BILL ANALYSIS Ó
SB 418
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Date of Hearing: July 1, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 418 (Jackson) - As Amended: June 26, 2013
SENATE VOTE : (vote not relevant)
SUBJECT : Energy: nuclear fission power plants
SUMMARY : Requires a detailed study of project needs and costs
to be provided to the California Public Utilities Commission
(PUC) when requesting ratepayer funding for a nuclear power
plant seeking relicensing from the U.S. Nuclear Regulatory
Commission (NRC). Specifically, this bill :
1)Requires when a nuclear power plant generating greater than 50
megawatts submits an application, or reopens an existing
application, with the PUC to request ratepayer funding to
undertake a license renewal process from NRC to provide a
detailed study of project needs and costs.
2)Specifies the study shall detail the following:
a) Effect of the nuclear power plant on system reliability
and affordable supplies of electricity, including planned
provisions for emergency operations and unplanned shutdowns
and replacement power.
b) Costs due to major disruptions in electric generation
due to aging or major seismic events, including any
uncompleted costs assessments required by AB 1632 Blakeslee
(Chapter 722, Statutes of 2006) where costs would be in
excess of $50 million at the power plant.
c) Costs of responding to, or mitigating for retrofits or
modifications to the nuclear fission thermal power plant
that may arise from the U.S. Nuclear Regulatory Commission
Near Term Task Force (NTTF) requirements.
d) Potential costs with storage of radioactive waste
necessitated by changes to the U.S. Nuclear Regulatory
Commission's revised Waste Confidence policy.
e) Potential costs with mitigating or alternative to use of
once through cooling mandated by the State Water Resources
Control Board.
f) Potential costs associated with expanding and
maintaining emergency planning zones in compliance with
U.S. NRC NTTF requirements.
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g) Costs of comply with requirements for certification
granted by the California Coastal Commission.
1)Requires the PUC to make the study publicly available on its
web site and perform a cost-effectiveness analysis of the
continued operation of the nuclear power plant.
EXISTING LAW :
1)States the PUC has regulatory authority over public utilities,
including electrical corporations.
2)Requires every electrical and gas corporation applying for a
certificate for public convenience and necessity to provide,
in addition to any other required information:
(a) Preliminary engineering and design information on the
project for each year of the useful life of the plant.
(b) A project implementation plan showing how the project
would be contracted for and constructed.
(c) An appropriate cost estimate, including preliminary
estimates of the costs of financing, construction, and
operation, including fuel, maintenance, and dismantling or
inactivation after the useful life of the plant, line, or
extension.
(d) A cost analysis comparing the project with any feasible
alternative sources of power. The corporation shall
demonstrate the financial impact of the plant, line, or
extension construction on the corporation's ratepayers,
stockholders, and on the cost of the corporation's borrowed
capital. The cost analyses shall be performed for the
projected useful life of the plant including dismantling or
inactivation after the useful life of the plant.
(e) A design and construction management and cost control plan
which indicates the contractual and working responsibilities
and interrelationships between the corporation's management
and other major parties involved in the project.
(Public Utilities Code 1003)
3)States the California Energy Commission (CEC) has the
authority to license thermal power plants of 50 megawatts or
greater along with the transmission lines, fuel supply lines,
and related facilities to serve them. (Public Resources Code
25000, et seq.)
4)Federal law requires an operator of a nuclear fission thermal
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power plant to obtain from the federal Nuclear Regulatory
Commission a license for the operation of the power plant.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Author's Statement. According to the author, "the state has
full authority and jurisdiction over the economics and
reliability of electrical generation, but there are currently
no requirements for updating the needs and costs" assumptions
to reflect how a project has changed from what was permitted
over forty years ago, or considering the costs and
consequences of any of the above emerging factors before
adding an additional 20 years to the original 40-year license.
This measure does not require a new Certificate of Public
Convenience and Necessity (CPCN), but does ask for an update
on the needs and costs. This bill also requires the PUC to
independently analyze and review the report and make it
publicly available on its web site."
2)Background . Nuclear power provides nearly 14 percent of
California's power mix. Nuclear power is considered one
component of a low carbon-electricity future. Nuclear plants
emit fewer greenhouse gas emissions (GHG) over their 40- to
60-year lifetimes and no direct carbon dioxide emissions
during their operation. In addition, they are considered a
direct replacement for coal plants, the technology that
produces 75 percent of global GHG emissions in the electricity
sector.
