Utilities Commission Slashes Transition Funds in Diablo Canyon Nuclear Closure

The California Public Utilities Commission (CPUC) managed to satisfy no one last week when it approved its final plan to close the Diablo Canyon nuclear plant, the state’s last operating reactor, and recover the US$241.2 million it will cost to complete the shutdown.

“It is uncontested that the retirement of Diablo Canyon would result in reduced local tax revenues and a loss of well-paying jobs, with a corresponding potential for significant adverse economic impacts on the local area,” the CPUC wrote in a 78-page proposed decision. “The question before this commission is not whether there will be economic impacts, or even the potential size and scope of those impacts, but rather whether PG&E ratepayers should pay to mitigate these impacts.”

The funding is scarcely half the $448 million that Pacific Gas & Electric (PG&E), unions, the Natural Resources Defense Council, and community groups had agreed would be needed for worker retention, retraining, and community support when they opened discussions with the PUC last summer, Greentech Media reports.

“The CPUC’s proposed decision, which first emerged in November, made drastic changes to this joint agreement, including halving its employee retention and retraining budget,” Greentech notes. “It also cut completely an $85-million Community Impact Mitigation Program for San Luis Obispo County, local cities, and the school district to partially offset lost tax dollars and job cuts to come,” with the commission stating it lacked “express legislative authorization” to mandate the fund. It said PG&E could still support the program out of shareholder dollars.

“The proposed decision, which was roundly decried by community groups, clean energy advocates, and PG&E alike, also cut a proposal for a 53% increase in PG&E energy efficiency programs. Those programs are expected to make up a huge portion of the resources being sought to replace Diablo Canyon,” notes Greentech Senior Editor Jeff St. John. It also “fails to mention a key promise of last summer’s compromise—replacing the 2.3 gigawatts of always-on power that Diablo Canyon provides the regional and statewide grid with zero-carbon resources. Since nuclear power doesn’t emit carbon, adding anything else would add to the state’s greenhouse gas burden.”

“The decision undermines what should have been an inspiring model for the rest of the country and the world on best practices for planning for the closure of giant, expensive, and inflexible nuclear plants,” said Ralph Cavanagh, Co-Director of NRDC’s Energy Program. “We will explore alternative options to ensure that the urgent needs of the affected communities, workers, and the environment are addressed.”

NRDC had calculated that PG&E could save at least $1 billion by closing Diablo Canyon and replacing its output with “major efficiency gains”, solar, and other distributed energy resources, Greentech states. Now, the question of how to fill a 2.3-GW gap in the utility’s supply portfolio will be left to CPUC’s Integrated Resources Procurement proceeding, a wider overview of the state’s energy needs.

The Diablo Canyon plant “opened in San Luis Obispo County in 1985, despite protests from environmental groups and others concerned about its proximity to [earthquake] fault lines,” Courthouse News recalls. “Governor Jerry Brown even tried to block the plant from opening in the 1970s during his first term in office.” Fast forward to 2016, and PG&E proposed the closure after acknowledging the high cost of ongoing maintenance, and “a number of groups supported the shutdown application, including the International Brotherhood of Electrical Workers Local 1245, the Coalition of California Utility Employees, Friends of the Earth,” and NRDC.

The loss of the impact mitigation fund could be a crippling blow for a community facing a “massive economic shift,” according to local media. “We’re trying to keep our heads up here,” said San Luis Coastal Unified School District Superintendent Eric Prater. “The remarks by the commission left room for some options we can pursue. We’re hoping members of the state assembly could come together to pick the ball up now.”

The plant is the county’s biggest private sector employer, with nearly 1,500 workers, its biggest taxpayer, supplying 5.88% of its local tax base, and has an estimated $1-billion impact on the local economy.

“San Luis Obispo County agreed to house the Diablo Canyon nuclear power plant, which provides power to more than three million people and benefits Californians despite the negative repercussions,” said State Senator Bill Monning. “The county and its residents deserve to be compensated for the impacts they will incur when the plant shuts down.”