The County of San Luis Obispo, in coordination with the San Luis Coastal Unified School District (SLCUSD) and a local Coalition of Cities, reached a multimillion dollar settlement agreement with Pacific Gas & Electric Company (PG&E) to ease the local impacts of the impending closure of Diablo Canyon Nuclear Power Plant in November 2016. PG&E submitted the agreement as a "Community Impact Mitigation Program" to the California Public Utilities Commission in a joint proposal to decommission the power plant. 

This agreement addresses the County’s concerns about how to cushion the impact of the plant’s closure on local public health, safety and economic stability. The settlement will provide $122.5 million to $147.5 million to address impacts to essential public services, the local economy, and offsite emergency planning efforts until the plant is fully decommissioned.

In June 2016, PG&E revealed its plans to close Diablo Canyon by 2025 in a joint proposal with seven labor and environmental groups. Soon after, the County intervened in the relevant rate hearing cases before the CPUC, which has the authority to approve or deny the joint proposal. As an intervener, the County identified several points that served as the framework for the community’s successful negotiations with PG&E. The County worked closely with PG&E, the SLCUSD and the Coalition of Cities during the negotiation process, and consulted with the State Board of Equalization and industry experts.

The agreement has four parts, which include:

Essential Services Mitigation Fund

Currently, about 80 governmental entities receive unitary tax, which is used to fund general operations of essential public services to the people of San Luis Obispo County. Of those who receive the tax, 71 will be negatively impacted by the closure of Diablo Canyon and see a reduction in unitary tax funding. This agreement will partially offset the loss of local revenue and hopefully ease the impacts to local public services essential to the people of San Luis Obispo County over the next nine years (between 2016 and 2025). It is important to note that these funds will not result in a net gain to the entities receiving them. 

The total amount of the fund is $75 million. The funds will be distributed to the County in nine equal, annual installments of $8,333,333 through 2025. The County will redistribute the funds to the 71 entities mentioned within two weeks of receiving the payment from PG&E. Currently, the SLCUSD and the County General Fund are the two largest recipients of the existing unitary taxes per the allocations set by the Board of Equalization. The SLCUSD will receive about $4 million annually for nine years and the County General Fund will receive $3.1 million. Per the agreement, $2 million of SLCUSD’s share of each of the first five installment payments will be deposited into the account of SLCUSD’s designated educational foundation.

Economic Development Fund

$10 million will be allocated to a fund for implementation of regional economic development and job creation. The funds are to be spent solely for the purposes of economic development and impact mitigation purposes. Of the total amount, $400K will be dedicated for regional economic strategy efforts. Of the remaining amount, $5.76 million will be allocated to the Coalition of Cities and $3.84 million to the County.

Of the County’s amount, $192,000 will be allocated to the City of Grover Beach. The County and each of the cities will prepare annual reports that enumerate and describe the expenditures from the Economic Development Fund and assess the results and effectiveness of the economic development measures or programs resulting from such expenditures. The reports will be provided to PG&E, the CPUC, and the public.

Following the issuance of the Monning Report (per SB 968), the Commission will institute a new proceeding to evaluate the results of the Monning Report, take comment, and consider further action. Additionally, PG&E, the County, and the Coalition of Cities agree to work together to advocate jointly for additional funding or other assistance from the State of California and federal government agencies, and their respective legislative bodies, to support the economic transition of the local community to an era without Diablo Canyon in operation.

Emergency Preparedness and Response (Emergency Management)

The specific costs and detailed plans for emergency management through the decommissioning period will be definitively proposed in the site-specific decommissioning estimate to be submitted to the CPUC. The purpose of this settlement agreement is to outline the intent of what will be submitted as part of the site-specific decommissioning estimate.

For the duration of the operation of the plant, current emergency management and activities and funding will continue pursuant to existing law.

Once operations of the plant cease, the general intent is that the maintenance of the public warning sirens and funding for offsite community and local emergency planning functions (approximately $2.5 million forecast in 2017) will continue until all spent fuel is in dry cask storage and the two nuclear reactors are fully decommissioned (following the surrender of the 10 CFR Part 50 license).

The funding for other emergency preparedness equipment, training, emergency planning functions, and PG&E’s emergency response personnel will be informed by the reduced risks that remain and will be more definitively proposed in the site-specific decommissioning estimate. The process for development of the site-specific decommissioning estimate will include formation of a decommissioning advisory panel, which will include representation from the County of San Luis Obispo, industry experts, state and local government representatives, and affected stakeholders.

Future Use of the Land

Issues surrounding the disposition of the land related to Diablo Canyon, including future land uses will be addressed in the Diablo Canyon site-specific decommissioning plan to be submitted by PG&E. It is anticipated this submittal will occur within the next three years.

PG&E agrees to complete a site-specific decommissioning plan for the facility before making any decisions on the disposition of the Diablo Canyon lands. As part of this process, PG&E will convene a community advisory group that will give stakeholders an opportunity to help shape the future use of PG&E’s land plans prior to finalizing the site-specific plan.

In the meantime, PG&E and its affiliate companies that hold a property interest in the Diablo Canyon lands will not make any commitments on land disposition or post-retirement land use, including the Wild Cherry Canyon parcels, until the stakeholder process is completed and PG&E’s recommendations have been considered by the Commission as part of the Diablo Canyon site-specific decommissioning plan.