Utility agrees to $85m to ease economic pain from Diablo Canyon retirement

Pacific Gas and Electric (PG&E) announced Nov. 28 that an $85m agreement has been reached with labor, environmental and government stakeholders to ease the economic blow to San Luis Obispo County, California as a result of the planned Diablo Canyon nuclear plant retirement.

The proposed agreement was reached following a mutual goal to ensure a successful transition for the region over the next nine years to a post-Diablo Canyon operations economy. The agreement fulfills a key element of the joint proposal that was announced over the summer.

Diablo Canyon Unit 1 commenced operation in 1984 and Unit 2 started up in 1985. The Nuclear Regulatory Commission (NRC) licenses expire in 2024 and 2025 for Units 1 and 2, respectively, which is when the utility has agreed to retire these units. Diablo Canyon has a capacity of more than 2,200 MW.

“We appreciate this opportunity to partner with our County, cities and other stakeholders on this important agreement, which will greatly assist in the planning and preparation for a future without Diablo Canyon in operation,” said PG&E Electric President Geisha Williams.

“This is an important issue for all of us, and PG&E will continue to strongly advocate for supporting our community as the joint proposal moves through the state’s review process,” Williams said.

The County served as the lead government agency for the local area in negotiating the overall agreement with PG&E.

Under the first part of the agreement between PG&E, the County and SLCUSD, a $75m Essential Services Mitigation Fund will be created to offset the potential negative impacts to essential services provided to the community by the San Luis Coastal Unified School District (SLCUSD) and the County. This will be distributed to the County in nine equal annual installments through 2025 and the County will redistribute the funds to local agencies whose budgets are impacted by the inevitable decrease in unitary tax funding from the power plant. The school district will receive the bulk of this funding.

Under a second part of the agreement between the County and the Coalition of Cities, PG&E would create a $10m Economic Development Fund to ease the local economic impacts of the plant’s closure. Each member of the Coalition of Cities will receive a portion of $5.76m, the County will receive $3.84m, and the remaining $400,000 will be allocated for regional economic development activities. The County will be sharing a portion of the $3.84m with the City of Grover Beach which means that all cities in the County will receive benefits from this settlement.

A third part of the agreement between PG&E and the County addresses the continuation of funding for offsite community and local emergency preparedness and planning efforts until all spent fuel is in dry cask storage and the two nuclear reactors are fully decommissioned.

This part of the agreement also reiterates PG&E’s earlier pledge not to take actions or make decisions on the re-use or sale of Diablo Canyon-related lands, including Wild Cherry Canyon, until PG&E has completed a site-specific decommissioning plan with input from the community.


About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.