HomeMy WebLinkAbout12-13-2016 Item 15 Council Reading File Coalition of Cities CPUC Filing
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
OCTOBER 6, 2016 PREHEARING CONFERENCE STATEMENT OF THE CITY OF
SAN LUIS OBISPO, CITY OF PISMO BEACH, CITY OF PASO ROBLES, CITY OF
ARROYO GRANDE, CITY OF MORRO BAY, AND CITY OF ATASCADERO
STEVEN R. MEYERS
BRITT K. STROTTMAN
Meyers Nave
555 12th Street, Suite 1500
Oakland, CA 94607
Phone: (510) 808-2000
Fax: (510) 444-1108
E-mail: smeyers@meyersnave.com
J. CHRISTINE DIETRICK
City Attorney
JON ANSOLABEHERE
Assistant City Attorney
City of San Luis Obispo
City Hall, Room 10
990 Palm Street
San Luis Obispo, CA 93401-3249
Phone: (805) 781-7140
Fax: (805) 781-7109
October 3, 2016 E-mail: cdietrick@slocity.org
Application of Pacific Gas and Electric Company for Approval of the Retirement of Diablo Canyon Power Plant, Implementation of the Joint Proposal, And Recovery of Associated Costs Through Proposed Ratemaking Mechanisms. (U39E)
Application 16-08-006 (Filed August 11, 2016)
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
OCTOBER 6, 2016 PREHEARING CONFERENCE STATEMENT OF THE CITY OF
SAN LUIS OBISPO, CITY OF PISMO BEACH, CITY OF PASO ROBLES, CITY OF
ARROYO GRANDE, CITY OF MORRO BAY, AND CITY OF ATASCADERO
Pursuant to Rule 7.2(a) of the Commission’s Rules of Practice and Procedure, the City of
San Luis Obispo, City of Pismo Beach, City of Paso Robles, City of Arroyo Grande, City of
Morro Bay, and City of Atascadero (together, the “Nearby Cities”) hereby submit this statement
in advance of the prehearing conference scheduled for October 6, 2016 regarding the Application
of Pacific Gas and Electric Company for Approval of the Retirement of Diablo Canyon Power
Plant, Implementation of the Joint Proposal, And Recovery of Associated Costs Through
Proposed Ratemaking Mechanisms (the “Application” or “Joint Proposal”).1
To craft the Joint Proposal, PG&E negotiated with a hand-selected collection of green-
energy groups and its own labor unions completely in secret. Despite its role as the largest
1 The “Joint Parties,” who joined in the Application, include PG&E, the Natural
Resources Defense Council, Friends of the Earth, Environment California, International
Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees, and
the Alliance for Nuclear Responsibility.
Application of Pacific Gas and Electric Company for Approval of the Retirement of Diablo Canyon Power Plant, Implementation of the Joint Proposal, And Recovery of Associated Costs Through Proposed Ratemaking Mechanisms. (U39E)
Application 16-08-006 (Filed August 11, 2016)
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private employer and the largest taxpayer in San Luis Obispo County, PG&E did not make a
single attempt to reach out to the Nearby Cities prior to announcing the Joint Proposal on June
21, 2016. Instead, with no input from those most affected (including our County officials and
our local School District), PG&E simply invented a “Community Impact Mitigation Program,”
apparently wagering that local stakeholders would accept its offer of $49.5 million to San Luis
Obispo County rather than push for further analysis of the full economic impact of Diablo
Canyon’s closure and the adequacy of PG&E’s proposal to mitigate that impact.2
PG&E was wrong and economic impact analysis is clearly within the scope of this
proceeding. The Nearby Cities, which have hosted PG&E’s nuclear ambitions in their backyards
for over 30 years, recognized the dramatic and consequential nature of PG&E’s proposal to close
Diablo Canyon, and protested the Joint Proposal. They pointed out that even a preliminary
review shows the Application does not adequately and equitably consider, or provide for the
mitigation of, significant adverse effects from the proposed action on the Nearby Cities,
including economic and fiscal impacts. They also pointed out the Application fails to address
key details regarding the future use of Diablo Canyon land and the decommissioning process
itself.
