

Women For: Orange County

Women’s International League for Peace and Freedom, Santa Cruz

ARGUMENTS IN SUPPORT: According to the author, no one can say for certain whether the Diablo Canyon Nuclear Power Plant will continue to operate in the near-term or long-term. Given this uncertainty and the region’s economic reliance on the plant, it is critical that state regulators and the public be informed about the potential adverse economic impacts should the plant not be in operation and how to best mitigate these impacts.

ARGUMENTS IN OPPOSITION: Opponents make numerous arguments against the bill, including that the assessment is unneeded because PG&E already commissioned a benefits assessment, and that the CPUC cannot be trusted to act independently of PG&E in selecting a third party to conduct the assessment.

ASSEMBLY FLOOR: 78-0, 8/24/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Brough, Daly

Prepared by:

8/25/16 17:34:52

**** END ****

SENATE THIRD READING

STR Bill Id:SB 968

Author:(Monning)

As Amended Ver:August 17, 2016

2/3 vote. Urgency

SENATE VOTE: 36-0

SUMMARY: Requires the California Public Utilities Commission (CPUC) to cause an assessment of the economic impacts, for the County of San Luis Obispo and the surrounding regions that could occur if or when the Diablo Canyon Nuclear Powerplant temporarily or permanently shuts down. Specifically, this bill:

1. Requires the CPUC to cause an assessment to be completed by July 1, 2018, of the adverse and beneficial economic impacts, and the net economic effects, for the County of San Luis Obispo and the surrounding regions, that could occur if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the power plant’s current operating licenses or when it closes upon the expiration of its current licenses.
2. Requires the assessment to include a specified review of potential actions for the state and local jurisdictions to consider in order to mitigate the adverse economic impact of a shutdown.
3. Requires the assessment to be conducted by an independent third party, as specified.
4. Requires the assessment to consist of, but not be limited to, all of the following:
   1. Estimate of any changes in local tax revenues, changes in workforce populations, changes in indirect or induced economies, and potential impacts to ratepayers from a shutdown;
   2. A review of the economic impacts that affected the region surrounding the San Onofre Nuclear Generating Station (SONGS) after it was decommissioned by the Southern California Edison Company and of the relevant decommissioning plans of SONGS;
   3. A review of the regions in the United States similar to the region surrounding the County of San Luis Obispo that have experienced the decommissioning of a nuclear powerplant and of the resulting economic impacts of the decommissioning on those regions; and
   4. Identification of any contingency plans that could mitigate the adverse economic impact of a shutdown to state and local jurisdictions, the local workforce, and entities receiving enhanced tax revenue.
5. Requires the independent third party to consult with the Board of Supervisors of the County of San Luis Obispo, the governing board of the San Luis Coastal Unified School District, the Center for Labor Research and Education at the University of California, Berkeley, the regional economic development group of the County of San Luis Obispo, and other relevant governmental entities or community-based organizations to assist in an accurate assessment of the economic and workforce impacts of a shutdown.
6. Requires the CPUC to make the assessment publically available on its Internet Web site, distribute copies to relevant state and local jurisdictions, and convene a public forum in the County of San Luis Obispo on the findings and recommendations of the assessment.
7. Appropriates $400,000 from the nuclear decommissioning trust funds to be used for additional staffing to urgently effectuate the specified third-party assessment.
8. Includes an urgency clause allowing the provisions of this bill to take effect immediately upon enactment.

FISCAL EFFECT: According to the Assembly Appropriation Committee, this bill appropriates $400,000 to the CPUC to fund the assessment and hire limited-term staff to provide oversight. In addition, the CPUC estimates it will require $250,000 to contract with an independent third party to perform the assessment and an additional $170,000 to provide oversight.

COMMENTS:

1. Background: The Diablo Canyon Powerplant is a two-unit nuclear powerplant operated by the Pacific Gas and Electric Company (PG&E), and is the only remaining operating nuclear powerplant in California. According to PG&E, the powerplant produces approximately 20% of PG&E’s overall electricity production and 10% of California's energy load. The powerplant is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, for units 1 and 2. In June 2016, PG&E announced that it would not renew its license for the Diablo Canyon Powerplant.
2. Diablo's Economic Impacts on the Region: According to the author, having unbiased and accurate economic data for local planning and discussion is valuable because the region surrounding the Diablo Canyon Powerplant is heavily reliant on the plant. Arguably, shuttering of Diablo Canyon would have a major impact on the economies of San Luis Obispo and its surrounding regions. The loss of jobs resulting from the closure of Diablo Canyon potentially would have a ripple effect on the business and economic health of the region.

