BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 968


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          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.









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          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  








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            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)








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          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  








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            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.









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           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  








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            [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  








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            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









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          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










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          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










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          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










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          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