An administrative law judge for the California Public Utilities Commission (CPUC) issued a proposed ruling against the settlement agreement between PG&E and local government agencies over the expected closure of Diablo Canyon. The agreement that is now at risk of being overturned calls for PG&E to dole out $85 million as compensation for lost tax revenue because of the closure of the power plant.
Currently, the San Luis Coastal Unified School District stands to lose the most money, with the district being slated to receive $36.8 million as part of the settlement. San Luis Obispo County was due to received $3.8 million, while SLO County cities were in line to receive as much as $1.8 million.
As proposed, the settlement hinges on a PG&E rate hike, which Administrative Law Judge Peter V. Allen said contradicts general rate making principles and public utility law. Allen issued a proposed ruling Wednesday, which the CPUC board will consider at an upcoming hearing.
“The question before this commission is not whether there will be economic impacts, or even the potential size and scope of those impacts, but rather whether PG&E ratepayers should pay to mitigate these impacts,” Allen stated. “This commission is reluctant to require ratepayers to pay for the cost of local government services that are typically paid for by taxpayers, no matter how beneficial those services may be. Absent legislative authorization, utility rates should be used to provide utility services, not government services.”
Allen left open the possibility that the California Legislature, rather than ratepayers, provide funding to compensate local agencies for lost tax revenue. Likewise, the administrative law judge stated PG&E could choose to use shareholder funds to compensate local agencies.
Allen’s findings did, however, support the proposed timeline for the shutdown of Diablo Canyon. The nuclear plant’s reactors are expected to shut down in 2024 and 2025.
The CPUC board must approve Allen’s decision in order for it to take effect. The earliest the commission could decide on the matter is at its Dec. 14 meeting.