This bill requires the CPUC to cause an assessment to be completed by July 1, 2018, of the adverse and beneficial economic impacts, and the net economic effects, for the County of San Luis Obispo and the surrounding regions, that could occur if or when the Diablo Canyon Units 1 and 2 powerplant temporarily or permanently shuts down. In addition, this bill requires the assessment to be conducted by an independent third party, and requires the independent third party to consult with specified entities. Furthermore, this bill also requires the assessment to include a review of potential actions for the state and local jurisdiction to consider in order to mitigate the adverse economic impact of a shut down. This bill appropriates $400,000 from the nuclear decommissioning trust funds to be used for additional staffing to urgently effectuate the specified third-party assessment.

Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0004383

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 968

Author:(Monning) – As Amended Ver:August 1, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the California Public Utilities Commission (PUC) to contract with an independent third party to perform an economic assessment on the regional impacts that could occur if the Diablo Canyon Units 1 and 2 nuclear powerplant were to temporarily shut down prior to the expiration of its license or when PGE closes the power plant.

Additionally, this bill appropriates $400,000 from the PUC Utilities Reimbursement Account to the PUC to fund additional staffing and the third party assessment.

FISCAL EFFECT:

Appropriates $400,000 to the PUC to fund the assessment and hire limited-term staff to provide oversight (Utilities Reimbursement Fund).

The PUC estimates it will require $250,000 to contract with an independent third party to perform the assessment and an additional $170,000 to provide oversight.

COMMENTS:

1. Background. PG&E’s Diablo Canyon is the

only operating nuclear powerplant in California. According to PG&E, the plant produces approximately 10% of California’s energy load and about 20% of PG&E’s overall electricity.

Diablo Canyon is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, respectively for units 1 and 2

In addition to the application with NRC, Diablo Canyon’s continued operation is subject to state permitting and regulation. Diablo Canyon sits on state tidelands and operates pursuant to leases issued by the State Lands Commission (SLC). These leases will expire in 2018 and 2019, respectively for units 1 and 2. The SLC has not indicated whether it will renew the leases. The PUC must also approve ratepayer funding to pay for Diablo Canyon’s operations.

According to San Luis Obispo County, PG&E is both the largest taxpayer and largest private employer in the county. Diablo Canyon itself generates millions of dollars in property tax revenue, which mainly benefits local schools. A June 2013 Economic Impact Study, funded by PG&E, concluded that the local economic impact of Diablo Canyon is substantial, with the total 2011 estimated economic impact to be approximately $920 million. The powerpant has approximately 1,483 employees and it is estimated that this year the San Luis Coastal Unified School District will receive more than $10 million (12% of its operating revenue) from taxes paid by PG&E.

1. Purpose. On June 21, 2016, PG&E announced it will not renew its license for the two nuclear units at Diablo Canyon but it will continue paying property taxes through 2025, as well as enact workforce retention and retraining programs.

According to the author, because Diablo Canyon will not operate past its current license, this bill is needed due to the region’s economic reliance on the powerplant. The author further contends, that it is critical for state regulators and the public to be informed about potential economic impacts when the plant is no longer in operation and how to best mitigate negative impacts before the closure.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: June 22, 2016

ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE

Mike Gatto, Chair

SBPCA Bill Id:SB 968

Author:(Monning) – As Amended Ver:May 31, 2016

SENATE VOTE: 36-0

SUBJECT: Diablo Canyon Units 1 and 2 powerplant

SUMMARY: Requires the California Public Utilities Commission (CPUC) to cause an assessment of the economic impacts for the regions surrounding the County of San Luis Obispo that could occur if the Diablo Canyon Nuclear Powerplant were to temporarily or permanently shut down. Specifically, this bill:

1. Requires the CPUC to cause an assessment to be completed by July 1, 2018, of the adverse and beneficial economic impacts for the region surrounding the County of San Luis Obispo, and the net economic effects on that region, that could occur if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down.
2. Requires the assessment to include a review of potential actions for the state and local jurisdictions to consider in order to mitigate the adverse economic impact of a shutdown.
3. Requires the assessment to consist of, but not be limited to, all of the following:
   1. Estimate of any changes in local tax revenues, changes in workforce populations, changes in indirect or induced economies, and potential impacts to ratepayers from a shutdown;
   2. A review of the economic impacts that affected the region surrounding the San Onofre Nuclear Generating Station (SONGS) after it was decommissioned by the Southern California Edison Company and of the relevant decommissioning plans of SONGS;
   3. A review of the regions in the United States similar to the region surrounding the County of San Luis Obispo that have experienced the decommissioning of a nuclear powerplant and of the resulting economic impacts of the decommissioning on those regions; and
   4. Identification of any contingency plans that could mitigate the adverse economic impact of a shutdown to state and local jurisdictions, the local workforce, and entities receiving enhanced tax revenue.
4. Requires the assessment to be conducted by an independent third party, as specified.
5. Requires the independent third party to consult with the Board of Supervisors of the County of San Luis Obispo, the governing board of the San Luis Coastal Unified School District, the Center for Labor Research and Education at the University of California at Berkeley, the regional economic development group of the County of San Luis Obispo, and other relevant governmental entities or community-based organizations to assist in an accurate assessment of the economic and workforce impacts of a shutdown.
6. Requires the CPUC to make the assessment publically available on its Internet Web site and place it as an item on the agenda at the next CPUC meeting after the assessment is made publicly available for purposes of collecting and recording public comment.

