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HomeMy WebLinkAboutItem 6b - Invitation to Join Letter from SLO County Requesting Legislation related to Diablo Canyon Power Plant Item 6b Department: Administration Cost Center: 1002 For Agenda of: 1/20/2026 Placement: Business Estimated Time: 20 Minutes FROM: Whitney McDonald, City Manager Prepared By: Natalie Harnett, Policy and Project Manager SUBJECT: CONSIDER INVITATION TO JOIN LETTER FROM THE COUNTY OF SAN LUIS OBISPO REQUESTING STATE LEGISLATION RELATED TO DIABLO CANYON POWER PLANT RECOMMENDATION Receive the County of San Luis Obispo’s invitation to join a request for State legislation related to the Diablo Canyon Power Plant and provide direction to staff regarding participation in the letter drafted by the County. POLICY CONTEXT The City Council annually adopts a Legislative Action Platform (“Legislative Platform”) that establishes the City’s positions on legislative matters of importance . It does not extend to advocacy for or against any individual project, program, or entitlement application unless specifically noted. In this case, the City has received a request to join in efforts to seek legislative support on a part of an issue not included in the current Legislative Platform, and the matter is therefore being presented to the Council for direction. DISCUSSION On Monday, December 22, 2025, the City Manager received an email from the County of San Luis Obispo’s (“County”) Assistant Executive Officer, following direction from the County Board of Supervisors provided as part of an item added to the consent agenda during its meeting held on December 16, 2025. The email included a County-led draft legislative letter (Attachment A) requesting State legislation related to the continued operation of the Diablo Canyon Power Plant (DCPP), coastal land conservation, and restoration of unitary tax treatment. The County is inviting all agencies that have received DCPP unitary tax revenues to join a coalition in support of submitting the letter to the California State Legislature. Participation would include inclusion of the City’s name and/or logo on the letter and identification of a leadership point of contact. While portions of the County’s draft letter align with the City’s adopted Legislative Platform, the Platform does not authorize the City to take a formal position on whether DCPP’s operating license should be extended, which is included in the County’s request. Historically, the City has not taken a position on the license extension itself but has Page 71 of 114 6b emphasized that any continued operation must prioritize public safety, appropriate fiscal mitigation for local impacts, and long-term land conservation considerations. The sections below summarize prior City actions and explain how the County’s request both aligns with, and differs from, the City’s Legislative Platform and Council -adopted guiding principles regarding DCPP. Should the Council wish to sign on to this letter (Attachment A) and/or provide direction for future advocacy related to DCPP’s operating license extension, this direction could be incorporated into the City’s 2026 Legislative Platform update, planned for adoption in April 2026.1 Alignment with Guiding Principles and the Legislative Platform The County’s draft letter includes three primary requests from the Legislature: 1. Support the Nuclear Regulatory Commission’s regulatory approval process and establish a state licensing pathway to authorize DCPP to operate for up to 20 additional years. 2. Enact Legislation restoring historic pre-decommissioning unitary tax treatment for DCPP including land valuation for the duration of its extended operations or provide alternative equivalent financial mitigations. 3. Support the California Coastal Commission’s land conservation and public access plan for lands surrounding Diablo Canyon, in coordination with appropriate regulatory and conservation agencies. Since the first component requests legislative action specific to a single facility and project, it does not fall under the current Legislative Platform . Historically, the City has not taken a formal position on the extension or closure of DCPP. However, in 2016, when PG&E first announced the planned closure of the facility, the City Council adopted guiding principles to inform staff participation in regulatory and stakeholder processes. Those principles emphasized the City’s interest in “a seat at the table” and ensuring community safety, fiscal stability, and long-term planning, including the following: 1. Ensure the continued safe operation of the DCPP and the health and safety of the community. The primary focus is the emergency preparedness funding extension but may also include other public safety related activities. 2. Be involved in creating solutions that will lessen the short- and long-term financial impacts to the community. This could include a longer runway on tax offsets to ease the transition, direct funding for programs impacted by the loss of tax revenue and other direct financial contributions. A tangential issue that may be addressed is the fair and equitable cost sharing between ratepayers and PG& E corporate assets and shareholders. 3. Investigate opportunities for job creation and economic diversification. 