The California Public Utilities Commission (CPUC) approved the closure of Diablo Canyon Nuclear Power Plant in 2025, but rejected a proposed settlement in which PG&E would have doled out $85 million to local government agencies as compensation for lost tax revenue.
Last November, Peter V. Allen, an administrative law judge for the CPUC issued a tentative ruling against the proposed settlement, arguing the agreement hinged on a PG&E rate hike that would have contradicted general rate making principles and public utility law. Ratepayers should not be required to pay for local government services that are typically funded by taxpayers, Allen said.
On Thursday, the commission upheld Allen’s ruling, voting unanimously to approve the planned Diablo Canyon closure without the settlement. The commission did, though, approve a $211.3 million PG&E employee retention program, as well as an additional $11.3 million in ratepayer funds to cover the costs of retraining workers.
The CPUC’s decision leaves open the possibility that the California Legislature, rather than ratepayers, will allocate funding to compensate San Luis Obispo County government agencies for lost tax revenue. Likewise, PG&E could use shareholder funds to compensate local agencies.
A coalition of six of SLO County’s seven cities issued a statement saying they were disappointed by the CPUC’s decision.
“The California Public Utilities Commission (CPUC) decision is very disappointing,” according to the statement. “Our region bore the risk of hosting a nuclear power plant that benefited millions of Californians, and will continue to bear those risks during the shutdown process and afterward, including the storage of nuclear wastes for an unknown time period. As a result, it is only fair that the people in this region receive support to reduce the significant economic, social and environmental impacts of Diablo Canyon’s closure.
“Despite the commission’s decision, members of the coalition of cities are determined to find a successful path forward. On our own initiative, we will explore options for mitigation, including working with PG&E and the Legislature. That includes Senator Bill Monning’s bill, which would require PG&E to submit a study on the closure’s adverse economic impacts on our region. In addition, Assembly Member Jordan Cunningham has expressed his willingness to sponsor legislation that could provide some mitigation money for the residents and businesses of this region.”
Had the proposed settlement been approved, the San Luis Coastal Unified School District, the agency most financially impacted by the Diablo Canyon closure, would have received $36.8 million. San Luis Obispo County was slated to received $3.8 million, while individual cities in the county were in line to receive as much as $1.8 million.