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 theregion surrounding theCounty 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 regionsthe region surrounding the County of San Luis Obispothat 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