BILL ANALYSIS                                                                                                                                                                                                    

                                                                 AB 42
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         ASSEMBLY THIRD READING
         AB 42 (Blakeslee)
         As Amended  June 1, 2009
         Majority vote 

          UTILITIES AND COMMERCE           13-0               NATURAL  
         RESOURCES           7-0         
          
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         |Ayes:|Fuentes, Duvall, Tom      |Ayes:|Skinner, Gilmore,         |
         |     |Berryhill, Blakelsee,     |     |Brownley, Chesbro, Hill,  |
         |     |Buchanan, Carter, Fong,   |     |Huffman, Logue            |
         |     |Furutani, Krekorian,      |     |                          |
         |     |Skinner, Smyth, Swanson,  |     |                          |
         |     |Torrico                   |     |                          |
         |-----+--------------------------+-----+--------------------------|
         |     |                          |     |                          |
          ----------------------------------------------------------------- 
          APPROPRIATIONS      12-0                                         
          
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         |Ayes:|De Leon, Ammiano, Charles  |   |                          |
         |     |Calderon, Davis, Fuentes,  |   |                          |
         |     |Hall, John A. Perez,       |   |                          |
         |     |Price, Skinner, Solorio,   |   |                          |
         |     |Torlakson, Krekorian       |   |                          |
         |-----+---------------------------+---+--------------------------|
         |     |                           |   |                          |
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          SUMMARY  :  Requires Pacific Gas and Electric Company (PG&E) to  
         conduct seismic fault studies or surveys in the vicinity of the  
         Diablo Canyon nuclear powerplant in order to maintain reliable  
         operation of the electrical grid and mitigate impacts to customer  
         rates that could result from a seismic event.  Specifically,  this  
         bill:   

         1)Requires PG&E to, in furtherance of the specific recommendations  
           made by the California Energy Commission (CEC), to conduct  
           seismic fault studies or surveys, including three-dimensional  
           geophysical seismic reflection mapping, for the area in the  
           vicinity of Diablo Can yon nuclear powerplant.

         2)Provides the reason for the study is to maintain reliable  
           operation of the electrical grid and mitigate impacts to customer  
           rates that could result from a seismic event.

         3)Requires PG&E to seek funding for the studies or surveys in its  
           application to the California Public Utilities Commission (PUC)  
           for license renewal of the Diablo Canyon nuclear powerplant in  



                                                                 AB 42
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           compliance with a PUC decision.

         4)Authorizes CEC, in consultation with the California Geologic  
           Survey and the Seismic Safety Commission, to participate in  
           development of the study or survey designs, and requires 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 CEC to include the study or survey findings and  
           recommendations in its integrated energy policy report.

         6)Requires PG&E to be responsible for funding all costs associated  
           with a peer review of any studies or surveys conducted pursuant  
           to 1) above.





































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         7)Requires PUC to expedite issuance of its decision approving the  
           recovery of costs so that the decision is made within 120 days of  
           filing the application, and requires PUC to allow PG&E to fully  
           recover in rates all reasonable costs associated with the studies  
           or surveys and peer review.

          FISCAL EFFECT  :  According to the Assembly Appropriations Committee:  


         1)CEC will incur one-time special fund costs for contracts of  
           $50,000 for the peer review.

         2)Minor absorbable costs to PUC.

          COMMENTS  :   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% 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.  

         AB 1632 (Blakeslee), Chapter 722, Statutes of 2006, directed 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.  CEC  
         recommended that a high quality three-dimensional geophysical  
         seismic reflection mapping should be conducted.

         On November 21, 2008, PG&E announced that it had discovered an  
         additional earthquake fault several miles offshore from their  
         Diablo Canyon nuclear powerplant.  Another known fault resides 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 reliability of the state's energy supply and  
         greatly increase costs to ratepayers.

         PG&E believes the three-dimensional geophysical seismic reflection  
         mapping 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 necessary to maintain reliable operation of the electrical  
         grid and mitigate impacts to customer rates that could result from  
         a seismic event.  



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         The Seismic Vulnerability Advisory Team, comprised of experts from  
         CEC, California Geologic Survey, and Seismic Safety Commission,  
         provided technical review and input during the development of the  
         AB 1632 report.  This bill would permit those parties to  
         participate in the development of the study and conduct or  
         facilitate a peer review of the study or survey.

         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).  This bill requires PG&E  
         to seek funding for the studies or surveys in its application to  
         the PUC to extend the nuclear powerplants' operating license for  
         the following 20 years.

          Analysis Prepared by  :    Gina Adams / U. & C. / (916) 319-2083 FN:  
         0001260