Now, rather than address the merits of the Nearby Cities’ concerns in the context of this
proceeding, PG&E argues their concerns are outside the scope of the current proceeding. This is
nonsense. PG&E itself made economic and fiscal impacts a central issue in this proceeding
when it devoted an entire section of the Joint Proposal to its plan for a Community Impact
2 PG&E’s strategy of depriving the Commission, stakeholders, and the public of key
information regarding the Joint Proposal and then simultaneously suggesting that the Joint
Proposal is a great deal is a well-recognized way to encourage the acceptance of unfavorable
terms. See George Akerlof, The Market for Lemons: Quality Uncertainty and the Market
Mechanism, The Quarterly Journal of Economics, Vol. 84, No. 3 (Aug. 1970), pp. 488-500.
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Mitigation Program, developed in a vacuum. PG&E’s complaint that this is an issue for “State
and local government” is completely unsupported. Senate Bill 968, on which PG&E relies,
explicitly states it is “not intended to interfere” with the Joint Proposal. The assessment it
provides for will not be completed until July 1, 2018, almost a year after the Commission’s
decision in these proceedings under the schedule PG&E has proposed. Thus, by the time it is
finished, it will be too late for the assessment to be useful in the Commission’s evaluation of the
Joint Proposal. The sole usefulness of the data at that time may be to highlight how woefully
inadequate and inequitable PG&E’s already-approved closure mitigations proved to be, with no
regulatory authority to address the deficiencies and no remedy left to the Nearby Cities, the
County of San Luis Obispo, or the School District to demand corporate accountability.
Further, PG&E and the Joint Parties are conspicuously silent as to what other proceeding
might be available for evaluation of the local economic impact and PG&E’s plans to mitigate
that impact. SB 968, for example, provides for only an assessment and a “review” of “potential
actions for the state and local jurisdictions to consider in order to mitigate the adverse economic
impact of a shutdown.” As far as PG&E and the Joint Parties appear to be concerned, the
Nearby Cities will never be given a chance to evaluate their plans to address local economic
impact in the administrative context. The Nearby Cities agree with PG&E and the Joint Parties
that it is not the Commission’s responsibility to ensure the local community is completely and
forever insulated from any economic impacts associated with Diablo Canyon’s retirement – that
is not the Nearby Cities’ goal in this proceeding. But basic notions of fairness demand that the
proceedings are at least informed by objective data based upon identification of impacts that
PG&E rightfully should be required to mitigate and negotiation of impact mitigation with all
parties having equal access to reliable information. PG&E made a strategic choice to exclude the
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Nearby Cities and other agencies from negotiations of the Joint Proposal, placing itself in the
power position of having all of the information and forcing the impacted communities to play
catch up in the dark. It now attempts to further skew the playing field to its advantage by
defining central issues as outside the scope of the proceeding and advancing an expedited
schedule for approval that will guarantee the substantive exclusion of the Nearby Cities and other
impacted agencies and communities and avoid the possibility that PG&E will be required to
account for its impacts. There can be no question that appropriately mitigating the economic
impact of Diablo Canyon’s closure on the Nearby Cities and other local communities should be a
part of these proceedings and PG&E’s scoping proposal to the contrary should be squarely
rejected by the Commission.
The Nearby Cities also submit the Commission should properly and thoroughly consider
issues related to the use of Diablo Canyon land and the details of PG&E’s plans for the
decommissioning process. PG&E’s plan to delay consideration of those issues until at least
2018 would mean by the time they are finally discussed, the various stakeholders’ options on
these issues may be severely and detrimentally limited by decisions that have already been made.