As of mid-2012, California has one operating nuclear power
plant: Pacific Gas & Electric Company's (PG&E) Diablo Canyon
Nuclear Power Plant (Units 1 and 2 producing a total 2,160
megawatts), near San Luis Obispo. Unit 1 began commercial
operation in May 1985, while Unit 2 began commercial operation
in March 1986. Diablo Canyon's operation license for Units 1
and 2 expire in 2024 and 2025, respectively. PG&E must apply
to the U.S. Nuclear Regulatory Commission (NRC) for a license
extension.
PG&E filed application at NRC in November 2009 requesting to
extend operating licenses for Diablo Canyon Units 1 & 2 to
2044 and 2045, respectively (20-year extension). In 2010, PG&E
filed an application at the PUC to request authority to
recover in rates the costs to obtain the state and federal
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approvals related to renewal of the Diablo Canyon operating
licenses. PG&E estimated the total cost of the License Renewal
project at $85 million. However, seismic safety
characteristics of Diablo Canyon were raised by concerned
parties following the nuclear emergency at the Fukushima
Daiichi nuclear power plant in Japan in 2007. PG&E withdrew
its application at PUC and its license renewal application at
NRC to pursue enhanced seismic studies.
Southern California Edison (SCE) and San Diego Gas & Electric
own the two nuclear facilities units at San Onofre Nuclear
Generating Station (SONGS), located midway between Los Angeles
and San Diego. SONGS has been offline since early 2012. In
June 2013 SCE announced that it would permanently retire both
units.
3)Federal And State Authority over Nuclear Power Plants: The
regulatory jurisdiction and oversight of nuclear power plants
is addressed by both federal and state authorities:
NRC . The NRC formulates regulations for nuclear power plants
in the United States. Safety and operational issues are
primarily and directly under NRC jurisdiction.
California Energy Commission. The CEC is authorized to license
thermal power plants 50 megawatts or greater along with the
transmission lines, fuel supply lines, and related facilities
to serve them.
State Water Resources Control Board (SWRCB). SWRCB enforces
the Federal Clean Water Act. Generation facilities, including
nuclear power plants use seawater, in a system referred to as
once-through-cooling, to remove heat from their facilities.
Because of the impact to marine life, the SWRCB requires that
most of the coastal fossil-fuel plants control and/or mitigate
entrainment and impingement of marine life by the end of 2020,
with some exceptions. Compliance can be addressed by no longer
using once-through cooling or by reducing entrainment by 93%.
PUC. The PUC has jurisdiction over utility cost recovery
related to existing nuclear power plants owned by the
investor-owned utilities. Specifically, the PUC has direct and
primary jurisdiction in the following areas:
Approving Certificates of Public Convenience and
Necessity (CPCN) if a CPUC-jurisdictional utility seeks to
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build a nuclear power plant.
Reviewing and approving major capital additions to a
nuclear plant for cost recovery.
Reviewing costs of the plant and setting cost recovery
rules after the plant goes into operation.
Ensuring that there are sufficient funds to decommission
the plant after its operating life.
Reviewing safety issues as they arise. Specific to
safety, the PUC authorized creation of the Diablo Canyon
Independent Safety Committee (DCISC). The DCISC is an
independent committee responsible for monitoring and
reviewing safety operations at PG&E's Diablo Canyon Power
Plant for the purpose of assessing the safety of operations
and suggesting any recommendations for safe operations. The
DCISC consists of three members: one each appointed by the
Governor of the State of California, the Attorney General,
and the Chair of the California Energy Commission, serving
staggered three-year terms.
1)Reasonableness Review to Apply for Rate Recovery. The author
opines that when a nuclear plant applies for ratepayer funding
for the relicensing process the current PUC process looks only
at the "reasonableness" of whether the cost of the relicensing
process (only the paperwork to apply to the NRC) itself is
prudent; and not whether the ongoing costs associated with and
projected for the actual relicensed reactor will be necessary,
reasonable or prudent for California ratepayers. They point
out that the last time a reasonableness review was performed
for Diablo Canyon was in 1967 and that an application for
relicensing, if approved by the NRC, would permit PG&E to
operate Diablo Canyon for 20 years.
However, in 2010 PG&E completed a License Renewable
Feasibility Study which did assess whether it would be
reasonable and prudent to renew the facilities license to
operate. The PUC ordered PG&E to conduct a license renewal
feasibility study in PG&E's 2007 General Rate Case. The PUC
ordered PG&E to complete the study by 2011. The PUC also
ordered PG&E to include an assessment of the potential
vulnerability of Diablo Canyon due to a major seismic event or
plant aging; the impacts of a major disruption on system
reliability, public safety, and the economy; and an assessment
of the costs and impacts from nuclear waste accumulating at
these plants; and other major issues related to the future
role of the plant in the state's energy portfolio. In
addition, PG&E provided an assessment of the plant in response
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to the recommendations that were part of the CEC's 2008
assessment of California Nuclear Power Plants prepared in
response to AB 1632 (Blakeslee, Chapter 722, Statutes of
2006). PG&E completed the study in December 2010.
