Planning begins for loss of Diablo Canyon tax revenue

June 22, 2016

Local government agencies are set to lose about $26.75 million in annual revenue as a result of PG&E’s decision to close Diablo Canyon power plant. However, the loss in revenue does not appear to be catastrophic for any one agency. [Tribune]

On Monday, PG&E signed an agreement to shut down the nuclear reactors at Diablo Canyon when their licenses expire in 2024 and 2025. The decision impacts San Luis Obispo County, as well as several school districts and a harbor district, which receive property tax revenue from PG&E’s operation of Diablo Canyon.

The agency hardest hit by the announced closure of the nuclear plant is San Luis Coastal Unified School District. Diablo Canyon property taxes generate about $9.5 million annually for San Luis Coastal, or about 11 percent of the district’s total revenue.

The closure of Diablo Canyon is likely to cause San Luis Coastal to lose its basic-aid status. Basic-aid districts receive most of their revenue from local property taxes, rather than from state funding as most other school districts do.

Prater said California is pouring more money into state-funded districts, and San Luis Coastal was already at risk of losing its basic-aid status because of Gov. Jerry Brown’s opposition to the system.

San Luis Obispo County receives the second most revenue from Diablo Canyon property taxes. PG&E pays about $8 million a year in property taxes to the county. That accounts for less than two percent of the county budget, though. County officials say the loss in revenue will not be a major impact to the budget.

The Port San Luis Harbor District could face financial hardships as a result of its loss in tax revenue from PG&E. The harbor district receives about $440,000 annually, or about 7 percent of its budget, from Diablo Canyon property taxes.

District manager Andrea Lueker said she is unsure how the agency will recoup the losses, but she says the harbor commission will determine how much money it can obtain from a pool of aid offered by PG&E.

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

In addition to losing tax revenue, San Luis Obispo County will lose its planned desalination project as a result of Diablo Canyon closing. County officials had been planning to build a pipeline that would deliver water from the Diablo Canyon desalination plant to Avila Beach. The water would then go to South County homes. PG&E officials are now saying the project is dead.

Though PG&E officials have not discussed the issue publicly, there is some concern that Diablo Canyon will face closure in 2018 or 2019.

PG&E leases state tidelands for the plant to operate its cooling system, which sucks in water from the ocean and then returns it. The tidelands leases expire in 2018 and 2019, and PG&E is struggling to get the State Lands Commission to approve lease extensions.

In December, Lt. Gov. Gavin Newsom called for there to be a full environmental review before the commission decides on the lease extension. At the same meeting, Newsom accurately predicted Diablo Canyon would close by the time its licenses expire in 2024 and 2025.

The State Lands Commission may decide at a meeting next week whether PG&E’s tidelands lease extensions require an environmental impact report (EIR). If the commission does require an EIR, the process could take more than a year.