EXISTING LAW:

1. Provides that State and local costs to carry out activities, as specified, that are not reimbursed by federal funds shall be borne by a utility operating a nuclear powerplant with a generating capacity of 50 megawatts or more. (Government Code Section 8610.5)
2. Requires all charges demanded or received by any public utility, or by any two or more public utilities, for any product or commodity furnished or to be furnished or any service rendered or to be rendered to be just and reasonable. Specifies that every unjust or unreasonable charge demanded or received for such product or commodity or service is unlawful. (Public Utilities Code Section 451)
3. Specifies that nuclear decommissioning costs shall not be part of the specified costs, but shall be recovered as a nonbypassable charge until the time as the costs are fully recovered. Specifies that the recovery of decommissioning costs may be accelerated to the extent possible. (Public Utilities Code Section 379)

FISCAL EFFECT: Unknown.

COMMENTS:

1. Author’s Statement: "SB 968 will provide a baseline economic assessment for future local planning and help the community start to discuss the possibilities in the event of a plant closure. The assessment would determine changes in local tax revenues, changes in the local workforce, and if there would be any indirect economic losses. The assessment will also help identify mitigation efforts on the adverse impacts. Assessing and planning on the economic impacts should the Diablo Canyon Powerplant shut down is prudent given the region's economy is heavily reliant on the plant and the uncertainties for continued operation. SB 968 will help start the conversation about how the San Luis Obispo region might work together to protect the local economy with an informed transition plan."
2. Background: The Diablo Canyon Powerplant is a two-unit nuclear powerplant operated by Pacific Gas and Electric Company (PG&E), and is the only remaining operating nuclear powerplant in California. The powerplant is located adjacent to the Pacific Ocean between Avila Beach and Montano Del Oro State Park. According to PG&E, the powerplant produces approximately 20% of PG&E’s overall electricity production and 10% of California's energy load. The powerplant is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, for units 1 and 2. In 2009, PG&E filed an application with NRC to extend its operating license for Diablo Canyon for 20 more years. In addition, Diablo Canyon is subject to state permitting and regulations. Diablo Canyon is required to obtain operating leases through the state's Land Commission to operate on state tidelands. Its current operating lease is set to expire in 2018 for unit 1 and 2019 for unit 2.
3. Diablo's Economic Impacts on the Region: According to the author, having unbiased and accurate economic data for local planning and discussion is valuable because the region surrounding the Diablo Canyon Powerplant is heavily reliant on the plant. Arguably, shuttering of Diablo Canyon would have a major impact on the economies of San Luis Obispo and its surrounding regions. For example, according to San Luis Obispo County, PG&E pays over $25 million in Unitary Property Tax to the County, which are distributed to roads, libraries and the General Fund, and the San Luis Coastal Unified School District. In addition, the County also receives $1.4 million for nuclear preparedness efforts from the California Office of Emergency Services. The loss of jobs resulting from the closure of Diablo Canyon potentially would have a ripple effect on the business and economic health of the region.

This bill requires the CPUC to cause an assessment to be completed by July 1, 2018 of the economic impacts for the region surrounding the County of San Luis Obispo, and the net economic effects on the region, that could occur if Diablo Canyon were to shut down. The bill requires the assessment to be conducted by an independent third party, and requires the independent third party to consult with the San Luis Obispo County Board of Supervisors, the San Luis Coastal Unified School District governing board, the Center for Labor Research and Education at the University of California at Berkeley, the regional economic development groups of San Luis Obispo County, and other relevant governmental entities or community based organization.

The author may wish to consider an amendment to clarify that the assessment includes San Luis Obispo County and its surrounding regions.

1. PG&E 2013 Diablo Economic Impact Study: In June 2013, PG&E released an economic impact study on the economic impacts and other benefits provide by Diablo Canyon on San Luis Obispo and northern Santa Barbara counties, as well as on the state of California and the United States. The study stated that Diablo Canyon created a total impact of $919.8 million in 2011 along with $244.3 million in indirect and induced impacts, including influences on local businesses, such as restaurants, real estate, wholesale trade, retail shops, financial institutions, healthcare, etc. The study stated that the total output impact for Diablo Canyon nationally was $1.969 billion in 2011. Diablo Canyon also created 3,358 jobs locally in 2011, including 1,483 jobs at the Plant with an additional 1,874 jobs created through expenditures in the local areas. The study also identified other contributions by Diablo Canyon to the region including, grants, volunteerism, educational programs, land stewardship, etc.

