BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 657 (Monning) - Diablo Canyon Units 1 and 2: enhanced seismic  
          studies and review: independent peer review panel.
          
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          |Version: June 23, 2015          |Policy Vote: E., U., & C. 10 -  |
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          |Urgency: Yes                    |Mandate: No                     |
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          |Hearing Date: July 6, 2015      |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 


          Bill  
          Summary:  AB 657 would require the California Public Utilities  
          Commission (CPUC) to continue to convene an independent peer  
          review panel (IPRP) to review enhanced seismic studies and  
          surveys of the Diablo Canyon Units 1 and 2 powerplant until  
          August 26, 2025.


          Fiscal  
          Impact:  Approximate annual costs of $200,000 until FY 2025-26  
          to the Public Utilities Reimbursement Account (special) for IPRP  
          contract costs. All costs are anticipated to be reimbursed by  
          PG&E.


          Background:  Diablo Canyon Power Plant is a two-unit nuclear powerplant  
          located in San Luis Obispo County. According to PG&E, the plant  
          produces approximately 10 percent of California's energy load  







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          and about 20 percent of PG&E's overall electricity production.  
          The powerplant is licensed by the federal Nuclear Regulatory  
          Commission (NRC) to operate until 2024 and 2025, respectively,  
          for units 1 and 2.  
          Since the initial siting of Diablo Canyon, PG&E and the state  
          have been aware that the plant lies within a seismically active  
          zone.  Recently, seismologists have become aware of the  
          possibility of an earthquake directly beneath the powerplant.  


          In 2009, PG&E filed an application with NRC to extend Diablo  
          Canyon's operation by 20 years.  The licensing decision rests  
          wholly with the NRC.  However, the CPUC will decide the  
          reasonableness of PG&E's request to recover the costs for  
          continued operation of the powerplant.  


          In 2010, the CPUC formally decided to convene, via contract, its  
          IPRP, composed of itself, the CEC, the California Geological  
          Survey, the California Coastal Commission, and the California  
          Seismic Safety Commission. The IPRP was charged with conducting  
          an independent review of PG&E's seismic studies to enhance  
          CPUC's ability to assess the reasonableness of Diablo Canyon's  
          proposed license renewal. 


          The IPRP has conducted several reports assessing PG&E's seismic  
          studies of Diablo Canyon.  Following the 2011 earthquake in  
          Japan that severely damaged the Fukushima Daiichi nuclear power  
          plant, NRC required PG&E to conduct additional, advanced seismic  
          studies of the area around and underneath Diablo Canyon. PG&E  
          requested that NRC delay its decision on PG&E's relicensing  
          request so that PG&E could conduct the seismic studies. The NRC  
          agreed. 


          The current contract for the IPRP expires on November 30, 2015.   
          PG&E's advanced seismic studies are ongoing and will likely  
          continue past 2015. However, the existing IPRP contract only  
          convenes the body until 2015.


          Proposed Law:   This bill would require that the CPUC continue  
          to convene the IPRP until at least August 26, 2015, which is the  








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          date which the license for Diablo Canyon unit 2 expires.


          The IPRP would be required to contract with the California  
          Energy Commission, the California Geological Survey of the  
          Department of Conservation, the California Coastal Commission,  
          the Seismic Safety Commission, the Office of Emergency Services,  
          and the county of San Luis Obispo to participate with the IPRP. 


          This bill is an urgency measure.




          Staff  
          Comments:  The contract required by this bill will necessitate  
          an extension of the existing IPRP contract. Assuming that the  
          extended contract costs will be similar to the current contract,  
          this bill would require the CPUC to incur $200,000 of costs  
          annually for a total of $1.9 million through 2025. 
          Under the current contract, state agencies submit invoices to  
          the CPUC for their participation in IPRP activities. The CPUC  
          pays for approved costs from the Public Utilities Reimbursement  
          Account and seeks reimbursement from PG&E, who then recovers the  
          costs from its ratepayers. 


          Because the CPUC is the signatory to the IPRP contract with the  
          other state agencies, it is the party contractually responsible  
          for the other agencies' costs, not PG&E. Therefore this bill  
          technically has state costs. That said, staff anticipates that  
          all state costs will be reimbursed by PG&E.




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