BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   May 6, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                   AB 42 (Blakeslee) - As Amended:  April 22, 2009

          Policy Committee:                               
          UtilitiesVote:13-0
                        Natural Resources                       7-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires the Pacific Gas and Electric Company (PG&E)  
          to conduct those seismic hazard studies or surveys in the  
          vicinity of the Diablo Canyon Nuclear Powerplant that are deemed  
          urgent by the California Energy Commission (CEC).  Specifically,  
          this bill:

          1.Requires the CEC, in consultation with the California Geologic  
            Survey, Seismic Safety Commission, and the California Coastal  
            Commission to determine by April 1, 2010 what seismic fault  
            vulnerability studies or surveys are urgently needed for  
            Diablo Canyon.

          2.Requires the Public Utilities Commission (PUC) to consider  
            PG&E studies or surveys done pursuant to (1) in the PUC's  
            review of PG&E's license renewal application required pursuant  
            to a previous commission decision.

          3.Requires the PUC to extend until June 30, 2011 PG&E's deadline  
            for applying for license renewal of Diablo Canyon if the  
            commission determines an extension is necessary for PG&E to  
            complete the seismic studies or surveys.

          4.Authorizes the CEC, in consultation with the other entities  
            listed in (1), to participate in development of the study or  
            survey designs, and requires the CEC, in conjunction with  
            those other entities, to conduct or facilitate a peer review  
            of the studies or surveys with 120 days of receipt from PG&E.

          5.Requires the CEC to include the study or survey findings and  








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            recommendations in its integrated energy policy report.

          6.Requires the PUC to allow PG&E to fully recover in rates all  
            reasonable costs associated with the studies or surveys.

           FISCAL EFFECT  

          1)The CEC will incur one-time special fund costs of about  
            $310,000 for one-half position and contracts regarding  
            required consultation, study design, and peer review.

          2)Minor absorbable costs to the PUC.

           
          COMMENTS  

           1.Background  .  The state's two operating nuclear plants,  
            PG&E-owned Diablo Canyon and Southern California Edison-owned  
            San Onofre Nuclear Generating Station (SONGS), account for 12  
            % 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.

            Diablo Canyon and SONGS have been operating for roughly half  
            of their 40-year initial NRC license term.  In 2007, the PUC  
            granted PG&E's request for $16.8 million in ratepayer funds to  
            explore the feasibility of relicensing Diablo Canyon for  
            another 20 years-until the early to mid-2040s.  In its  
            decision, the PUC required PG&E to submit an application by  
            June 30, 2011 on whether to pursue license renewal; the  
            application must include a license renewal feasibility study  
            to address whether renewal is cost effective and in the best  
            interests of PG&E's ratepayers. 

            AB 1632 (Blakeslee)/ Chapter 722 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 role of these plants in the  
            state's energy portfolio in order to be ready should a  
            disruption occur.  In its decision regarding the license  
            renewal, the PUC also required PG&E to incorporate the  
            findings and recommendations of the CEC's AB 1632 study into  








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            PG&E's feasibility study.

           2.Purpose  .  On November 21, 2008, PG&E announced it had  
            discovered a new earthquake fault within one mile offshore of  
            Diablo Canyon.  According to the author's office, the nature  
            of the fault is unknown, as is its relationship with the  
            Hosgri fault, which is located about three miles offshore of  
            Diablo Canyon. The discovery of the second fault raises new  
            questions about the seismic risks of Diablo Canyon,  
            particularly regarding the plant's vulnerability to a major  
            disruption in electricity generation due to an earthquake.   
            The author believes that as PG&E explores the feasibility of  
            relicensing Diablo Canyon, it is imperative that both PG&E and  
            the state understand the economic and reliability risks of the  
            plant's extended operation.

            At issue is the CEC's recommendation in its AB 1632 report  
            that PG&E should conduct high quality three-dimensional  
            geophysical seismic reflection mapping, which PG&E believes is  
            not necessary given the two-dimensional mapping it is  
            currently doing. This bill does not compel PG&E to do such  
            mapping, but instead requires PG&E to conduct those studies or  
            surveys deemed urgent by the CEC following a public hearing  
            and in consultation with the Seismic Vulnerability Advisory  
            Team (SVAT), comprised of experts from the CEC, California  
            Geologic Survey, SSC and California Coastal Commission, who  
            also provided technical review and input during the  
            development of the AB 1632 report.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081