According to the author, the 2013 PG&E study, did not detail the adverse economic impacts that could occur if the Plant were to shut down, such as what might happen to the region without the benefits highlighted in the PG&E study. In addition, the report was published based on 2011 data. In light of the sudden closure of SONGS in 2013, it is prudent to contemplate a future without Diablo Canyon in order to understand and prepare the region for any impacts should Diablo Canyon shut down.

This bill also requires the assessment to include a review of potential actions for the state and local jurisdiction to consider in order to mitigate the adverse economic impact of a shut down.

1. Arguments in Support: According to PG&E, "PG&E has conducted three economic impact studies detailing the economic influence [the Diablo Canyon Powerplant] has in the region, with the most recent being completed in 2013. Each study was commissioned by PG&E and executed by an independent third party, including the Cal Poly San Luis Obispo Orfalea College of Business in 2010 and 2013. The scope of the proposed study in SB 968 will go beyond the previous studies and seeks to examine the economic changes to the region after the plant transitions to decommissioning activities. Further the study would help local government pursue a mitigation strategy to offset the potential impacts to the local economy."
2. Arguments in Opposition: According to a coalition of opposition, "Diablo Canyon represents one of the greatest environmental, public health, and economic threats to much of California […] Nuclear proponents are pushing to extend operations for decades more. The risks are just too great. We need to quickly transition from Diablo to renewables, and it must not be allowed to run beyond its design life and original license period […] In summary the analysis the bill calls for is unnecessary and unbalanced and could amount to a state-ordered piece of advocacy for forces pushing for Diablo Canyon to operate far beyond its original design and license life. This could have great negative impacts on California."
3. Suggested Amendment:

712.5.  (a) (1) The commission shall cause an assessment to be completed by no later than July 1, 2018, of the adverse and beneficial economic impacts, and the net economic effects, for the region surrounding the County of San Luis Obispo and the surrounding regions, and the net economic effects on that region, that could occur if the Diablo Canyon Units 1 and 2 powerplant were to temporarily or permanently shut down before the powerplant’s current operating licenses from the Nuclear Regulatory Commission expire or if the Pacific Gas and Electric Company were to decide not to pursue license renewal. The assessment shall include a review, as described in paragraph (4) of subdivision (b), of potential actions for the state and local jurisdictions to consider in order to mitigate the adverse economic impact of a shutdown.

(b) (3) A review of regions in the United States similar to the County of San Luis Obispo and the surrounding regions the region surrounding the County of San Luis Obispo that have experienced the decommissioning of a nuclear powerplant and of the resulting economic impacts of the decommissioning on those regions.

1. Prior Legislation:

AB 361 (Achadjian), Chapter 399, Statutes of 2015: Extends the sunset date for the Nuclear Planning Assessment Special Account and requires the CPUC to convene, or continue, an independent peer review panel to conduct an independent review of enhanced seismic studies and surveys of the Diablo Canyon Powerplant.

REGISTERED SUPPORT / OPPOSITION:

Support

Alliance for Nuclear Responsibility

Californians for Green Nuclear Power

City of San Luis Obispo

County of Morro Bay

County of San Luis Obispo

County of Santa Barbara

Economic Vitality Corporation of San Luis Obispo County

Environmental Progress

Mothers for Nuclear

Pacific, Gas and Electric

San Luis Coastal Unified School District

Thorium Energy Silicon Valley

ThoriumNow

Opposition

Azul

CodePink Women for Peace, Golden Gate Chapter

Committee to Bridge the Gap

Desert Protection Society

Ecological Options Network

Food and Water Watch

Green Action for Health and Environmental Justice

Green Party of San Luis Obispo

Greenpeace

No Nukes Action Team

Northern Chumash Tribal Council

Nuclear Energy Information Services

Nuclear Hotseat

Nuclear Information and Resource Service

Nuclear Watch South

People’s Democratic Club of Santa Cruz County

People of Faith for Justice

Physicians for Social Responsibility – Los Angeles

Physicians for Social Responsibility – San Francisco Bay Area

Public Citizen

Residents Organized for Safe Energy

Rocketdyne Cleanup Coalition

San Francisco Occupy Forum Environmental Working Group

San Luis Obispo Mothers for Peace

San Onofre Safety

Southern California Federation of Scientists

Sunflower Alliance

Teens Against Toxins

Tri-Valley Communities Against a Radioactive Environment

West Berkeley Alliance for Clean Energy and Safe Jobs

Women For: Orange County

Women’s International League for Peace and Freedom, Santa Cruz

Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083

 THIRD READING  

Bill No: SB 968

Author:

:

Vote:

SENATE ENERGY, U. & C. COMMITTEE: 9-0, 3/29/16

AYES: Hueso, Morrell, Cannella, Gaines, Hill, Lara, Leyva, McGuire, Wolk

NO VOTE RECORDED: Hertzberg, Pavley

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

SUBJECT:

SOURCE: Author

DIGEST: This bill requires an assessment of the regional economic effect that would result from closure of the Diablo Canyon Power Plant.