Another component to this bill would include the costs of
implementing provisions for unplanned shut downs due to
seismic events or other natural disasters.
Following the 2011 Fukushima accident, PG&E requested
permission from the NRC to conduct additional seismic studies
and suspended efforts to seek license renewals for the
reactors at Diablo Canyon.
Within weeks of the 2011 Fukushima accident in Japan, the NRC
created the NTTF to provide recommendations to enhance safety
at U.S. power plants. Because nuclear power plant operators
are required to comply with NRC requirements at any time they
are directed by the NRC any new safety requirements would be
implemented as directed according to a timeline established by
the NRC. For example, following the terrorist events of
September 11, 2001, the NRC issued security advisories,
orders, license conditions, and a new regulation to require
licensees to develop and implement guidance and strategies to
maintain or restore capabilities for core cooling and
containment and spent fuel pool cooling under circumstances
associated with the loss of large areas of a plant due to a
fire or explosion.
2)Requires Hypothetical Cost Estimates? AB 418 requires an
applicant to provide information on potential costs, such as
the costs of responding to, or mitigating for requirements,
retrofits, or modifications that may arise from the NTTF
requirements pursuant to commission document SECY-11-0137:
Prioritization of Recommended Actions to be Taken in Response
to Fukushima Lessons Learned, as that document may be
subsequently amended."
The NTTF is an advisory body to the NRC. The NTTF's
recommendations to enhance nuclear plant safety covers a
variety of issues such as seismic and flooding protections,
vent designs, emergency preparedness, and confinement
strategies, among other items. In December 2011 the NRC
approved a three-tiered prioritization of these
recommendations. Tier 1 recommendations were to be implemented
immediately. Tier 2 and Tier 3 recommendations required
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further study and analysis, many of which have yet to be
finalized. Other recommendations were not grouped in the Tier
structure but are being analyzed by NRC staff. Ultimately
these recommendations could originate in the form of a NRC
order, a rulemaking with public input, or a determination for
longer term evaluation. When and if the NRC makes a final
determination on the recommendations, nuclear plant operators
will be required to comply.
If the NRC hasn't issued a rule that the operator is required
to comply with, it isn't clear how an applicant would estimate
the cost of a requirement that does not yet exist or is not
final.
3)Once through Cooling Cost Estimate. In 2011, the SWRCB
convened a review committee to oversee the special studies,
which will investigate ability, alternatives, and cost for two
nuclear-fueled power plants to meet the policy objectives. The
final report is due October 2013.
AB 418 would require a study of the potential costs associated
with mitigation or alternatives to the use of once-through
cooling at the nuclear fission thermal powerplant as by the
SWRCB.
If enacted, AB 418 would take effect on January 1, 2014. It is
unclear if this bill would require a second study to be
performed on the same subject.
4)Support : According to The Utility Reform Network: "This common
sense measure will protect consumer interests and prevent any
utility from billing ratepayers unless the full range of costs
associated with extended operations are considered."
The Division of Ratepayer Advocates "supports this bill's
proactive efforts to increase accountability and transparency
over the nuclear power plant relicensing process."
5)Opposition : PG&E states SB 418 "would require duplicative
action by the CPUC related to its assessment of the cost
effectiveness of operating the state's nuclear power plants
beyond the expiration of the current operating licenses."
REGISTERED SUPPORT / OPPOSITION :
Support
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Alliance for Nuclear Responsibility (A4NR) (Sponsor)
Bob Filner, Mayor, San Diego
Bruce Gibson, San Luis Obispo County Supervisor, District Two
Clean Coalition
Clean Power Campaign (CPC)
Division of Ratepayer Advocates (DRA)
Doreen Farr, Santa Barbara County Supervisor, Third District
Environment California
Families for Safe Energy
Individual Letters (19 letters)
Janet Wolf, Santa Barbara County Supervisor, Second District
Mendocino County Board of Supervisors
Physicians for Social Responsibility
San Luis Obispo Mothers for Peace (SLOMFP)
Sheila Lodge, Mayor, City of Santa Barbara
Sierra Club California
Surfrider Foundation
The Utility Reform Network (TURN)
Utility Consumers' Action Network (UCAN)
World Business Academy
Opposition
California Coalition of Utility Employees (CCUE)
California State Pipe Trades Council
Pacific Gas and Electric (PG&E)
State Association of Electrical Workers (IBEW)
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083