Economic Opportunities and Impacts

Possible Economic Impacts and Potential Economic
Opportunities of Decommissioning

The closure of DCPP will impact the local economy.  In addition to the loss of jobs and opportunities for jobs in the area, local governments are impacted by the loss of unitary taxes.  Currently, DCPP, which employs about 1,500 PG&E workers, is the second largest employer in San Luis Obispo County and provides a large economic base to the area.  Unitary tax currently provides funding to 70+ governmental agencies, including the County, Cities and School Districts.

Since PG&E announced the closure, a number of measures have already occurred to soften the economic impact to local government.  These include the Joint Proposal, Senate Bill 1090 and Senate Bill 968 as described in this section.  These efforts have allowed for local government to ease into the potential impacts.

The Joint Proposal and Senate Bills have also provided PG&E with funding for a job retention program so that a well-trained workforce will remain in place to safely operate the plant until shutdown.  There is also funding for job retraining programs to provide opportunities for plant employees to remain in the area or with the company in different jobs.

PG&E formed the DCDEP and through public workshops and meetings has begun planning for the shutdown of operations.  This includes actions necessary to safely retire the plant and looking at approaches for preservation and future public use of the Diablo Canyon Lands, as well as repurposing the site for alternative uses.

This section of the Strategic Vision describes the efforts currently underway to address potential economic impacts of the closure of DCPP, as well as potential opportunities for economic development.

Joint Proposal

California’s energy landscape is changing dramatically. State policies that focus on renewables and energy efficiency, coupled with projected lower customer electricity demand in the future, will result in a significant reduction in the need for the electricity produced by DCPP beyond 2025.  Reflecting this change, PG&E partnered with labor and leading environmental organizations in 2016 on the Joint Proposal that would increase investment in energy efficiency and renewables, while retiring DCPP at the end of its current Nuclear Regulatory Commission (NRC) operating licenses, which expire in 2024 and 2025.

The parties to the DCPP Joint Proposal include PG&E, International Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, Environment California, California Energy Efficiency Industry Council and Alliance for Nuclear Responsibility.

Recognizing that the procurement, construction and implementation of a greenhouse gas (GHG) free portfolio of energy efficiency and renewables would take time, the parties to the Joint Proposal agreed to support PG&E in obtaining the state approvals needed to operate DCPP to the expiration of its current NRC operating licenses.  This avoids an early shutdown of DCPP and the associated negative economic and social impacts, including having to replace the plant’s output required to meet customer demand with non-GHG-free resources.  The Joint Proposal also supports for a successful transition for DCPP employees and the greater San Luis Obispo County community.

The Joint Proposal represented a significant milestone in the planning to help meet California’s clean energy vision. This unique approach with a diverse set of stakeholders tackled a complex issue in a collaborative and successful manner whose goal is the orderly transition and retirement of Diablo Canyon Power Plant. More specifically, it helps protect local communities, support employees and ensure that other GHG-free resources will replace the output of Diablo Canyon.

The Joint Proposal included an $85 million community impact mitigation program to support the community with its transition and provide funding to support essential public services that the plant and the local community rely upon.  It also included a DCPP employee program that would provide incentives to retain employees during the remaining operating years of the plant, and a retraining and development program to facilitate redeployment of a portion of plant personnel to the decommissioning project or other positions within the company.

Senate Bill 1090

In September 2018, Governor Brown signed Senate Bill (SB) 1090 which implements key objectives of the Diablo Canyon Joint Proposal.  SB 1090 included Community Impact Mitigation Funds intended to ease into post-Diablo Canyon economy.  The CPUC enacted the rate changes ordered in SB 1090 when it issued D.18-11-024 on December 7, 2018. Collectively, D.18-01-022, SB 1090, and D.1811-024, authorized up to $352.1 million for DCPP employee retention programs, and $85 million for community impact mitigation programs.

