BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 42
                                                                  Page  1

          Date of Hearing:   March 23, 2009

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                                Felipe Fuentes, Chair
                   AB 42 (Blakeslee) - As Amended:  March 17, 2009
           
          SUBJECT  :   Pacific Gas and Electric Company: Seismic Survey.

           SUMMARY  :   Requires Pacific Gas and Electric Company (PG&E) to  
          use the California Energy Commission (CEC) to conduct an imaging  
          survey to map the fault characteristics in the vicinity of the  
          Diablo Canyon Nuclear Power Plant (Diablo Canyon) that could  
          potentially disrupt the reliable operation of the electric  
          transmission grid.   

           EXISTING LAW  :  

          1)Requires the CEC to adopt an Energy Report every two years  
            that includes an overview of major energy trends and issues,  
            including: supply, demand, pricing, reliability, efficiency,  
            impacts on public health and safety, the economy, resources,  
            and the environment. The Energy Report is required to include  
            policy recommendations based on an in-depth and integrated  
            analysis of the most current and pressing energy issues facing  
            the state.

          2)Requires the CEC to include in the Energy Report an  
            electricity supply forecast that includes a compilation and  
            assessment of existing scientific studies to determine the  
            potential vulnerability to a major disruption due to aging or  
            a major seismic event of large baseload generation facilities,  
            of 1,700 megawatts or greater.

          3)Requires the CEC to conduct an assessment of the vulnerability  
            of large baseload generation facilities to include an analysis  
            of the impact of a major disruption on system reliability,  
            public safety, and the economy, and adopt the assessment by  
            November 1, 2008.  

          4)Precludes the CEC from permitting nuclear powerplants until  
            the federal government has identified and approved the  
            construction and operation of nuclear fuel rod reprocessing  
            plants.

           THIS BILL  : 








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          1)Makes the following findings:

             a)   The California Public Utilities Commission (PUC)  
               authorized an expenditure of $16.8 million ratepayer funds  
               to explore the feasibility of relicensing Diablo Canyon,  
               and the PUC requested PG&E to defer the relicensing  
               feasibility study until after the CEC completes its seismic  
               vulnerability report and include the CEC 's findings and  
               recommendations in its own work.

             b)   The CEC made several findings and recommendations in its  
               seismic vulnerability report, in particular, that PG&E  
               should use three-dimensional geophysical seismic reflection  
               mapping and other advanced techniques to explore fault  
               zones near Diablo Canyon.

             c)   The July 2007 magnitude 6.8 Japan Sea earthquake located  
               16 kilometers (almost 10 miles) from Toyota Electric Power  
               Company's nuclear power plant shut down the facility at a  
               cost of some hundreds of million of dollars per month.

             d)   In November 2008, the United States Geological Survey  
               (USGS) identified a previously unidentified offshore fault  
               approximately one kilometer (a little more than half a  
               mile) west of Diablo Canyon with an estimated ability to  
               generate a magnitude 6.5 earthquake.

          2)Requires PG&E to seek funding for seismic fault studies in  
            order to maintain reliable operation of the electrical grid  
            and reduce impacts to customer rates as a result of a seismic  
            event.

          3)Requires the CEC to conduct a peer review of any studies  
            conducted pursuant to the seismic fault studies, and permits  
            the CEC to enter into agreements with academic and industry  
            groups of scientists with expertise to conduct the scientific  
            peer review.

          4)Requires the CEC to include findings and recommendations of  
            the fault study and peer review in the integrated energy  
            policy report as updates.

          5)Requires the PUC to allow PG&E to fully recover costs from all  
            of their electrical customers for investments in fault studies  








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            and seismic retrofits.

           FISCAL EFFECT  :   Unknown.

          COMMENTS  :   According to the author, the purpose of this bill is  
          to ensure that as PG&E explores the feasibility of relicensing  
          Diablo Canyon, both PG&E and the state understand the economic  
          and reliability risks of the plant's extended operation. The  
          CEC's recommendations from its seismic assessment will provide  
          the detailed information about the seismic setting around the  
          plant.

          1)  Background  :  The state's two operating nuclear plants,  
          PG&E-owned Diablo Canyon and Southern California Edison-owned  
          (SCE) San Onofre Nuclear Generating Station (SONGS), account for  
          12 percent of the state's electricity supply.   Each plant faces  
          uncertain amount of damages due to earthquakes erupting directly  
          below the plants, or ground motion resulting from a nearby  
          earthquake rupture.  