ANALYSIS:

Existing law:

1. Authorizes the California Public Utilities Commission (CPUC) to fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities, including electrical and gas corporations, subject to its jurisdiction. (Article 12 of the California Constitution)
2. Requires that all charges demanded or received by any public utility for any product, commodity or service be just and reasonable, and that every unjust or unreasonable charge is unlawful. (Public Utilities Code §451)
3. Authorizes the collection of funds, on a nonbypassable basis, required for site restoration when an electrical corporation’s nuclear powerplant is removed from service. (Public Utilities Code §379)

This bill:

1. Directs the CPUC to cause an assessment to be completed, by July 1, 2018, of the economic effects, and potential mitigating actions, for the region surrounding the County of San Luis Obispo that could occur if Diablo Canyon Power Plant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if PG&E were to decide not to pursue licensing renewal.
2. Requires the assessment to be conducted by an independent third party, selected by the CPUC from among qualified entities who respond to a request for proposal by the CPUC.
3. Requires the independent third party to consult with governmental and community-based entities in San Luis Obispo County, as well as the Center for Labor Research and Education at University of California Berkeley.
4. Requires the CPUC to make the assessment publicly available on its website and to place it as an agenda item on the first CPUC meeting following publication of the assessment.
5. Declares the need for a special law: Diablo Canyon is the only nuclear powerplant operating in California.

Background

Diablo Canyon’s uncertain future. There remains one operating nuclear powerplant in California – PG&E’s Diablo Canyon Power Plant in San Luis Obispo County. According to PG&E, the plant produces approximately 10 percent of California’s energy load and about 20 percent of PG&E’s overall electricity.

Diablo Canyon is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, respectively, for units 1 and 2. In 2009, PG&E filed an application with NRC to extend Diablo Canyon’s operation by 20 years. The outcome of the application is uncertain.

In addition to the application with NRC, continued operation of Diablo Canyon is subject to state permitting and regulation. Diablo Canyon sits on state tideland. It operates pursuant to leases, issued by the State Lands Commission, that expire in 2018 and 2019, for units 1 and 2, respectively. It is unknown whether the State Lands Commission will renew the leases. And, of course, the CPUC must approve ratepayer funding to pay for operation of Diablo Canyon.

These permitting uncertainties, along with the sudden and seemingly unexpected closure of the San Onofre Nuclear Generating Station (SONGS) in 2013, lead many in the region around Diablo Canyon to contemplate a future without the nuclear powerplant. Whatever its other effects, shuttering of Diablo Canyon would remove a major contributor to the economy of San Luis Obispo County and northern Santa Barbara County.

Bill proponents call for a study by an independent, third party that would, at a minimum, consider decreases in local tax revenues, decreases in local workforce, and indirect economic losses. Proponents conclude that such a study, informed by the experiences of SONGS and similar facilities that have shut down elsewhere, would better prepare the communities that would be most affected by closure of Diablo, thereby enabling mitigation of the worst economic effects.

Who will pay? This bill directs the CPUC to issue a request for proposal for an independent third party, to be selected from bidding parties by the CPUC, to conduct the economic assessment of Diablo Canyon’s closure. Presumably, the CPUC will require PG&E to recover the cost of the statutorily required assessment from its ratepayers.

Related/Prior Legislation

AB 361 (Achadjian, Chapter 399, Statutes of 2015) extended the sunset date for the Nuclear Planning Assessment Special Account (NPASA) from July 1, 2019, to August 26, 2025, to continue funding emergency service programs and planning activities for the Diablo Canyon Power Plant in San Luis Obispo County. The bill passed each house of the Legislature with zero “no” votes.

SB 657 (Monning, 2015) would have required the CPUC to convene, or continue, until August 25, 2025, the independent peer review panel to review PG&E’s seismic studies of PG&E’s Diablo Canyon Power Plant. The bill passed the Senate on a vote of 38-0. The bill was held at the Assembly Desk.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• One-time cost of approximately $250,000 (Public Utilities Commission Utilities Reimbursement Account) for the CPUC to oversee the economic impact assessment process and conduct a new proceeding.
• Unknown, but likely significant costs, for the completion of the assessment required by the bill (reimbursed through ratepayer funds).

