BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 968 Hearing Date: 3/29/2016
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|Author: |Monning |
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|Version: |3/14/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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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
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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
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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
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<1> San Luis Obispo County Comprehensive Annual Financial
Report for Fiscal Year 2013-14.
( http://www.slocounty.ca.gov/Assets/AC/Digital/Financial/CAFR/201
3-14CAFR.pdf )
<2> Economic Benefits of Diablo Canyon Power Plan: and economic
impact study. June 2013.
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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
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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
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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.
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