San Luis Obispo County will be in a world of hurt if it doesn’t get an $85 million settlement to cushion the financial blow of losing the Diablo Canyon Power Plant.
Even with the $85 million, it will be a struggle, since the nuclear plant contributes an estimated $1 billion a year to the local economy. That’s huge.
Without the $85 million in economic aid from the PG&E settlement?
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As for other possible consequences, we can tell you what’s happened in some of the small- and mid-size communities that lost nuclear power plants and received little or no compensation: Property taxes skyrocketed (not really an option here, on account of Proposition 13).
Government employees were laid off; one small community disbanded its police department.
Homes languished on the market, and businesses were shuttered.
To avoid such dire consequences, we don’t believe $85 million — which includes $10 million for economic development — is too much to ask.
Nearly everyone who has weighed in agrees.
The issue is where that money comes from. PG&E planned to pass that cost on to its ratepayers, but last week, an administrative law judge for the California Public Utilities Commission concluded it would violate state utility law to require ratepayers to pay for local government services, “no matter how beneficial those services may be.”
The judge went on to say that the county could take its request to the state Legislature.
That’s some comfort, though from a practical standpoint, that’s a big hoop to jump through for a rate increase so miniscule most customers aren’t likely to notice it.
To fund the $85 million, the typical residential customer would pay an additional 12 cents a month during the first year. After that, the cost would decrease to 6 cents a month for the next seven years. Then it would go away completely.
What’s more, we believe a strong case can be made that all ratepayers should share in the cost of ensuring local agencies are able to function normally during the nuclear plant’s final eight years of operations.
A legal brief filed on behalf of the county put it this way: “The plant will need a full roster of employees during the transition period, as well as a steady stream of materials, supplies, and services. Supporting the local community through the transition is a legitimate part of the plant's ongoing operations.”
The judge’s ruling was a disappointment, but it’s too soon to panic.
Some points to keep in mind:
▪ That decision is preliminary. The five-member California Public Utilities Commission has the final say, and local governments plan to continue to argue that it’s fair to pass on the cost of the $85 million settlement to ratepayers.
▪ If the commission ultimately agrees with the judge, special state legislation remains an option. To his credit, Assemblyman Jordan Cunningham already has indicated he’ll do whatever he can to help the county.
▪ PG&E shareholders could pick up the tab, or at least part of the tab, though we don’t hold out much hope of that.
Whatever happens in the coming weeks, we can’t afford to give up.
We’ve repeatedly seen how economically devastating it can be when an industry that’s been key to a community’s financial health pulls out — whether it’s an auto plant, a coal mine or a nuclear power plant.
We strongly urge leaders at every level — local, state and federal — to continue pursing all possible sources of economic aid to help San Luis Obispo County weather the loss of Diablo Canyon.