          According to the CEC, a major disruption of California's  
          operating nuclear plants could result in a shutdown of plant  
          operations for several months to more than a year or even cause  
          the retirement of one or more of the plants' reactors. Because  
          these plants contribute a significant portion of the state's  
          electricity supply, AB 1632 (Blakeslee), Chapter 722, Statutes  
          of 2006, directed the CEC to determine the potential  
          vulnerability of the state's largest generating plants due to  
          aging or a major seismic event, assess the impacts that such a  
          disruption would have on system reliability, public safety, and  
          the economy, and evaluate other major issues related to the  
          future role of these plants in the state's energy portfolio in  
          order to be ready should a disruption occur. The CEC included  
          this assessment in the 2008 Integrated Energy Policy Report  
          Update.

          On November 21, 2008, PG&E announced that they had discovered an  
          additional earthquake fault several miles offshore from their  
          Diablo Canyon Nuclear Power Plant.  The nature of the fault is  
          unknown, as is its relationship with the Hosgri fault, which is  
          also located just about a half a mile offshore from Diablo  
          Canyon.  The discovery of the second fault raises new questions  
          about the seismic risks of Diablo Canyon; in particular the  
          plant's vulnerability to a major disruption in electricity  
          generation due to an earthquake, which could impact the  








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          reliability of the state's energy supply and greatly increase  
          costs to ratepayers.

          2)   The Japan experience  :  In July 2007, a magnitude 6.8  
          earthquake in Japan rocked the Kashiwazaki-Kariwa Nuclear Power  
          Plant (KKNPP), the largest nuclear plant in the world.  The  
          plant experienced ground motion nearly twice the shaking that  
          was considered when the plant was designed, resulting in minor  
          radioactive leaks into the Sea of Japan and into the atmosphere.  
          The unexpected severity of the ground motion, in addition to  
          minor radioactive leaks, forced local officials to shut the  
          plant down.

          As a result of the plant's closure the Tokyo Electric Power  
          Company (TEPCO), owners and operators of KKNPP, has been forced  
          to rely on fossil fuel generation to replace the 8,200 MW  
          previously generated by the nuclear facility. This cost TEPCO an  
          additional $4.1 billion in replacement fossil fuel for FY 2007  
          alone.

          3)  Whose fault is it anyway  :  There are numerous active fault  
          lines in and offshore California. Since 1900, almost 90 damaging  
          earthquakes with a magnitude over 6.0 have occurred within the  
          state resulting in billions of dollars of property damage and  
          thousands of deaths and injuries.  Just last year, the USGS  
          identified a previously unknown earthquake fault just a little  
          over a half a mile from Diablo Canyon with the potential to  
          generate an earthquake with a magnitude of 6.5. 

          4)   To relicense, or not to relicense  :  Diablo Canyon and SONGS  
          have been operating for roughly half of their 40-year initial  
          license periods.  PG&E sought $16.8 million in ratepayer funds  
          (which included $5 million for legal and technical staff to  
          counter public intervention against extending the operating  
          license) to explore the feasibility of extending its licenses  
          for another 20 years until the early to mid-2040s.  (Diablo  
          Canyon's operating licenses expire in 2024 and 2025, while SONGS  
          operating licenses expire in 2022.)  

          These plants produce significant quantities of radioactive waste  
          in the form of spent fuel and other radioactively contaminated  
          materials.  The waste is stored on site in pools and in dry  
          casks as a temporary plan until the federal government completes  
          Yucca Mountain as a permanent deep geologic repository.  The  
          federal waste disposal program has been gradually defunded and  








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          may never materialize.  As such, California's utilities will  
          likely be forced to retain spent fuel in storage facilities at  
          currently operating reactor sites for an indefinite period of  
          time.  The CEC has recommended a state evaluation of the  
          long-term implications associated with the continuing  
          accumulation of spent fuel at California's operating plants.  

          The Clean Water Act may also affect the nuclear plants'  
          relicensing feasibility.  Both Diablo Canyon and SONGS use a  
          once-through cooling process to cool the power plant generators.  
           To implement the federal Clean Water Act, the State Water  
          Resources Control Board issued a "scoping document," which  
          requires Diablo Canyon and SONGS to implement measures to reduce  
          environmental damage due to once-through cooling structures by  
          January 1, 2021.  The Water Board may provide an exemption if  
          compliance would result in a conflict with the Nuclear  
          Regulatory Commission safety requirements.  However, the Nuclear  
          Regulatory Commission defers to states with regard to issuing  
          the permits to discharge. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          The Alliance for Nuclear Responsibility

           Opposition 
           
          Pacific Gas & Electric Company (PG&E) (unless amended)
           
          Analysis Prepared by  :    Gina Adams / U. & C. / (916) 319-2083