As PG&E itself stated, the Nearby Cities have “borne the burdens” of hosting an
operating nuclear power plant, and “Diablo Canyon could not have realized its tremendous value
to all of PG&E’s customers without the help and willing partnership of the local community.”3
As a consequence, the Nearby Cities should be allowed a full and equal voice in the process of
approving the procedure for its decommissioning, in this proceeding. As discussed further
below, the Nearby Cities respectfully submit that evaluation of the local economic effects of
Diablo Canyon’s closure and the adequacy of the Joint Parties’ proposal to mitigate those effects,
3 Application, p. 10.
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as well as PG&E’s plans regarding land use and decommissioning issues, should be considered
within the scope of this proceeding.
I. THE JOINT PARTIES DEVOTED AN ENTIRE SECTION OF THE JOINT
PROPOSAL TO THEIR PLAN FOR MITIGATING THE ECONOMIC IMPACT
ON THE LOCAL COMMUNITY
In the Application, PG&E boasted it “joined with labor, leading environmental
organizations, and a community-based nuclear safety advocacy group to chart a different energy
future.” It stated the Joint Parties “recognize the impact of the retirement of Diablo Canyon on
PG&E’s employees and the community” and as a result, “[t]he Joint proposal also addresses
community impacts.” Though PG&E itself admits it unilaterally determined what would
constitute fair mitigation for community impacts, never once reaching out to any of the
communities it stated were being impacted for their input on the terms of the Joint Proposal
before announcing it,4 the Joint Parties nevertheless congratulated themselves that the Joint
Proposal was the result of “considerable negotiation.”
One of the primary areas of focus of the Joint Proposal was mitigating economic and
fiscal impacts on the local community. Indeed, Section 4 of the Joint Proposal (there are five
sections total) is titled “Community Impacts Mitigation Program” and entirely devoted to the
Joint Parties’ proposal for addressing these impacts. As PG&E explains in the Application:
Section 4 of the Joint Proposal recognizes and honors the mutually beneficial relationship
that has existed between Diablo Canyon and the local community in which it is situated
over the past three decades. Diablo Canyon has provided reliable, safe, and economic
4 In its Reply, PG&E alleges it made “significant efforts to notify, info rm, and seek input
from the Nearby Cities … following the announcement of the Joint Proposal.” Reply, p. 22
(emphasis added). Obviously, such efforts did not allow the Nearby Cities to provide their input
on the Joint Proposal, since it had already been announced. And PG&E’s statement that it
“briefed” a number of local elected officials and their staff is telling as to the level of local
involvement PG&E considers sufficient. As further discussed in Section IV, below, none of
these briefings including meaningful, substantive discussions or negotiations regarding issues of
importance.
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GHG-free electricity for more than 30 years. It has done so with the support and
assistance of the local community that has provided a home for DCPP and its employees.
Over many years, the local community has both reaped the many benefits and also borne
the burdens —both realized and potential —associated with hosting an operating nuclear
power plant. Simply put, Diablo Canyon could not have realized its tremendous value to
all of PG&E's customers without the help and willing partnership of the local community.
Diablo Canyon is one of the largest employers, taxpayers, and charitable contributors in
the San Luis Obispo County area. It currently pays approximately $22 million in annual
property taxes to the local community. In order to continue to support this local
community even as the facility begins to retire, PG&E proposes to provide $49.5 million
in funding to San Luis Obispo County over a nine-year period to mitigate the decline in
the economic benefit that the plant's operations have traditionally provided. The
mitigation payment would be recovered through nuclear decommissioning funding.
In addition, PG&E proposes to continue its support for state and local emergency
planning and preparedness, including continuing support for the San Luis Obispo County
early warning system, until the decommissioning of Diablo Canyon is complete. PG&E
and the other Joint Parties believe that this Community Program strikes the right balance
between providing appropriate transitional assistance to the community while also
recognizing that the community must manage this transition so that it can thrive in the
longer term without the historic levels of spending and taxes funded by PG&E
customers.5
Clearly, the Joint Parties understood that assessment of the local economic impact of
Diablo Canyon’s closure, and their plan to mitigate that impact, would be a part of these
proceedings at the time they filed the Application. After receiving the Nearby Cities’ and other
parties’ protests, and recognizing the absurdity of negotiating with itself over community impact
mitigations, the Joint Parties now seek to move the target.
