HomeMy WebLinkAbout03-20-2018 Item 15 Diablo Canyon Closure Regional Funding Strategy
Meeting Date: 3/20/2018
FROM: Derek Johnson, City Manager
SUBJECT: DIABLO CANYON NUCLEAR POWER PLANT CLOSURE SETTLEMENT
AGREEMENT UPDATE AND COSTS ASSOCIATED WITH CONDUCTING
AN ECONOMIC IMPACT ANALYSIS / FINANCIAL IMPACT ANALYSIS
RECOMMENDATION
Receive an update on the status of the Diablo Canyon Power Plant closure settlement and
approve a Resolution authorizing the City Manager to contribute $90,000 of the estimated costs
associated with an Economic/Financial Impact Analysis and Regional Economic Strategy.
BACKGROUND
In response to the anticipated economic hardships of the planned closure, PG&E, the County, the
cities within the County; the San Luis Obispo Coastal School District (School District) and other
partners negotiated a settlement agreement that included the Community Impact Mitigation
Program (CIMP) that would bring $85 Million to the region to alleviate some of the impacts of
the Diablo retirement. Of that amount, $39 Million would be distributed among the county,
cities and community service districts to help offset projected impacts and another $10 Million to
form an economic development fund for the cities and county. Of that latter amount, $400,000
would be set aside for immediate economic planning.
In addition, Senate Bill 968 was signed in to law in 2015, approving a study (Monning Study) to
analyze the impacts of nuclear power plant closures. It was anticipated that funding for the
Monning Study would complement the $400,000, to provide a long-term economic and
workforce development strategy that addresses the various needs of the micro economies within
the County.
In an effort to ensure equitable consideration of the adverse impacts of the retirement on area
cities, the City joined the Coalition of Cities (Coalition) in September 2016. In collaboration
with our County and School District partners, the Coalition to helped negotiate the settlement
agreement with PG&E and advocate at the California Public Utilities Commission (CPUC), in
public forums and in the media to successfully move the agreement forward. The City of San
Luis Obispo served as the lead agency for the Coalition, assuming responsibility for management
of outside counsel, initial payment of legal fees and coordinating information and advocacy
efforts. The parties agreed at the initial formation of the Coalition that those legal costs would be
distributed across the agencies in equitable manner.
The settlement agreement was brought before the CPUC in the fall of 2017 as part of
proceedings related to the Joint Proposal. The Administrative Law Judge Peter V. Allen issued
an opinion unfavorable to the CIMP, stating in part that the CPUC did not have clear authority to
approve the CIMP in its decision. The final CPUC January 11, 2018 decision did not include
CIMP funding. The decision continues to be a disappointing outcome, as the decision severely
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limits the region’s ability to address the impacts of Diablo Canyon’s closure.
DISCUSSION
In the process of joining the Coalition of Cities (Coalition), the City Managers agreed to an
operating framework whereby the cities within the Coalition spread the legal fees and fiscal and
economic impact study and strategy development costs equitably. In the framework, San Luis
Obispo served as the lead agency for legal representation of the Coalition, to argue on behalf of
the local communities for the California Public Utilities Commission (CPUC) to approve the
settlement agreement. Additionally, the City of San Luis Obispo supported the development of a
funding contingency plan, which would be activated in the event that the Joint Proposal and
associated settlement agreement with PG&E was not supported by the CPUC.
In addition, according to the contingency plan, the City Managers agreed that they would
recommend funding an equitable portion of the fiscal and economic impact study and strategy
development. The total cost of the study and strategy development is expected to exceed
$1,000,000. The following table shows the expected amounts that each City and the County
Administrative Officer agreed to recommend to their respective Boards and Councils. The
amounts in the table below are subject to change based on whether these recommendations are
approved. At the time of this report, only the City of Arroyo Grande has yet to approve the staff
recommendation. Staff will update Council with the status of the other partners’ Council
approved recommendations.
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While the Coalition works with the County and other partners to pursue an economic
development strategy, efforts are underway on various avenues to fund the CIMP. Currently, our
partners are pursuing a legislative response. A spot bill has been filed, which ultimately, if
successful, would provide funding for the CIMP to not only included developing a strategy, but
to also provide regional funding for the implementation of economic initiatives in line with this
strategy. City staff will keep Council informed on the bill’s progress through the legislative
process.
CONCURRENCES
The proposed action is consistent with the Guiding Principles, which were approved by the City
Council on July 19, 2016 (Attachment A).
ENVIRONMENTAL REVIEW
Receiving an update on the Diablo Canyon Power Point closure settlement agreement and
contributing to the costs of an Economic / Financial Impact Analysis and Strategy Development
is not subject to the California Environmental Quality Act.
FISCAL IMPACT
The recommendation would provide up to $90,000 towards the overall cost of the study and
analysis. The City has $100,000 in funding available that can be allocated for this purpose at City
Manager authority. The Cities and Counties in San Luis Obispo County have agreed to fund
$627,0001. The City of Santa Maria has been approached to fund $135,000 which is their
proportional cost related to their budget, population, and number of Diablo employees that live
within their jurisdiction. This leaves approximately $300,000 in funding needed to fund both
direct consultant costs and estimated project management costs.