SUPPORT: (Verified 5/27/16)

Alliance for Nuclear Responsibility

City of Morro Bay

City of San Luis Obispo

County of San Luis Obispo Board of Supervisors

Economic Vitality Corporation

Pacific Gas and Electric Company

San Luis Coastal Unified School District

Santa Barbara County Board of Supervisors

OPPOSITION: (Verified 5/27/16)

Azul

CodePink Women for Peace, Golden Gate Chapter

Committee to Bridge the Gap

Desert Protection Society

Ecological Options Network

Food and Water Watch

Green Action for Health and Environmental Justice

Green Party of San Luis Obispo

Greenpeace

No Nukes Action Team

Northern Chumash Tribal Council

Nuclear Energy Information Services

Nuclear Hotseat

Nuclear Information and Resource Service

Nuclear Watch South

People of Faith for Justice

Physicians for Social Responsibility-Los Angeles

Public Citizen

Residents Organized for Safe Energy

Rocketdyne Cleanup Coalition

San Francisco Occupy Forum Environmental Working Group

San Luis Obispo Mothers for Peace

San Onofre Safety

Southern California Federation of Scientists

Sunflower Alliance

Teens Against Toxins

Tri-Valley CAREs

West Berkeley Alliance for Clean Energy and Safe Jobs

Women For: Orange County

Women’s International League for Peace and Freedom, Santa Cruz

ARGUMENTS IN SUPPORT: According to the author, no one can say for certain whether the Diablo Canyon Nuclear Power Plant will continue to operate in the near-term or long-term. Given this uncertainty and the region’s economic reliance on the plant, it is critical that state regulators and the public be informed about the potential adverse economic impacts should the plant not be in operation and how to best mitigate these impacts.

ARGUMENTS IN OPPOSITION: Opponents make numerous arguments against the bill, including that the assessment is unneeded because PG&E already commissioned a benefits assessment, and that the CPUC cannot be trusted to act independently of PG&E in selecting a third party to conduct the assessment.

Prepared by:

5/31/16 22:13:33

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 968 (Monning) - Diablo Canyon Units 1 and 2 powerplant

Bill Summary:

SB 968 requires the Pacific Gas and Electric Company (PG&E) to submit to the California Public Utilities Commission (CPUC) an assessment of the adverse and beneficial impacts that would result from closure of the Diablo Canyon Power Plant (Diablo Canyon).

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 27, 2016

Fiscal Impact:

• One-time cost of approximately $250,000 (Public Utilities Commission Utilities Reimbursement Account) for the CPUC to oversee the economic impact assessment process and conduct a new proceeding.
• Unknown, but likely significant costs, for the completion of the assessment required by the bill (reimbursed through ratepayer funds).

Author Amendments:

• Requires the CPUC to cause the impact assessment to be completed, rather than requiring the CPUC to require PG&E to contract for the study to be completed.
• Deletes the requirement that the CPUC consider any further assessments needed.
• Makes conforming changes.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 968 (Monning) - Diablo Canyon Units 1 and 2 powerplant

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 968 requires the Pacific Gas and Electric Company (PG&E) to submit to the California Public Utilities Commission (CPUC) an assessment of the adverse and beneficial impacts that would result from closure of the Diablo Canyon Power Plant (Diablo Canyon).

Fiscal Impact:

• One-time cost of $659,000 (Public Utilities Commission Utilities Reimbursement Account) for the CPUC to oversee the economic impact assessment process and conduct a new proceeding.
• Unknown, but likely significant costs, for the completion of the assessment required by the bill (reimbursed through ratepayer funds).

Background: PG&E’s Diablo Canyon is the

only operating nuclear powerplant in California. According to PG&E, the plant produces approximately 10 percent of California’s energy load and about 20 percent of PG&E’s overall electricity.

Diablo Canyon is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, respectively, for units 1 and 2. In 2009, PG&E filed an application with NRC to extend Diablo Canyon’s operations by 20 years. The outcome of the application is uncertain.

In addition to the application with NRC, Diablo Canyon’s continued operation is subject to state permitting and regulation. Diablo Canyon sits on state tidelands and operates pursuant to leases issued by the State Lands Commission. These leases will expire in 2018 and 2019 respectively, for units 1 and 2. The State Lands Commission has not indicated whether it will renew the leases. The CPUC must also approve ratepayer funding to pay for Diablo Canyon’s operations.

These permitting uncertainties, along with the sudden and seemingly unexpected closure of the San Onofre Nuclear Generating Station in 2013, led many in the region to contemplate a future without the nuclear powerplant. Whatever the other effects, the closure of Diablo Canyon would remove a major contributor to the economies of San Luis Obispo County and northern Santa Barbara County.

According to San Luis Obispo County, PG&E is both the largest taxpayer and largest private employer in the county; Diablo Canyon itself generates millions in property tax revenue, which mainly benefits local schools. A recent study, commissioned by PG&E, concluded that, in 2011, Diablo Canyon contributed, directly and indirectly, more than $900 million to the local economy, including many of the regions high-paying, year-round jobs.

Proposed Law:

This bill:

1. Directs the CPUC to require PG&E to submit an assessment, by July 1, 2018, of the economic harm, benefits, and potential mitigating actions, for the surrounding region if Diablo Canyon were to temporarily or permanently shut down.
2. Requires the assessment to be conducted by an independent third party, selected by the CPUC from among qualified entities who respond to the RFP issued by PG&E.
3. Requires the independent third party to consult with governmental entities in San Luis Obispo County.
4. Requires the CPUC to make the assessment publicly available on its website and to place it as an agenda item on the first CPUC meeting following publication of the assessment.
5. Declares the need for a special law: Diablo Canyon is the only nuclear powerplant operating in California.

