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. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 23, 2015 |Policy Vote: E., U., & C. 10 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: July 6, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- 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 SB 657 (Monning) Page 1 of ? 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 SB 657 (Monning) Page 2 of ? 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. -- END --