BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 968|
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                                   THIRD READING 


          Bill No:  SB 968
          Author:   Monning (D), et al.
          Amended:  5/31/16  
          Vote:     21 

           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:   Diablo Canyon Units 1 and 2 powerplant


          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)








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          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  








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          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.  









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          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:    No          Fiscal  
          Com.:YesLocal:   No


          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:   (Verified5/27/16)


          Alliance for Nuclear Responsibility
          City of Morro Bay
          City of San Luis Obispo
          County of San Luis Obispo Board of Supervisors








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          Economic Vitality Corporation
          Pacific Gas and Electric Company
          San Luis Coastal Unified School District
          Santa Barbara County Board of Supervisors


          OPPOSITION:   (Verified5/27/16)


          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  








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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 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:Jay Dickenson / E., U., & C. / (916) 651-4107
          5/31/16 22:13:33


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