Related Legislation:

AB 361 (Achadjian, Chapter 399, Statutes of 2015) extended the sunset date for the Nuclear Planning Assessment Special Account from July 1, 2019, to August 26, 2025, to continue funding emergency service programs and planning activities for Diablo Canyon. The bill passed each house of the Legislature with zero “no” votes.

SB 657 (Monning, 2015) would have required the CPUC to convene, or continue, until August 25, 2025, the independent peer review panel to review PG&E’s seismic studies of Diablo Canyon. The bill passed the Senate on a vote of 38-0, but was held at the Assembly Desk.

Staff Comments:

This bill directs the CPUC to require PG&E to issue an RFP for the independent third party to conduct the economic assessment. According the CPUC, in practice, the CPUC must issue the RFP, and be reimbursed for expenses by PG&E.

-- END --

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2015 - 2016 Regular

Bill No: SB 968 Hearing Date: 3/29/2016

SUBJECT: Diablo Canyon Units 1 and 2 powerplant

DIGEST: This bill requires Pacific Gas and Electric (PG&E) to submit to the California Public Utilities Commission (CPUC) an assessment of the regional economic harm that would result from closure of the Diablo Canyon Power Plant.

ANALYSIS:

Existing law:

1. Authorizes the CPUC to fix rates, establish rules, examine records, issue subpoenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities, including electrical and gas corporations, subject to its jurisdiction. (Article 12 of the California Constitution)
2. Requires that all charges demanded or received by any public utility for any product, commodity or service be just and reasonable, and that every unjust or unreasonable charge is unlawful. (Public Utilities Code § 451)
3. Authorizes the collection of funds, on a nonbypassable basis, required for site restoration when an electrical corporation’s nuclear powerplant is removed from service. (Public Utilities Code § 379)

This bill:

1. Directs the CPUC to require PG&E to submit an assessment, by July 1, 2018, of the economic harm, and potential mitigating actions, for the region surrounding the County of San Luis Obispo that could occur if Diablo Canyon Power Plant were to temporarily or permanently shut down before the powerplants current operating licenses expire or if PG&E were to decide not to pursue licensing renewal.
2. Requires the assessment to be conducted by an independent third party, selected by the CPUC from among qualified entities who respond to a request for proposal by PG&E.
3. Requires the independent third party to consult with governmental entities in San Luis Obispo County.
4. Requires the CPUC to make the assessment publicly available on its website and to place it as an agenda item on the first CPUC meeting following publication of the assessment.
5. Declares the need for a special law: Diablo Canyon is the only nuclear powerplant operating in California.

Background

Diablo Canyon’s uncertain future. There remains one operating nuclear powerplant in California – PG&E’s Diablo Canyon Power Plant. The power production facility and support operations sit on approximately 900 acres adjacent to the Pacific Ocean between Avila Beach and Montano del Oro State Park. According to PG&E, the plant produces approximately 10 percent of California’s energy load and about 20 percent of PG&E’s overall electricity. Future operation of the powerplant is uncertain.

Diablo Canyon is licensed by the federal Nuclear Regulatory Commission (NRC) to operate until 2024 and 2025, respectively, for units 1 and 2. In 2009, PG&E filed an application with NRC to extend Diablo Canyon’s operation by 20 years. The outcome of the application is uncertain.

In addition to the application with NRC, continued operation of Diablo Canyon is subject to state permitting and regulation. Diablo Canyon sits on state tideland. It operates pursuant to leases, issued by the State Lands Commission, that expire in 2018 and 2019, for units 1 and 2, respectively. It is unknown whether the State Lands Commission will renew the leases. And, of course, the CPUC must approve ratepayer funding to pay for operation of Diablo Canyon.

These permitting uncertainties, along with the sudden and seemingly unexpected closure of the San Onofre Nuclear Generating Station (SONGS) in 2013, lead many in the region around Diablo Canyon to contemplate a future without the nuclear powerplant. Whatever its other effects, shuttering of Diablo Canyon would remove a major contributor to the economy of San Luis Obispo County and northern Santa Barbara County. According to San Luis Obispo County, PG&E is both the largest taxpayer and largest private employer in the county; Diablo Canyon itself generates millions in property tax revenue, which mainly benefits local schools.^[1] A recent study, commissioned by PG&E, of the economic benefits of Diablo Canyon concluded that operation of Diablo Canyon in 2011 contributed, directly and indirectly, over $900 million to the local economy, including many of the regions high-paying, year-round jobs.^[2]

Bill proponents are critical of the PG&E economic impact study. They note that the study, as its title implies, considers only the economic benefits of operation of Diablo Canyon; it does not adequately consider the economic harms of Diablo Canyon ceasing operation. Proponents contend that such consideration is more than simply placing a negative sign in front of the purported benefits of powerplant operation. Rather, proponents call for a study by an independent, third party that would, at a minimum, consider decreases in local tax revenues, decreases in local workforce, and indirect economic losses. Proponents conclude that such a study, informed by the experiences of SONGS and similar facilities that have shut down elsewhere, would better prepare the communities that would be most affected by closure of Diablo, thereby enabling mitigation of the worst economic effects.