ALTERNATIVES
The City Council could not support this recommendation. The recommendation is in line with
our regional partners to fund economic analysis and a regional economic strategic plan. This
plan is intended to align actions with our regional strengths and opportunities so that limited
resources are efficiently applied in to respond to the direct, indirect and induced economic
impacts related to the planned and approved timescale for the closure of the Diablo Canyon
Nuclear Power Plant.
1 The County has agreed to recommend $217,000 for phase 1 and $108,000 for phase 2. The Cities of San Luis
Obispo County have agreed to recommend $302,000 for both phases. The City of Santa Maria is considering
$135,000 towards the costs. If the Cit y of Santa Maria does not participate, the project costs will be reduced
proportionally.
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Attachments:
a - Guiding Principles
b - Diablo Canyon Resolution
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R ______
RESOLUTION NO. _____ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO
CONTRIBUTE $90,000 OF THE ESTIMATED COSTS ASSOCIATED
WITH AN ECONOMIC / FINANCIAL IMPACT ANALYSIS AND
REGIONAL ECONOMIC STRATEGY REGARDING THE CLOSURE OF
THE DIABLO CANYON NUCLEAR POWER PLANT
WHEREAS, on August 11, 2016, Pacific Gas & Electric (PG&E) filed its application
proposing to retire the Diablo Canyon Nuclear Power Plant (DCNPP) upon the expirations of
applicable licenses to allow for the continued operation of the plant; and
WHEREAS, protests and responses to the Joint Proposal were filed and eventually the
Joint Proposal was amended with a settlement agreement. The settlement agreement adjusted the
Community Impact Mitigation Program (CIMP) and was reached with many parties and locally
included: The San Luis Coastal Unified School District, the County of San Luis Obispo, and The
Coalition of Cities; and
WHEREAS, on November 8, 2017 Administrative Law Judge, Peter V. Allen, released
the Proposed Decision regarding the Joint Proposal to close the DCNPP. The Proposed Decision
rejected the proposed CIMP and on January 11, 2018 the CPUC voted to not include the CIMP;
and
WHEREAS, in the process of joining the Coalition of Cities (Coalition), the City
Managers agreed to an operating framework providing for a funding contingency plan to be
activated in the event that the Joint Proposal and associated settlement agreement with PG&E was
not supported by the CPUC; and
WHEREAS, according to the contingency plan, the City Managers agreed that they would
recommend funding an equitable portion of the fiscal and economic impact study and strategy
development among the partner cities. The total cost of the study and strategy development is
expected to exceed $1,000,000 and the City of San Luis Obispo’s contributio n of that amount is
$90,000; and
WHEREAS, The City has $100,000 in funding available for this purchase that was
previously approved.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
that:
a) The City Manager is authorized to expend $90,000 to contribute to the City’s portion of
funding an Economic / Fiscal Impact Analysis and Regional Economic Strategy regarding the
closure of the Diablo Canyon Nuclear Power Plant.
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Resolution No. _____ (2018 Series) Page 2
R ______
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
____________________________________
Carrie Gallagher
City Clerk
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3/21/2018
1
Diablo Canyon Nuclear Power
Plant
Derek Johnson, City Manager
March 20, 2018
1
Recommendation
1.Receive an update on the status of the Diablo
Canyon Nuclear Power Plant closure settlement.
2.Approve a Resolution authorizing the City Manager
to contribute $90,000 of the estimated costs
associated with an Economic/Financial Impact
Analysis and Regional Economic Strategy.
2
Staff Presentation - Item #15
3/21/2018
2
Background
In response to the anticipated closure of DCNPP, the
Coalition of Cities and other parties negotiated a
settlement agreement.
This settlement agreement included a Community
Impact Mitigation Program (CIMP).
The settlement agreement was brought before the
California Public Utilities Commission (CPUC) in the
fall of 2018.
The final CPUC decision on January 11, 2018 did not
include CIMP funding.
3
Background Continued
In the process of joining the Coalition of Cities, the
City Managers agreed to an operating framework.
According to the contingency plan, the City Managers
agreed that they would recommend funding an
equitable portion of the fiscal and economic impact
study and strategy development among the partner
cities.
4
Staff Presentation - Item #15
3/21/2018
3
Economic and Fiscal Impact Study
The total cost of the
study and strategy is
expected to reach $1M.
As outlined in the MOU,
the City’s share would
not exceed $90,000.
5
Fiscal Impact
The recommendation would provide up to $90,000
towards the overall cost of the analysis and study.
The City has $100,000 in funding available that can
be allocated for this purpose at City Manager
authority.
6
Staff Presentation - Item #15
3/21/2018
4
Recommendation
1.Receive an update on the status of the Diablo
Canyon Power Plan closure settlement.
2.Approve a Resolution authorizing the City Manager
to contribute $90,000 of the estimated costs
associated with an Economic and Fiscal Impact
Analysis and Regional Economic Strategy.
7
Staff Presentation - Item #15