1 The County’s December 22nd request sought confirmation of participation by January 10, 2026. However, due to the proximity to the holidays, the City’s first regularly scheduled Council meeting not occurring until January 13, and due to the need to allow adequate time for public noticing and outreach, the City Manager advised the County that Council direction would not be possible until January 20. Several other cities in the County are in a similar position with the need to obtain Council direction at public meetings occurring later than January 10th, and County staff have confirmed that this delay is acceptable. Page 72 of 114 6b Examples of this could include creation of a research and development facility located in the region, alternative energy generation technologies (small scale), job training programs and seed funding for relevant economic programs and opportunities. These opportunities could involve direct funding and/or commitments for a certain amount of jobs remaining in the community for a specified amount of time. 4. Develop a plan to address the potential long-term impacts of closing a nuclear facility. This includes spent fuel management, decommissioning and local vendor preference for request for offers (RFO) for new energy sources. 5. Explore the future use of the land and related facilities. This could include desalinization, large scale energy generation and general land designation (open space, development, etc.). Following these guiding principles, the City of San Luis Obispo participated in coordinating and forming a Coalition of Cities that worked in tandem with the County and other significantly impacted organizations, including the San Luis Coastal Unified School District (SLCUSD), to successfully establish a number of mitigation measures to address some of the economic impacts of the plant’s planned closure. This led to a settlement agreement entered into among a number of parties and presented to the California Public Utilities Commission (CPUC) in 2016 as part of PG&E’s ratemaking process intended to address needs associated with the planned closure of the DCPP. Ultimately, statutory authority (SB 1090) was provided to implement a number of provisions in the settlement agreement, including funding to the parties to address anticipated economic impacts of the closure. Following the enactment of SB 1090 in 2018, state energy policy shifted in response to growing electric grid reliability concerns. In 2022, the Legislature introduced, and ultimately adopted, SB 846 as an urgency statute, directing the CPUC to reverse its prior decision to have the plant closed and authorize PG&E to pursue extended operations through at least 2030, subject to federal license renewal by the Nuclear Regulatory Commission and additional state approvals related to coastal permitting, environmental compliance, and emergency preparedness, many of which remain underway. In 2022, the City joined a coalition letter regarding SB 846 that did not take a position on license extension, but emphasized the following nine key points: 1. Safety: Safe operation and regulatory oversight must remain the top priority. 2. Time-Limited Extension: Any license extension should be finite and tied to renewable replacement readiness. 3. Renewables First: The State should accelerate renewable energy deployment and remove regulatory barriers. 4. Land Use Planning: Extended operations should not hinder Central Coast clean energy or economic development and planning for future use of Diablo Canyon lands, including Parcel P, should continue. 5. SB 1090 Certainty: Prior mitigation funds should be explicitly protected from clawback. Page 73 of 114 6b 6. Fiscal Mitigation: Cities should be compensated for extended impacts beyond the original closure timeline. 7. Land Conservation: Coastal lands should be preserved in consultation with Tribal communities. 8. Local Workforce: PG&E should prioritize local labor and workforce transition. 9. Spent Fuel: A long-term solution for spent nuclear fuel is required. In parallel, the community has continued planning for eventual decommissioning through efforts such as the Diablo Canyon Decommissioning Engagement Panel. While the City will experience a relatively modest fiscal impact of approximately $76,000 annually in unitary tax revenue losses following the full depreciation of DCPP under SB 1090, the SLCUSD has documented substantially greater impacts. District reports show that unitary tax revenues from DCPP were approximately $3.7 million in 2024-25 and had been declining significantly since 2018. The total loss of this revenue stream starting in 2025 - 26 has contributed to budget reductions of roughly $5 million in 2024 –25, with additional reductions anticipated for the District. These significant financial impacts to community partners like the District are addressed in the County’s proposed advocacy letter, which seeks legislation requiring the reinstitution of the unitary tax. The second and third items listed in the County’s proposed letter (regarding unitary tax and land conservation and access) are consistent with the City’s adopted priorities and Legislative Platform. These elements align with the City’s guiding principles, Major City Goals as well as the following Legislative Platform planks: Finance & Governance #1: Support meaningful fiscal reform that allows each level of government to adequately finance its service responsibilities while continuing to support efforts to protect the City from loss of revenues due to State take‐aways and unfunded State or Federal mandates. Parks and Recreation and Natural Resources #1: Support State and Federal funding and other