Who will pay? This bill directs the CPUC to require PG&E to issue a request for proposal for the independent third party, to be selected from bidding parties by the CPUC, to conduct the economic assessment of Diablo Canyon’s closure. Presumably, the CPUC will allow PG&E to recover the cost of the statutorily required assessment from its ratepayers.

Proponents contend it appropriate that ratepayers fund the assessment. Ratepayers benefit from operation of Diablo Canyon and are responsible for the costs of its operation. Consideration of post-closure effects, proponents reason, is inherent to the operation of Diablo Canyon. Therefore, ratepayers should pay. In any case, ultimately, the CPUC determines what costs PG&E may recover from its ratepayers.

The opposite of impact. As described above, the bill requires PG&E to consider the “negative economic impact” of closure of Diablo Canyon. Opponents complain that the requirements of the bill are unbalanced, in that they exclude consideration of the potential benefits that might occur following closure of Diablo Canyon. These complaints echo those of bill proponents, who protest, as described above, the PG&E-sponsored economic impact study failed to consider the potential economic harm of that could follow closure of Diablo Canyon. Such complaints are on the mark: a comprehensive understanding of the possible economic effects of closure of Diablo Canyon can come only from a consideration all potential economic effects, both positive and negative. The committee may wish to consider amending the bill the require the third-party economic assessment required by this bill to consider all potential economic effects, positive and negative, of closure of Diablo Canyon, as well as the net economic effect of closure.

Prior/Related Legislation

AB 361 (Achadjian, Chapter 399, Statutes of 2015) extended the sunset date for the Nuclear Planning Assessment Special Account (NPASA) from July 1, 2019, to August 26, 2025, to continue funding emergency service programs and planning activities for the Diablo Canyon Power Plant in San Luis Obispo County. The bill passed each house of the Legislature with zero “no” votes.

SB 657 (Monning, 2015) would have required the CPUC to convene, or continue, until August 25, 2025, the independent peer review panel to review PG&E’s seismic studies of PG&E’s Diablo Canyon Power Plant. The bill passed the Senate on a vote of 38-0. The bill was held at the Assembly Desk.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Alliance for Nuclear Responsibility

County of San Luis Obispo Board of Supervisors

Economic Vitality Corporation

San Luis Coastal Unified School District

OPPOSITION:

Azul

CodePink Women for Peace, Golden Gate Chapter

Committee to Bridge the Gap

Desert Protection Society

Ecological Options Network

Food and Water Watch

Green Action for Health and Environmental Justice

Green Party of San Luis Obispo

Greenpeace

No Nukes Action Team

Northern Chumash Tribal Council

Nuclear Energy Information Services

Nuclear Hotseat

Nuclear Information and Resource Service

Nuclear Watch South

People of Faith for Justice

Physicians for Social Responsibility-Los Angeles

Public Citizen

Residents Organized for Safe Energy

Rocketdyne Cleanup Coalition

San Francisco Occupy Forum Environmental Working Group

San Luis Obispo Mothers for Peace

San Onofre Safety

Southern California Federation of Scientists

Sunflower Alliance

Teens Against Toxins

Tri-Valley CAREs

West Berkeley Alliance for Clean Energy and Safe Jobs

Women For: Orange County

Women’s International League for Peace and Freedom, Santa Cruz

ARGUMENTS IN SUPPORT: According to the author, no one can say for certain whether the Diablo Canyon Nuclear Power Plant will continue to operate in the near-term or long-term. Given this uncertainty and the region’s economic reliance on the plant, it is critical that state regulators and the public be informed about the potential adverse economic impacts should the plant not be in operation and how to best mitigate these impacts.

ARGUMENTS IN OPPOSITION: Opponents make numerous arguments against the bill, including that it fails to require the economic assessment to consider the potential benefits of Diablo Canyon closure, that the assessment is unneeded because PG&E already commissioned a benefits assessment, and that the CPUC cannot be trusted to act independently of PG&E in selecting a third party to conduct the assessment.

-- END --

1. San Luis Obispo County Comprehensive Annual Financial Report for Fiscal Year 2013-14. (http://www.slocounty.ca.gov/Assets/AC/Digital/Financial/CAFR/2013-14CAFR.pdf) ↑

2. Economic Benefits of Diablo Canyon Power Plan: and economic impact study. June 2013. ↑