II. THE JOINT PARTIES NOW SAY THAT LOCAL ECONOMIC IMPACT IS
OUTSIDE THE SCOPE, BUT DO NOT OFFER ANY LEGITIMATE REASON
WHY THAT IS SO
In the Reply, rather than address the Nearby Cities’ legitimate concerns in the context of
these proceedings, PG&E and the Joint Parties have completely reversed themselves. The Joint
Parties maintain the reasonableness of PG&E’s proposed $49.5 million “Community Impacts
Mitigation Program” is properly within the scope – as they must, since they so emphatically
5 Application, p. 10-11.
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touted this payment as proof of PG&E’s commitment to “support this local community” and
“mitigate the decline in the economic benefit that the plant’s operations have traditionally
provided.”6 Nonetheless, in an impressively cynical attempt to preclude broader scrutiny of local
economic impacts and PG&E’s plan to “appropriately” mitigate them, PG&E now claims that
“quantifying and assessing the overall impacts of Diablo Canyon’s closure” is outside the scope.
PG&E’s statement has a glaring and inescapable logical flaw because it is self-evident that
evaluating the sufficiency of the Community Impacts Mitigation Program will require analysis
of the “economic impacts” of the closure. PG&E cannot simultaneously tout the generosity of its
plan to address local economic impact and obstruct any impartial analysis that would permit the
verification of its statements or test the adequacy of its proposal.
The only reason PG&E offers for its argument that economic impact assessment is out of
scope is such an assessment is a “matter for State and local government” because of Senate Bill
968.7 This is false. SB 968 does nothing more than provide for the completion of an assessment
of the economic impact of Diablo Canyon’s closure by July 1, 2018 using $400,000 from the
nuclear decommissioning funds. SB 968 is explicitly “not intended to interfere” with the Joint
Proposal, nor does it provide any mechanism by which the parties to this proceeding will be able
6 Application, p. 11.
7 SB 968 was signed into law on September 26, 2016, the same day as the Joint Parties’
Reply, but the Reply was filed relatively early in the day and does not take into account that SB
968 was signed into law. See Reply, p. 4 (“[SB 968], recently passed by the legislature and
presented to the Governor for signature …”). The Reply argues, instead, that even as draft
legislation SB 968 would be a basis for precluding consideration of economic impact in this
proceeding. This makes no sense: There are hundreds, if not thousands of pieces of legislation
introduced by state legislators each session. See Senate Bill Index, available at:
http://www.legislature.ca.gov/bill_index.html. If the mere fact that an issue is the subject of
draft legislation was sufficient to preclude any agency, commission, or other administrative body
from considering issues related to the same subject matter, the entire administrative process
would come to a grinding halt. Of course, the Governor’s approval of SB 968 saves PG&E from
having to defend this absurd argument.
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to use the findings of the assessment in order to evaluate the sufficiency of the Joint Proposal.
Most importantly, the legislation includes no mechanism by which to compel PG&E to mitigate
any impacts that may be identified through the study. According to PG&E’s proposed timeline,
the Commission’s decision on the Joint Proposal will be completed a year earlier, in August
2017, and the regulatory opportunity to require community impact mitigation will have passed.
Postponing consideration of the Joint Proposal’s plan to mitigate economic and fiscal impacts
until after the results of the assessment from SB 968 are available in July 2018 (and precluding
the Commission from considering it here) would be like waiting to determine how best to fix the
gate until after the proverbial cow has already left the barn. In short, it allows PG&E and the
Joint Parties to ram through a settlement they claim addresses local economic impact before the
Nearby Cities and other local communities, or the CPUC, have the chance to evaluate whether
that settlement is remotely fair and adequate.
