Judge denies PG&E plan for ratepayers to fund Diablo Canyon community support program

Nov 8, 2017

A judge’s decision issued Wednesday paves the way for the Diablo Canyon Power Plant to close in 2025, if that decision is ratified by the full California’s Public Utilities Commission (CPUC). Seven months after hearings started in the proceeding, a CPUC administrative law judge issued a draft approval of Pacific Gas and Electric’s (PG&E) request to close the plant. 

The decision allows PG&E to increase customer rates enough to recover over $190 million dollars to pay for closure costs: $160.5 million to pay PG&E salaries over the next eight years, $11.3 million to retrain workers and $18.6 million for license renewal costs.

However, the judge rejected PG&E’s request to charge customers even more to pay $85 million to San Luis Obispo County, several cities, a school district, labor unions and environmental groups.

“Having ratepayers take the place of taxpayers in paying for government services is not reasonable, and should not be approved,” California Public Utilities Commission Judge Peter V. Allen wrote in his proposed decision.

Instead, he ruled the joint agreement would need legislative authorization.

PG&E announced in June, 2016 its intention to shutter the plant, the last nuclear power generating facility in California. In late November, 2016, the company announced a proposed agreement that would provide $85 million “in support of the San Luis Obispo County community,”

According to the November statement, “PG&E does not believe long-term customer rates will increase as a result of the joint proposal.”

In his decision, Judge Allen challenged this idea. “Because the cost of the payment would be recovered in rates, PG&E itself bears no out-of-pocket costs,” he wrote.

In a statement released Wednesday afternoon, PG&E said the company "strongly disagrees with these proposed adjustments. All of these programs support the key focus of the joint proposal, which is having DCPP serve as a reliable and affordable clean energy bridge to 2025 while other greenhouse gas-free replacement resources are developed to replace the output we need to meet customer demand."

Some of the joint agreement funding was earmarked for the San Luis Coastal Unified School District. Superintendent Eric Prater said tax dollars related to the operation of Diablo Canyon contribute to about 12 percent of the district budget. Prater said the deal was proposed to help cushion the loss when the plant closes. And now, that cushion may not be there at all.

“Naturally I’m disappointed. You know, I felt the joint proposal was reasonable. I thought it was anchored in sound logic,” Prater said.

Allen’s proposed decision isn’t binding until the full Commission votes to approve it. The CPUC is expected to review the decision at its December 14 meeting.