BILL ANALYSIS Ó
SB 968
Page 1
Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
SB
968 (Monning) - As Amended May 31, 2016
SENATE VOTE: 36-0
SUBJECT: Diablo Canyon Units 1 and 2 powerplant
SUMMARY: Requires the California Public Utilities Commission
(CPUC) to cause an assessment of the economic impacts for the
regions surrounding the County of San Luis Obispo that could
occur if the Diablo Canyon Nuclear Powerplant were to
temporarily or permanently shut down. Specifically, this bill:
1)Requires the CPUC to cause an assessment to be completed by
July 1, 2018, of the adverse and beneficial economic impacts
for the region surrounding the County of San Luis Obispo, and
the net economic effects on that region, that could occur if
the Diablo Canyon Units 1 and 2 powerplant were to temporarily
or permanently shut down.
2)Requires the assessment to include a review of potential
actions for the state and local jurisdictions to consider in
order to mitigate the adverse economic impact of a shutdown.
SB 968
Page 2
3)Requires the assessment to consist of, but not be limited to,
all of the following:
a) Estimate of any changes in local tax revenues, changes
in workforce populations, changes in indirect or induced
economies, and potential impacts to ratepayers from a
shutdown;
b) A review of the economic impacts that affected the
region surrounding the San Onofre Nuclear Generating
Station (SONGS) after it was decommissioned by the Southern
California Edison Company and of the relevant
decommissioning plans of SONGS;
c) A review of the regions in the United States similar to
the region surrounding the County of San Luis Obispo that
have experienced the decommissioning of a nuclear
powerplant and of the resulting economic impacts of the
decommissioning on those regions; and
d) Identification of any contingency plans that could
mitigate the adverse economic impact of a shutdown to state
and local jurisdictions, the local workforce, and entities
receiving enhanced tax revenue.
4)Requires the assessment to be conducted by an independent
third party, as specified.
5)Requires the independent third party to consult with the Board
of Supervisors of the County of San Luis Obispo, the governing
board of the San Luis Coastal Unified School District, the
Center for Labor Research and Education at the University of
SB 968
Page 3
California at Berkeley, the regional economic development
group of the County of San Luis Obispo, and other relevant
governmental entities or community-based organizations to
assist in an accurate assessment of the economic and workforce
impacts of a shutdown.
6)Requires the CPUC to make the assessment publically available
on its Internet Web site and place it as an item on the agenda
at the next CPUC meeting after the assessment is made publicly
available for purposes of collecting and recording public
comment.
EXISTING LAW:
1)Provides that State and local costs to carry out activities,
as specified, that are not reimbursed by federal funds shall
be borne by a utility operating a nuclear powerplant with a
generating capacity of 50 megawatts or more. (Government Code
Section 8610.5)
2)Requires all charges demanded or received by any public
utility, or by any two or more public utilities, for any
product or commodity furnished or to be furnished or any
service rendered or to be rendered to be just and reasonable.
Specifies that every unjust or unreasonable charge demanded or
received for such product or commodity or service is unlawful.
(Public Utilities Code Section 451)
3)Specifies that nuclear decommissioning costs shall not be part
of the specified costs, but shall be recovered as a
nonbypassable charge until the time as the costs are fully
recovered. Specifies that the recovery of decommissioning
costs may be accelerated to the extent possible. (Public
Utilities Code Section 379)
SB 968
Page 4
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "SB 968 will provide a baseline economic
assessment for future local planning and help the community
start to discuss the possibilities in the event of a plant
closure. The assessment would determine changes in local tax
revenues, changes in the local workforce, and if there would
be any indirect economic losses. The assessment will also help
identify mitigation efforts on the adverse impacts. Assessing
and planning on the economic impacts should the Diablo Canyon
Powerplant shut down is prudent given the region's economy is
heavily reliant on the plant and the uncertainties for
continued operation. SB 968 will help start the conversation
about how the San Luis Obispo region might work together to
protect the local economy with an informed transition plan."
2)Background: The Diablo Canyon Powerplant is a two-unit
nuclear powerplant operated by Pacific Gas and Electric
Company (PG&E), and is the only remaining operating nuclear
powerplant in California. The powerplant is located adjacent
to the Pacific Ocean between Avila Beach and Montano Del Oro
State Park. According to PG&E, the powerplant produces
approximately 20% of PG&E's overall electricity production and
10% of California's energy load. The powerplant is licensed
by the federal Nuclear Regulatory Commission (NRC) to operate
until 2024 and 2025, for units 1 and 2. In 2009, PG&E filed
an application with NRC to extend its operating license for
Diablo Canyon for 20 more years. In addition, Diablo Canyon
is subject to state permitting and regulations. Diablo Canyon
is required to obtain operating leases through the state's
Land Commission to operate on state tidelands. Its current
operating lease is set to expire in 2018 for unit 1 and 2019
SB 968
Page 5
for unit 2.
3)Diablo's Economic Impacts on the Region: According to the
author, having unbiased and accurate economic data for local
planning and discussion is valuable because the region
surrounding the Diablo Canyon Powerplant is heavily reliant on
the plant. Arguably, shuttering of Diablo Canyon would have a
major impact on the economies of San Luis Obispo and its
surrounding regions. For example, according to San Luis
Obispo County, PG&E pays over $25 million in Unitary Property
Tax to the County, which are distributed to roads, libraries
and the General Fund, and the San Luis Coastal Unified School
District. In addition, the County also receives $1.4 million
for nuclear preparedness efforts from the California Office of
Emergency Services. The loss of jobs resulting from the
closure of Diablo Canyon potentially would have a ripple
effect on the business and economic health of the region.
