SLO County agencies want a voice in Diablo Canyon closure agreement

PG&E’s Diablo Canyon nuclear power plant is slated to close in 2025 after its last license expires.
PG&E’s Diablo Canyon nuclear power plant is slated to close in 2025 after its last license expires. dmiddlecamp@thetribunenews.com

With the release of the proposal to close Diablo Canyon in 2025 — an agreement drafted behind closed doors — come the inevitable questions: What about us? Why weren’t we included, or at least consulted, in the negotiations?

Public officials — whose agencies stand to lose a collective $27 million in annual property taxes alone — are among those asking.

Those interviewed by The Tribune say they support the agreement, but they believe the community mitigation could have been stronger.

“I think it would have been a much better agreement if they’d included the county and the school district as parties,” said San Luis Obispo County Supervisor Adam Hill, whose district includes Diablo Canyon. “There wasn’t anybody truly advocating for our interests.”

The county stands to lose around $8 million in tax revenue. That’s not a huge financial hit — it’s between 1 and 2 percent of the county’s budget — but Hill says that’s not the only consideration. He’s disappointed, for example, that PG&E is no longer interested in moving forward with a county-backed plan to pipe excess water from Diablo Canyon’s desalination plant for sale to thirsty South County communities.

At San Luis Coastal Unified School District, which receives about $9.5 million per year in Diablo taxes, Superintendent Eric Prater says he’s grateful to PG&E for providing plenty of warning. But he also made it clear that the $49.5 million in community financial aid PG&E has proposed for the entire county won’t stretch very far.

“This is a significant event for us,” Prater said. “The more I look at (the proposal), it undershoots the revenue hit. … I’m hopeful there’s room to negotiate additional funding when they (PG&E) examine the true impact on our school district.”

Diablo Canyon nuclear power plant will be shut down in 2025 after its operating licenses expire.

Negotiations to close the plant involved PG&E, labor unions and environmental groups, including the San Luis Obispo-based Alliance For Nuclear Responsiblity, led by Executive Director Rochelle Becker.

“When we negotiated the benefits to the county, we did it without much knowledge of what the county needs,” she said. “We felt like we were giving them the floor … that they could go in and ask for more.”

PG&E says it’s not too late for others to weigh in.

“It was not possible to include all affected parties in the initial negotiations,” PG&E spokesman Tom Cuddy said via email. “Now that the proposal is public, we want the community and other stakeholders to provide comments and feedback before we file the proposal at the CPUC (California Public Utilities Commission).”

PG&E has scheduled meetings on July 20 in San Luis Obispo where representatives of the county, the school district, economic development organizations, as well as the public, can offer input.

The more I look at (the proposal), it undershoots the revenue hit. … I’m hopeful there’s room to negotiate additional funding when they (PG&E) examine the true impact on our school district.

Eric Prater, San Luis Coastal superintendent

The fact that PG&E is reaching out to community members to such a degree is noteworthy. Typically, the decision to close a nuclear power plant is made by the owner and then announced to the community, with little to no time allotted to prepare for the loss of jobs, tax revenue and energy.

In this case, PG&E is offering both a long period of time to plan for a future without Diablo and some financial assistance:

▪  It’s proposing $350 million for employee retention, retraining and development. That’s in addition to a severance pay program already approved by the CPUC.

▪  It will continue to fund emergency planning activities, including the maintenance of public warning sirens, through much of the decommissioning process. (Decommissioning will involve dismantling all the buildings at the site — a project expected to take 10 or 20 years.)

▪  It has agreed to continue to support local nonprofit organizations. While that commitment has not been put in writing, PG&E President Geisha Williams recently told the state Lands Commission that the company will continue charitable contributions. (PG&E donated nearly $900,000 to more than 90 nonprofit organizations in San Luis Obispo and Santa Barbara counties in 2015, though it did not tell The Tribune how much it would contribute going forward.)

▪  And it has proposed to compensate San Luis Obispo County for an estimated $49.5 million in property tax revenue it will lose over the next nine years as the plant depreciates.

Though it’s not spelled out in the agreement, it’s expected the county will share the $49.5 million in mitigation funds with other affected agencies.

“We anticipate that the county and other entities will work together to determine how the funds would be distributed to support the community,” PG&E spokesman Blair Jones said in an email.

But as Hill points out, it isn’t just government agencies that will lose out.

“The much bigger impact is to the overall economy,” Hill said. “The tax is a small slice compared to the other things.”

Take a closer look at Diablo Canyon nuclear power plant near Avila Beach. California's last operating nuclear power plant will close in 2025, owner Pacific Gas & Electric Co. has announced.

How much?

Calculating the value of those “other things” is just one of the challenges the community faces.

A bill proposed by state Sen. Bill Monning calls for an economic study to be completed by a third party by July 1, 2018. The study would include:

▪  Estimates of any changes in tax revenue and workforce populations.

▪  A review of economic impacts that occurred following the 2012 shutdown of the San Onofre nuclear plant in San Diego County.

▪  A review of impacts to regions in other parts of the nation that experienced a nuclear power plant closure.

▪  Identification of contingency plans that could mitigate negative economic consequences of Diablo’s closure.

What could those “contingency plans” include?

Here’s one example: When Entergy Corp. closed the Vermont Yankee Nuclear Power Plant, it agreed to provide the state of Vermont with $2 million per year, for five years, to promote economic development in Windham County, where the plant was located. The money is used to promote private sector job creation by making low-interest loans and grants available to businesses.

Utilities also have invested in other energy projects in communities where they’ve closed nuclear plants. In San Luis Obispo County, that could take the form of a renewable energy project, or projects, as PG&E has committed to replacing Diablo’s power with renewables.

There is, however, a limit to how much local agencies can expect in mitigation, as ratepayers from throughout PG&E’s territory will be bearing the costs associated with closing the plant.

“I think they’re going to have to be very, very circumspect and considerate as they go forward and ask for money,” Becker said. “There is a definite point at which most PG&E ratepayers don’t care about what happens to San Luis Obispo.”

Diablo Canyon nuclear power plant employees have eight years to decide whether they want to stay in SLO County or move to another plant after it was announced that Diablo Canyon would close in 2025.

If you go

PG&E has scheduled two meetings on July 20 to take comments on the proposed Diablo Canyon closure agreement. Both will be at Embassy Suites, 333 Madonna Road in San Luis Obispo. The first session will be from noon to 3:45 p.m., followed by another from 4:15 to 8 p.m. Those unable to attend can submit comments to diablocanyon@pge.com before July 26.

Related stories from San Luis Obispo Tribune