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Home My WebLink About06-23-2016 Item 01 - Letter of Support for PG&E request to CSLC for an Extension LeaseMeeting Date: 6/23/2016 FROM: Katie Lichtig, City Manager Prepared By: Lee Johnson, Economic Development Manager SUBJECT: CONSIDERATION OF A CITY LETTER OF SUPPORT FOR PACIFIC GAS & ELECTRIC’S REQUEST TO THE CALIFORNIA STATE LANDS COMMISSION FOR AN EXTENSION OF A LEASE FOR AN OCEAN INTAKE AND OUTFALL STRUCTURE AT THE DIABLO CANYON POWER PLANT RECOMMENDATION Send a letter to the State Lands Commission supporting Pacific Gas & Electric’s request for an extension of a lease for an ocean intake and outfall structure at the Diablo Canyon Power Plant in light of Pacific Gas & Electric’s recent announcement of its contingent agreement not to seek renewal of its Nuclear Regulatory Commission licenses. DISCUSSION On June 21, 2016 Pacific Gas & Electric (PG&E) announced that it will close the Diablo Canyon Power Plant (DCPP) when the current operating licenses from the Nuclear Regulatory Commission (NRC) expire in 2024 and 2025. The announcement also stated that an agreement for the closure had been reached with labor and environmental groups, but required final approval by the California Public Utilities Commission (CPUC) and was contingent on the extension of current leases with the State Lands Commission for the ocean intake and outfall structure. The meeting of the State Lands Commission to consider extension of this lease is set for June 28, 2016. At the City Council meeting on June 21, 2016 representatives from PG&E announced the closure and requested that the City Council send a letter to the State Lands Commission supporting the extension of the lease required to operate the facility. At that time, the City Council provided direction to hold a special meeting on June 23, 2016 to discuss the request. On June 22, 2016 the City received from PG&E a sample letter of support (Attachment A). While the City has anticipated closure of the DCPP as a possibility for some time, there was no communication between PG&E and the City regarding the proposed agreement or means to mitigate local impacts prior to the announcement on June 21, 2016. Staff is still in the process of gathering the necessary information to fully understand the breadth of the impacts. Until additional information is received and analyzed, staff will have a limited ability to answer questions about the short and long term impacts of closure of the DCPP or strategies and tactics to mitigate the impacts. Packet Pg. 1 However, as the State Lands Commission meeting on June 28, 2016 plays an important role in the approval of the proposed agreement, it is prudent for the City to weigh in on this issue at this time. Supporting the lease extension would extend the timeframe from a potential closure in 2018-19 to the proposed closure in 2024-25. This provides for additional time for the City to analyze the impacts of the closure of the DCPP, understand PG&E’s future plans and assess ways to mitigate the local impacts, both regionally and specifically to the City. The recommended letter to the State Lands Commission (Attachment B) contains the following key points: Given PG&E’s business decision to close the DCPP, the City supports the proposal by PG&E that the expiration of the State Lands Commission leases should coincide with the expiration of the current NRC licenses, as long as the plant can be operated safely until that point in time. The City would like to ensure that opportunities are provided to all impacted communities to propose possible additional mitigations or alternative solutions to what is currently included in the closure agreement. The City is in general agreement on the proposed path forward, but respectfully request that the State Lands Commission recommend to the California Public Utilities Commission that PG&E participate in a meaningful discussion with the impacted communities about additional actions that could mitigate the negative impacts of the closure. If the City Council would like the City to be represented at the State Lands Commission meeting then staff requests an indication of such. This meeting is scheduled for June 28, 2016 at 10 a.m. in Sacramento (with an off-site location in Morro Bay). FISCAL IMPACT There is no financial impact associated with sending the letter to the State Lands Commission. There are potential significant financial impacts for the City and region associated with the closure of the DCPP. The short and long term impacts associated with the planned closure of the facility will require extensive regional cooperation and analysis to identify short and long terms strategies to reduce the financial impacts to the City and region. ALTERNATIVES 1. Modify the letter. The City Council may wish to modify the letter based on deliberation. Specific direction should be given regarding changes. 2. Do not send a letter. The City Council may wish to not send a letter. This is not recommended due the Packet Pg. 2 potential significant impacts for the City and region associated with the closure of the Diablo Canyon Power Plant and this specific opportunity to influence a key decision point in the process. Attachments: a - PG&E Sample Letter b - City Letter to the State Lands Commission Packet Pg. 3 Packet Pg. 4 Attachment A (PG&E Sample Letter) Packet Pg. 5 Attachment A (PG&E Sample Letter) Packet Pg. 6 Attachment A (PG&E Sample Letter) Attachment A (PG&E Sample Letter) Packet Pg. 7 City of San Luis Obispo, Office of the City Council, 990 Palm Street, San Luis Obispo, CA, 93401-3249, 805.781.7114, slocity.org June 23, 2016 State Lands Commission 100 Howe Avenue, Suite 100 South Sacramento, CA, 95825 RE: Item #96 – Pacific Gas & Electric Company Leases at Diablo Canyon Power Plant Honorable Chair Yee and Commissioners Newsom and Cohen: Although there is very limited information available about the closure of the Diablo Canyon Power Plant (DCPP), the proposed closure agreement, the potential impacts (economic and otherwise) and the possible alternatives, on behalf of the City Council of the City of San Luis Obispo and our community, we believe it is important to weigh in on this important issue that will have a lasting impact on our City and our region. On June 21st, the same day as the Pacific Gas & Electric (PG&E) announcement, the City Council agreed to hold a special meeting on the June 23rd to receive input from our community and to discuss what input we should provide to the State Lands Commission. Given PG&E’s business decision to close the DCPP, the City supports the proposal by PG&E that the expiration of the State Lands Commission leases should coincide with the expiration of the current Nuclear Regulatory Commission licenses, as long as the plant can be operated safely until that point in time. Supporting the lease extension would extend the timeframe from a potential closure in 2018-19 to the proposed closure in 2024-25. This provides for additional time for the City to analyze the impacts of the closure of the DCPP, understand PG&E’s future plans and assess ways to mitigate the local impacts, both regionally and specifically to the City. The City would like to ensure that opportunities are provided to all impacted communities to propose possible additional mitigations or alternative solutions to what is currently included in the closure agreement. In closing, the City is in general agreement on the proposed path forward, but respectfully request that the State Lands Commission recommend to the California Public Utilities Commission that PG&E participate in a meaningful discussion with the impacted communities about additional actions that could mitigate the negative impacts of the closure. Thank you for considering input from the City of San Luis Obispo. Jan Howell Marx Mayor Attachment B (City Letter to State Lands Commission) Packet Pg. 8