This bill requires the CPUC to cause an assessment to be
completed by July 1, 2018 of the economic impacts for the
region surrounding the County of San Luis Obispo, and the net
economic effects on the region, that could occur if Diablo
Canyon were to shut down. The bill requires the assessment to
be conducted by an independent third party, and requires the
independent third party to consult with the San Luis Obispo
County Board of Supervisors, the San Luis Coastal Unified
School District governing board, the Center for Labor Research
and Education at the University of California at Berkeley, the
regional economic development groups of San Luis Obispo
County, and other relevant governmental entities or community
based organization.
The author may wish to consider an amendment to clarify that
the assessment includes San Luis Obispo County and its
surrounding regions.
SB 968
Page 6
4)PG&E 2013 Diablo Economic Impact Study: In June 2013, PG&E
released an economic impact study on the economic impacts and
other benefits provide by Diablo Canyon on San Luis Obispo and
northern Santa Barbara counties, as well as on the state of
California and the United States. The study stated that
Diablo Canyon created a total impact of $919.8 million in 2011
along with $244.3 million in indirect and induced impacts,
including influences on local businesses, such as restaurants,
real estate, wholesale trade, retail shops, financial
institutions, healthcare, etc. The study stated that the
total output impact for Diablo Canyon nationally was $1.969
billion in 2011. Diablo Canyon also created 3,358 jobs locally
in 2011, including 1,483 jobs at the Plant with an additional
1,874 jobs created through expenditures in the local areas.
The study also identified other contributions by Diablo Canyon
to the region including, grants, volunteerism, educational
programs, land stewardship, etc.
According to the author, the 2013 PG&E study, did not detail
the adverse economic impacts that could occur if the Plant
were to shut down, such as what might happen to the region
without the benefits highlighted in the PG&E study. In
addition, the report was published based on 2011 data. In
light of the sudden closure of SONGS in 2013, it is prudent to
contemplate a future without Diablo Canyon in order to
understand and prepare the region for any impacts should
Diablo Canyon shut down.
This bill also requires the assessment to include a review of
potential actions for the state and local jurisdiction to
consider in order to mitigate the adverse economic impact of a
shut down.
5)Arguments in Support: According to PG&E, "PG&E has conducted
three economic impact studies detailing the economic influence
SB 968
Page 7
[the Diablo Canyon Powerplant] has in the region, with the
most recent being completed in 2013. Each study was
commissioned by PG&E and executed by an independent third
party, including the Cal Poly San Luis Obispo Orfalea College
of Business in 2010 and 2013. The scope of the proposed study
in SB 968 will go beyond the previous studies and seeks to
examine the economic changes to the region after the plant
transitions to decommissioning activities. Further the study
would help local government pursue a mitigation strategy to
offset the potential impacts to the local economy."
6)Arguments in Opposition: According to a coalition of
opposition, "Diablo Canyon represents one of the greatest
environmental, public health, and economic threats to much of
California [?] Nuclear proponents are pushing to extend
operations for decades more. The risks are just too great.
We need to quickly transition from Diablo to renewables, and
it must not be allowed to run beyond its design life and
original license period [?] In summary the analysis the bill
calls for is unnecessary and unbalanced and could amount to a
state-ordered piece of advocacy for forces pushing for Diablo
Canyon to operate far beyond its original design and license
life. This could have great negative impacts on California."
7)Suggested Amendment:
712.5. (a) (1) The commission shall cause an assessment to be
completed by no later than July 1, 2018, of the adverse and
beneficial economic impacts, and the net economic effects,
for the region surrounding the County of San Luis Obispo and
the surrounding regions , and the net economic effects on that
region, that could occur if the Diablo Canyon Units 1 and 2
powerplant were to temporarily or permanently shut down before
the powerplant's current operating licenses from the Nuclear
Regulatory Commission expire or if the Pacific Gas and
SB 968
Page 8
Electric Company were to decide not to pursue license renewal.
The assessment shall include a review, as described in
paragraph (4) of subdivision (b), of potential actions for the
state and local jurisdictions to consider in order to mitigate
the adverse economic impact of a shutdown.
(b) (3) A review of regions in the United States similar to
the County of San Luis Obispo and the surrounding regions the
region surrounding the County of San Luis Obispo that have
experienced the decommissioning of a nuclear powerplant and of
the resulting economic impacts of the decommissioning on those
regions.
8)Prior Legislation:
AB 361 (Achadjian), Chapter 399, Statutes of 2015: Extends
the sunset date for the Nuclear Planning Assessment Special
Account and requires the CPUC to convene, or continue, an
independent peer review panel to conduct an independent review
of enhanced seismic studies and surveys of the Diablo Canyon
Powerplant.
REGISTERED SUPPORT / OPPOSITION:
Support
Alliance for Nuclear Responsibility
Californians for Green Nuclear Power
SB 968
Page 9
City of San Luis Obispo
County of Morro Bay
County of San Luis Obispo
County of Santa Barbara
Economic Vitality Corporation of San Luis Obispo County
Environmental Progress
Mothers for Nuclear
Pacific, Gas and Electric
San Luis Coastal Unified School District
Thorium Energy Silicon Valley
ThoriumNow
Opposition
SB 968
Page 10
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
SB 968
Page 11
Nuclear Information and Resource Service
Nuclear Watch South
People's Democratic Club of Santa Cruz County
People of Faith for Justice
Physicians for Social Responsibility - Los Angeles
Physicians for Social Responsibility - San Francisco Bay Area
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
SB 968
Page 12
Sunflower Alliance
Teens Against Toxins
Tri-Valley Communities Against a Radioactive Environment
West Berkeley Alliance for Clean Energy and Safe Jobs
Women For: Orange County
Women's International League for Peace and Freedom, Santa Cruz
Analysis Prepared by:Edmond Cheung / U. & C. / (916)
319-2083