III. ISSUES RAISED BY THE NEARBY CITIES’ PROTEST, ESPECIALLY LOCAL
ECONOMIC AND FISCAL IMPACT, SHOULD BE INCLUDED IN THE SCOPE
OF THIS PROCEEDING
Evaluating and appropriately mitigating the economic and fiscal impact of Diablo
Canyon’s closure on the Nearby Cities and other local communities must be a part of these
proceedings. Indeed, if it is not, the Nearby Cities may never get the chance to be heard on these
vital issues. PG&E and the Joint Parties do not point to any alternative forum in which economic
impact would be at issue – likely because the Joint Parties originally planned for economic
impact issues to be a part of this proceeding, albeit without the participation of the economically
impacted communities, which they strategically excluded and no doubt hoped would not be able
to organize quickly enough to participate. Now, faced with an organized opposition to their
unilateral proposal, PG&E has reversed course after receiving substantial skepticism regarding
the sufficiency of their proposal on the subject from representatives of almost all impacted local
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agencies. In addition, neither SB 968 nor any other State or local law appears to provide an
equivalent alternative mechanism through which PG&E’s efforts to address economic impact
can be timely evaluated or mitigations required.
The other issues raised by the Nearby Cities in their Protest that the Joint Parties also now
argue are outside the scope should similarly be considered in these proceedings. For example,
PG&E argues issues related to the use and disposition of the lands surrounding Diablo Canyon
following its closure should be instead addressed in connection with the 2018 Nuclear
Decommissioning Triennial Proceeding (“NDCTP”). But PG&E’s plan to delay consideration of
land use issues until after these proceedings suffers from many of the same problems that plague
its plan to delay consideration of economic impact issues: by the time land use issues are finally
discussed, the various stakeholders’ options may be severely and detrimentally limited by
decisions that have already been made.
That problem is even more acute in the context of PG&E’s proposal to delay
consideration of “decommissioning issues,” including specific details regarding the
decommissioning process, post-retirement use of the desalination plant, and funding of
emergency planning and response services. These issues must be addressed as soon as possible,
and in the context of these proceedings, because the outcome of these proceedings will have a
direct effect on what options are even available for imminent and important decisions related to
decommissioning.
IV. PG&E’S CHARACTERIZATION OF ITS PUBLIC ENGAGEMENT AND
OUTREACH ON THIS MATTER IS MISLEADING
In its response to the Nearby Cities’ Protest, PG&E attempts to refute its lack of
substantive engagement with Nearby Cities and other impacted agencies and communities as
follows:
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The Nearby Cities state that no meetings or discussions took place between PG&E
and any of the Nearby Cities regarding Diablo Canyon retirement between the release
of the Joint Proposal and submission of the Application. In fact, PG&E made
significant efforts to notify, inform, and seek input from the Nearby Cities and other
local elected officials and their staff following the announcement of the Joint
Proposal. From the date of the June 21 announcement to the present, PG&E has
briefed 106 local elected officials and their staff on the Joint Proposal, including
attending 79 in-person meetings, placing 19 phone calls and sending 313 e-mail
communications.
PG&E seems to confuse unilateral dissemination of its pre-packaged talking points and
activation of its substantial, but self-serving, public relations machine (what PG&E
apparently calls “briefing”) with substantive discussion and meaningful public engagement.
The Nearby Cities don’t share PG&E’s self-congratulatory view of its “outreach” efforts.
Telling people what you are going to do to them is not the same as having a discussion or
engaging in meaningful negotiations or even mutual exchanges of information.
PG&E apparently believes the definition of meaningful discussions and negotiations
lies in general presentations to city councils during public comment, a brief telephone
conversation with someone from PG&E not authorized to negotiate, or a blast email sent to
an unknown list of recipients. The Nearby Cites have little doubt that PG&E can produce
evidence of these contacts. However, there can also be no doubt that these contacts were
neither meaningful nor constructive negotiations of the issues of importance. It is an affront
to the common sense of the excluded agencies’ representatives and to their communities to
think otherwise.