measures to promote the acquisition, protection, preservation and restoration of natural resources, open space, coasta l resources, signature landforms, wetlands, and park development, including continued funding for the Land and Water Conservation Grant Program and for the California Conservation Corps. Parks and Recreation and Natural Resources #7: Support funding to reduce or mitigate negative impacts to vital regional and community services and enhance public access to parks, open space, after school programming, senior services, facilities that promote physical activity, protect natural resources, and strengthen safety and security Previous Council/City Action July 2016: The City Council considered its stance on the DCPP Closure and approved a set of guiding principles to guide staff in the process of providing input during stakeholder discussions and in any potential CPUC filings as it relates to PG&E’s commitment to the community. Page 74 of 114 6b September 2016: To ensure equitable consideration of the adverse impacts of the retirement on area cities, the City joined the Coalition of Cities including San Luis Obispo, Arroyo Grande, Atascadero, Morro Bay, Paso Robles and Pismo Beach. The Coalition filed a joint request before the CPUC asking the state regulatory agency to formally hear their concerns regarding key impacts related to the closure. 2016-2017: Numerous parties, including PG&E, labor and environmental organizations, the County of San Luis Obispo, the SLCUSD, and the Coalition of Cities, participated in CPUC proceedings. Ultimately, a settlement agreement was established that included short-term community impact mitigation funding based on the assumption that the plant would close in 2024–2025 but did not address long-term fiscal impacts associated with extended operations or ongoing unitary tax treatment. On November 21, 2017, Council authorized the City to advocate for legislation (if necessary) to fund the Community Impacts Mitigation Program (CIMP). March 2018: Staff gave the City Council an update on the status of the DCPP closure settlement and sought Council approval for the City’s financial participation in a region al economic and fiscal impact analysis following the unfavorable CPUC decision, which excluded the CIMP. The City shared its guiding principles to the Diablo Canyon Decommission Engagement Panel in May 2018 and t he Coalition advocated throughout 2018 and pushed for the passage of SB 1090 which was a California state law enacted to implement key elements of the original Diablo Canyon Joint Proposal noted above. August 2022: The City signed on a Coalition letter in August 2022 expressing considerations and concerns for SB 846 (2022). SB 846 allowed DCPP to continue operating past the retirement date and was enacted as an urgency statute to address near-term grid reliability risks. Public Engagement Notice of this agenda item was provided through the meeting's posted agenda. The public may submit comments in writing before the meeting or share their input during the public meeting. ENVIRONMENTAL REVIEW The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report because the action does not constitute a “Project” under CEQA guidelines Section 15378. FISCAL IMPACT Budgeted: N/A Budget Year: 2025-26 Funding Identified: N/A Page 75 of 114 6b Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ $ $ $ State Federal Fees Other: Total N/A N/A N/A N/A There is no fiscal impact associated with signing onto the County’s draft letter. Through FY 2024-25, the City received approximately $76,000 annually from the Essential Services Mitigation Fund and a one -time $1.8 million Economic Development allocation in FY 2018-19, as approved through SB 1090. The expiration of these revenue streams were accounted for in the City’s adopted FY 2025–26 budget and revenue forecasts. ALTERNATIVES Draft an Independent Advocacy Letter. Prepare an advocacy letter limited to elements consistent with the City’s adopted Legislative Platform. Council may also direct staff to incorporate specific policy positions or elements in this alternative letter, as desired. Staff would draft the letter and send it to the Mayor for signature consistent with Council direction. Take No Action. Receive and file the County’s invitation and take no action at this time. ATTACHMENTS A – Draft Letter - County Legislative Request for Action Regarding DCPP Licensing Page 76 of 114 Draft COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS John Peschong District One Supervisor Bruce Gibson District Two Supervisor Dawn Ortiz-Legg Chairperson, District Three Supervisor Jimmy Paulding Vice-Chairperson, District Four Supervisor Heather Moreno District Five Supervisor Katcho Achadjian Government Center County of San Luis Obispo 1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5450 | (F) 805-781-1350 boardofsups@co.slo.ca.us | slocounty.ca.gov 12/16/2025 To: Members of the California State Legislature Cc: Relevant Legislative Committees Subject: Request for Legislation Supporting Extended Operations of Diablo Canyon Power Plant, Coastal Land Conservation, and Restoration of Unitary Tax Treatment Dear Members of the Legislature: On behalf of the County San Luis Obispo Board of Supervisors, we write to express our firm support for legislative action to enact measures authorizing Diablo Canyon Power Plant (DCPP) to operate for up to twenty (20) additional years, restore unitary tax treatment for DCPP, and support coastal