PG&E to close Diablo Canyon

June 21, 2016

By JOSH FRIEDMAN

Pacific Gas and Electric Co. announced plans to close Diablo Canyon power plant when the licenses to operate its two nuclear reactors expire in 2024 and 2025. The decision is being celebrated by environmental groups as the end of nuclear power in California, while others are concerned about the ensuing financial impact on the Central Coast.

Diablo Canyon has been in operation since 1985. The nuclear plant generates about 9 percent of California’s annual electricity production, according to PG&E.

In 2009, PG&E applied to renew it licenses to operate Diablo Canyon. But in 2011, PG&E paused the license renewal process to evaluate seismic concerns.

Multiple earthquake faults lie within several miles of the nuclear plant. Also in 2011, the Fukushima, Japan nuclear disaster reignited concerns among environmental groups and community members about the safety of Diablo Canyon.

California’s only other nuclear plant, San Onofre, closed permanently in 2013.

On Monday, PG&E reached an agreement with environmental and labor organizations on the closure of Diablo Canyon. The agreement calls for the utility to replace the power generated by nuclear reactors with a portfolio of greenhouse gas-free renewable energy resources.

Parties to the agreement include Friends of the Earth, the Alliance for Nuclear Responsibility, the Coalition of California Utility Employees and the International Brotherhood of Electrical Workers Local 1245.

There are currently about 1,483 Central Coast residents who are employed at Diablo Canyon. Most employees are expected to be offered jobs in the renewable energy industry.

PG&E’s transition away from nuclear energy is due in large part to a California regulation that mandates renewables account for at least 50 percent of the utility’s retail power sales by 2030. Some observers say that regulation, as well as the increasing regulatory scrutiny on nuclear power, removed the financial incentive to maintain operations at Diablo Canyon.

The closure of the nuclear plant will result in an approximately $920 million annual loss to the economies of San Luis Obispo County and northern Santa Barbara County, according to a 2013 study commissioned by PG&E. The Nuclear Energy Institute and Cal Poly’s Orfalea College of Business authored the report.

PG&E’s agreement to close Diablo Canyon states the nuclear plant currently generates about $22 million in local property taxes. That total could decline to zero by 2025, according to the agreement.

PG&E is offering to compensate SLO County an estimated $49.5 million for the loss of tax revenue. The utility expects to recover that amount through nuclear decommission funding.

The San Luis Coastal Unified School District receives more than $10 million, or about 16 percent of its operating budget, from PG&E taxes, according to a recent estimate released by State Sen. Bill Monning (D-Carmel). It is unclear how much money the school district will be able to recoup.