To confirm and reiterate, none of the Nearby Cities were engaged in a substantive
discussion or negotiated in good faith with an authorized representative from PG&E up to
and through the date of this filing. All contacts, conversations and interactions that have
occurred were of little added value in terms of remedying the PG&E-created informational
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deficit under which the Nearby Cities are continuing to operate, leveling the negotiations
playing field by engaging the Nearby Cities as equal partners, or reaching an agreement
about the terms of the Joint Proposal. No interactions thus far represent substantive, good
faith negotiations in any way, shape or form. Quantity of contacts is no substitute for
productive and substantive engagement over the real issues. PG&E has done a fine job of
being pleasant and otherwise ubiquitous in its communications with the Nearby Cities, but
this should not be confused with genuine, forthright and forthcoming engagement or
providing any good faith offers to address the issues of concern to the Nearby Cities.
V. SCOPING ISSUES
Proposed Schedule:
Activity Application Proposal Nearby Cities
Alternative Date(s)
Intervenor Testimony 10/28/2016 3/31/20178
Rebuttal Testimony 11/30/2016 4/15/2017
Hearings 12/13/2016 5/6/2017
Opening Brief 1/16/2017 5/31/2017
Reply Brief 2/3/2017 6/21/2017
Proposed Decision 5/2017 9/2017
Final Decision 6/2017 10/2017
Proposal for issues in the scope:
The retirement of Diablo Canyon Power Plant (“Diablo Canyon”)
8 As public entities, the Nearby Cities cannot retain the expertise necessary to
meaningfully analyze and comment on the Joint Proposal without first going through a lengthy
procurement process. The Nearby Cities propose that the dates for submitting Intervenor and
Rebuttal Testimony provide sufficient time for the completion of that process.
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PG&E’s proposal for three tranches of procurement to partially replace Diablo Canyon
and associated cost recovery and allocation
PG&E’s proposed Employee Program and associated cost recovery and allocation
PG&E’s proposed Community Impact Mitigation Plan and associated cost recovery and
allocation
The reasonableness and cost recovery of license renewal activities
The balancing accounts and accounting treatment proposed by PG&E for Diablo Canyon
depreciation costs and the Employee Program
PG&E’s ratemaking proposals, including the depreciation expense revenue requirement
Disposition of Buffer lands
Quantification and assessment of total economic impact of Diablo Canyon retirement
Other decommissioning (“post-retirement”) issues (e.g., methods of decommissioning,
specific description and cost of emergency response activities during decommissioning)
Disposition of Desalination plant
VI. CONCLUSION
The Nearby Cities deserve and respectfully demand that issues raised by their Protest,
including issues related to quantification and assessment of the total economic impact of Diablo
Canyon’s closure on the local communities, and to land use and decommissioning, be considered
within the scope of these proceedings. If the Commission ultimately decides these issues are
outside the scope of these proceedings, the Nearby Cities respectfully request the Commission
make its decision expressly contingent on PG&E’s agreement to present them in another forum
that allows the Nearby Cities and other local communities to fully participate.
/s/ Britt K. Strottman
STEVEN R. MEYERS
BRITT K. STROTTMAN
Meyers, Nave, Riback, Silver & Wilson
555 12th Street, Suite 1500
Oakland, CA 94607
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Phone: (510) 808-2000
Fax: (510) 444-1108
E-mail: smeyers@meyersnave.com
bstrottman@meyersnave.com
Attorneys for the CITY OF SAN LUIS OBISPO,
CITY OF PISMO BEACH, CITY OF PASO
ROBLES, CITY OF ARROYO GRANDE,
CITY OF MORRO BAY, AND CITY OF
ATASCADERO
/s/ J. Christine Dietrick
J. CHRISTINE DIETRICK
City Attorney
JON ANSOLABEHERE
Assistant City Attorney
City of San Luis Obispo
City Hall, Room 10
990 Palm Street
San Luis Obispo, CA 93401
Phone: (805) 781-7140
Fax: (805) 781-7109
E-mail: cdietrick@slocity.org
October 3, 2016 Attorneys for the CITY OF SAN LUIS OBISPO,
CITY OF PISMO BEACH, CITY OF PASO
ROBLES, CITY OF ARROYO GRANDE, CITY
OF MORRO BAY, and CITY OF ATASCADERO
2712486.3