land conservation and public access near the facility. As the host county for California’s only operating commercial nuclear power plant which provides approximately 9% of the State’s total generation of power, San Luis Obispo County recognizes Diablo Canyon as a critical component of the State’s clean energy infrastructure. Extending the plant’s operational life for up to 20 years would provide stable, carbon free baseload power that strengthens grid reliability, reduces greenhouse gas emissions, and advances California’s clean energy and climate goals. Continuation of operations, however, must be accompanied by fiscal fairness for the communities that host and support the facility. We therefore urge the Legislature to restore pre- decommissioning unitary taxation for DCPP during any extended period of operation. Historically, unitary tax revenues have been distributed to the County, cities, school districts, and special districts, supporting essential public services, educational programs, infrastructure maintenance, and public safety. Restoration of this tax structure is critical to maintaining the fiscal stability of local governments and public agencies. If restoring the pre-decommissioning unitary tax treatment proves infeasible, we request alternate financial mitigations to the County and local jurisdictions impacted by exemptions of taxable value on the DCPP during the period of extended operations established by the statutory prohibition against including operating costs in PG&E’s rate base. In tandem with extended operations, we support further conservation and public access frameworks for lands surrounding Diablo Canyon. Protecting these coastal and natural resources ensures long term environmental stewardship while providing opportunities for responsible public Attachment 1 1 of 2 Page 77 of 114 Draft County of San Luis Obispo Government Center 1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5000 | (F) XXX-XXX-XXXX info@slocounty.ca.gov | slocounty.ca.gov access and public benefit. This balanced approach of clean energy, fiscal stability, and environmental conservation serves both local communities and the broader interests of the State. In addition, future DCPP allocations related to changes in the values being assessed for portions of the property that may legislatively transition from highest and best use assessed acres of land towards lower value assessed acres of land due to new conservation restrictions should not financially penalize the affected region with lower assessed revenue figures. Accordingly, we respectfully request that the Legislature: 1.Support the Nuclear Regulatory Commission’s regulatory approval process and establish a state licensing pathway to authorize DCPP to operate for up to 20 additional years. 2.Enact legislation restoring historic pre-decommissioning unitary tax treatment for Diablo Canyon Power Plant including land valuation for the duration of its extended operations or provide alternate equivalent financial mitigations. 3.Support the California Coastal Commission’s land conservation and public access plan for lands surrounding Diablo Canyon, in coordination with appropriate regulatory and conservation agencies. Taken together, these actions represent a prudent and forward-looking policy framework that balances California’s clean energy needs with local fiscal health, environmental protection, and community interests. Thank you for your attention to this important matter. We stand ready to work collaboratively with the Legislature to enact legislation that reflects these priorities and supports a sustainable and equitable future for San Luis Obispo County and the State of California. Sincerely, Chair County San Luis Obispo Board of Supervisors San Luis Obispo County Attachment 1 2 of 2 Page 78 of 114 1 Item 7b. Consider invitation to join on County letter requesting state legislation related to Diablo Canyon Power Plant (DCPP) January 20, 2026 2 Context 1.Support the Nuclear Regulatory Commission’s regulatory approval process and establish a state licensing pathway to authorize DCPP to operate for up to 20 additional years.** 2.Enact legislation restoring historic pre-decommissioning unitary tax treatment for Diablo Canyon Power Plant including land valuation for the duration of its extended operations or provide alternate equivalent financial mitigations. 3.Support the California Coastal Commission’s land conservation and public access plan for lands surrounding Diablo Canyon, in coordination with appropriate regulatory and conservation agencies. ** License extension advocacy is outside the scope of current Legislative Platform and guiding principles County is inviting impacted agencies to join a coalition letter to the State including three primary requests from the Legislature regarding DCPP: 3 Background •2016-2017: City developed five guiding principles in advance of anticipated DCPP licensing conversations and potential closure: •Community Safety •Fiscal Mitigation •Jobs & Economy •Long-Term Planning •Future Land Use •The City of SLO participated in and help form a Coalition of Cities that worked in tandem with the County and San Luis Coastal Unified School District (SLCUSD), and other agencies to successfully establish several mitigation measures to address some of the economic impacts of the plant’s planned closure. 