Environment

SLO County will take $801 million hit when Diablo Canyon closes — but there’s good news

Closing Diablo Canyon might not have as much of an impact on the local economy as previously thought, a new study from the University of California, Berkeley revealed Wednesday

The study — mandated by state Senate Bill 968 — found that the closure would have a net effect on the local economy that is “much smaller than previous estimates for (Diablo Canyon) closure,” according to the report.

PG&E plans to shutter the nuclear power plant, the last in California, when permits for its two reactors expire in 2024 and 2025. The California Public Utilities Commission approved PG&E’s application to close Diablo Canyon in January 2018.

According to the study, the closure would decrease local economic activity by approximately $801 million in San Luis Obispo County immediately after the closure — but much of that could be offset by gains made during decommissioning.

“The release of the Economic Impact Assessment report will help our local leaders prepare for the economic impact the closure of the Diablo Canyon Nuclear Power Plant will have on our region, as well as the needs of the plant’s workforce”, Sen. Bill Monning, who sponsored the bill, said in an email to The Tribune. “I’m glad to see that the report indicates a much smaller net impact on the region than previous estimates.”

Economic ups and downs

Soon after PG&E announced its intent to close the nuclear power plant, many were concerned at what the decision might mean for San Luis Obispo County.

After all, Diablo Canyon is the second largest employer in San Luis Obispo County, employing about 1,500 workers. A pre-closure-announcement study estimated the power plant’s local economic impact at $1 billion.

The SB 968 study revealed that the actual impact was significantly less.

The study found that pre-closure, the local economy could actually be expected to improve, thanks largely to the $85 million mitigation settlement Senate Bill 1090 guaranteed to SLO County.

The settlement will increase San Luis Obispo County’s aggregate economic output by “at least $40 million annually for the seven years preceding closure,” according to the report.

That’ll increase to $53 million once the Economic Development Fund (EDF) — a part of the mitigation settlement — comes into full effect, the study found.

During that pre-closure time, the study estimated roughly 349 full-time jobs would be added, followed by an additional 87 full time jobs when the EDF funds are capitalized.

Immediately after closure in 2025, the economic output for the region would decrease by $801 million, with a loss of about 2,908 full-time jobs — most from direct employment at the plant.

During the next step, decommissioning, the local economic output could actually grow by about $724 million annually for the following 10 years, according to the study. Full-time jobs would grow by about 4,934 annually for 10 years.

All combined, researchers with the study estimated the closure of Diablo Canyon would result in a loss of only about $77 million annually. The study did not delve into what might happen once decommissioning is completed.

“This impact is far less than previous estimates which placed losses closer to $1 billion per year,” read the report.

Researchers also noted that though the closure would result in “meaningful economic losses, overall economic growth in the region will still be positive, although perhaps at a lower rate.”

More impacts

Third District Supervisor Adam Hill, whose district includes Diablo Canyon, said Wednesday that the study’s findings weren’t a revelation.

“Nothing surprising,” he said in a phone interview with The Tribune. “We know what we know.”

Hill did note that the study doesn’t tell the full story in regards to some of the other forces at play in determining how Diablo Canyon is decommissioned and how San Luis Obispo’s economy changes.

Chief among those are lingering concerns over PG&E’s bankruptcy and how that could impact decommissioning decisions and timing, he said.

Hill added that he wasn’t sure the study encapsulated the full impact of losing Diablo Canyon on local high-wage, specialized workers.

“A lot of the local contractors around here have made their livings working at the plants during the outages,” he said. “And there are a lot of people who won’t have that. I don’t know of anything that provides similar wages for them.”

Going forward, Hill said he believes the county can maintain and even grow the local economy through investment in the airport and initiatives such as the Hourglass Project — which brings together business and civic leaders to create high quality jobs through the Central Coast.

In an email to The Tribune on Wednesday, Rep. Jordan Cunningham said there’s more to do to prepare for a post-Diablo Canyon economy.

“Diablo Canyon’s closure will result in a loss of tax revenue, economic activity and more than a thousand head-of-household jobs,” he wrote. “While SB 1090 will help soften the blow of the plant’s closure, there is still so much more to do to prepare our region for a new economic reality.”

Cunningham added that he thinks the area needs to “think regionally and develop a plan to ensure that we are creating employment opportunities here on the Central Coast.”

“This report further shows that our efforts to transform our economy in the wake of Diablo’s closure are absolutely critical,” he wrote.

Public forum

The California Public Utilities Commission and Monning will hold a public meeting regarding the report at 1 p.m. Friday, in the San Luis Obispo County Board of Supervisors hearing room, 1055 Monterey St. in San Luis Obispo.

Stakeholders for the joint proposal to shutter the plant, including representatives from local governments, school districts, labor groups, environmental groups and utility ratepayer groups will be in attendance.

The full 144-page report can be found here: https://www.cpuc.ca.gov/uploadedFiles/CPUC_Website/Content/Utilities_and_Industries/Energy/Energy_Programs/Electric_Costs_and_Rates/Nuclear/FINAL_SB%20968%20Diablo%20Canyon%20Economic%20Impact%20Assessment.pdf

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Kaytlyn Leslie writes about business and development for The San Luis Obispo Tribune. Hailing from Nipomo, she also covers city governments and happenings in the South County region, including Arroyo Grande, Pismo Beach and Grover Beach. She joined The Tribune in 2013 after graduating from Cal Poly with her journalism degree.
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