4 Background •2018: SB1090 passed in 2018 and implemented one-time Economic Development funding and essential services mitigation funding, among other things, to address upcoming plant closure. •City received a one-time payment of $1.8 million in Economic Development funding •City has received approximately $76,000 annually through Essential Services Mitigation Fund (ended in 2025) •2022: Coalition of cities once again advocated for nine key points as the Legislature considered SB 846, an urgency statute directing the CPUC to authorize PG&E to pursue extended operations through 2030: 1.Safety 2.Time-limited extension 3.Renewables first 4.Land use planning 5.SB 1090 Certainty 6.Fiscal Mitigation 7.Land Conservation 8.Local Workforce 9.Spent Fuel 5 Where things are at now State Direction: The State has authorized continued operations at DCPP through at least 2030, subject to federal and state approvals (SB 846). Regulatory Process Ongoing: Safety oversight remains with the Nuclear Regulatory Commission. Federal licensing, coastal permitting, and emergency preparedness reviews are still underway. Unitary Tax Dilemma: State law assumed permanent closure, triggering accelerated depreciation that eliminated unitary tax revenues to local agencies; however, the plant remains in operation, creating a mismatch between ongoing impacts and tax treatment. Fiscal Reality: City impacts are modest; other community partners, including school districts, face significant ongoing revenue losses. 6 Alternatives 1.Draft an Independent Advocacy Letter consistent with existing legislative platform and Council direction 2.Take No Action. Receive and file the County’s invitation and take no action at this time. Recommendation: Receive the County of San Luis Obispo’s invitation to join a request for State legislation related to the Diablo Canyon Power Plant and provide direction to staff regarding participation in the letter drafted by the County. 7 Alternative 1.Council could decide not to create an ad-hoc committee and instead direct staff to make recommended updates. In this alternative, staff would incorporate recommendations from Cal Cities and other relevant sources to update the legislative platform. The draft 2025- 26 Legislative Platform would then be presented to the Council for approval in April 2026. 2.Council could decide not to create an ad-hoc committee and continue with the current legislative platform. If this alternative is chosen, there may be changes in policy landscape that are not addressed in the current platform. 3.Council could decide not to adopt a legislative platform. Under this alternative, the City would not be able to write letters or reach out to legislators on key issues without requesting review and approval of the letters by Council each time. This would limit the impact that the City might have on pending legislation due to the time constraints on fast-moving bills and issues. Adopting a legislative platform is considered a best practice. 8 2016 Guiding Principles (1-3) 1. Ensure the continued safe operation of the DCPP and the health and safety of the community. The primary focus is the emergency preparedness funding extension but may also include other public safety related activities. 2. Be involved in creating solutions that will lessen the short- and long-term financial impacts to the community. This could include a longer runway on tax offsets to ease the transition, direct funding for programs impacted by the loss of tax revenue and other direct financial contributions. A tangential issue that may be addressed is the fair and equitable cost sharing between ratepayers and PG& E corporate assets and shareholders. 3. Investigate opportunities for job creation and economic diversification. Examples of this could include creation of a research and development facility located in the region, alternative energy generation technologies (small scale), job training programs and seed funding for relevant economic programs and opportunities. These opportunities could involve direct funding and/or commitments for a certain amount of jobs remaining in the community for a specified amount of time. 9 2016 Guiding Principles (4-5) 4. Develop a plan to address the potential long-term impacts of closing a nuclear facility. This includes spent fuel management, decommissioning and local vendor preference for request for offers (RFO) for new energy sources. 5. Explore the future use of the land and related facilities. This could include desalinization, large scale energy generation and general land designation (open space, development, etc.). 10 2022 Advocacy on SB 846 - Summary 1.Safety: Safe operation and regulatory oversight must remain the top priority. 2.Time-Limited Extension: Any license extension should be finite and tied to renewable replacement readiness. 3.Renewables First: The State should accelerate renewable energy deployment and remove regulatory barriers. 4.Land Use Planning: Extended operations should not hinder Central Coast clean energy or economic development and planning for future use of Diablo Canyon lands, including Parcel P, should continue. 5.SB 1090 Certainty: Prior mitigation funds should be explicitly protected from clawback. 6.Fiscal Mitigation: Cities should be compensated for extended impacts beyond the original closure timeline. 7.Land Conservation: Coastal lands should be preserved in consultation with Tribal communities. 8.Local Workforce: PG&E should prioritize local labor and workforce transition. 9.Spent Fuel: A long-term solution for spent nuclear fuel is required. 11 2022 Advocacy on SB 846 12 13