The following summarizes the funding approved with this bill:

$10 million – Economic Development Fund*
  • $3.84 million – County sole use
    • $1.7 million – Economic Development
    • $1.0 million – Housing revolving funds
    • $948,000 – Infrastructure
    • $192,000 – City of Grover Beach
    • $400,000 – Regional Economic Funds
  • $5.76 million – Coalition of Cities (all incorporated cities excluding Grover Beach)
$10 million – Economic Development Fund**
  • $27.9 million – County total
    • $12.1 million – General Fund Mitigation
    • $5.4 million – Housing
    • $4.5 million – Safety
    • $4.1 million – Infrastructure
    • $1.9 million – Economic Development
  • $47.1 million – 70+ governmental entities including cities and school district

*Economic Development Fund

$10 million was allocated to a fund for implementing regional economic development and job creation. The funds are to be spent solely for the purposes of economic development and impact mitigation purposes. Of the total amount, $400,000 will be dedicated for regional economic strategy efforts. Of the remaining amount, $5.76 million will be allocated to the Coalition of Cities and $3.84 million to the County.

Of the County’s amount, $192,000 will be allocated to the City of Grover Beach. The County and each of the cities will prepare annual reports that enumerate and describe the expenditures from the Economic Development Fund and assess the results and effectiveness of the economic development measures or programs resulting from such expenditures. The reports will be provided to PG&E, the CPUC and the public.

**Essential Services and Stabilization Fund

Currently, about 80 governmental entities receive unitary tax, which is used to fund general operations of essential public services to the people of San Luis Obispo County. Of those entities that receive the tax, 71 will be negatively impacted by the closure of Diablo Canyon and will realize a reduction in unitary tax funding.

$75 million will be distributed to the County in nine equal, annual installments of $8,333,333 through 2025. The County will redistribute the funds to the 71 entities.  Currently, the San Luis Coastal Unified School District (SLCUSD) and the County’s General Fund are the two largest recipients of the existing unitary taxes per the allocations set by the Board of Equalization. The SLCUSD will receive about $4 million annually for nine years and the County General Fund will receive $3.1 million. Per the agreement, $2 million of SLCUSD’s share of each of the first five installment payments will be deposited into the account of SLCUSD’s designated educational foundation.

DCPP Job Retention and Retraining

There are approximately 1,300 employees currently employed at DCPP.  About 90 percent of these employees are participating in the employee retention program that was put in place in 2016.  This assures that well-trained personnel will continue be in place to safely operate the plant until closure. 

By making the announcement to not relicense DCPP in 2016, a nine-year time frame was created to design a program to retrain and redeploy the employees currently working at DCPP.  Through the approval of the Joint Proposal, $11.3 million in funding will be set aside for the development of retraining and redeployment programs starting in 2021.

DCPP has created the framework for the retraining/redeployment program, which they call the Pathways to Your Futureprogram.  The program was named for the five pathways that are included in the program that help employees pick their next employment “path”.  The five pathways include: staying on with PG&E, working in decommissioning at DCPP, moving on to another nuclear power plant, finding a job in another industry or retirement.

When the funding is available in 2021, it will be used to support many programs, but the major cost centers will be additional funding for education, apprenticeships and job training programs.

Workshop and Public Meeting on Economic Impacts and Opportunities

On October 17, 2019 and November 13, 2019, the DCDEP held a workshop and public meeting covering the topic of Economic Impacts and Opportunities of the closure of DCPP.  Included in the workshop were presentations from the County of San Luis Obispo, the Fort Ord Reuse Authority, and the Hourglass Project. 

The workshop held on October 17, 2019 can be found by following this link:

https://diablocanyonpanel.org/meetings/2019-panel-meetings/#10-17-19-panel-workshop

The public meeting held on November 13, 2019 can be found by following this link:

https://diablocanyonpanel.org/meetings/2019-panel-meetings/#11-13-19-panel-mtg

County of San Luis Obispo

The County of San Luis Obispo’s presentation included information about the way in which the funding received from Senate Bill 1090 had been defined for use by the Board of Supervisors.  In addition, it was noted that there was a potential role for the County of San Luis Obispo Workforce Development Board to assist with potential economic impacts prior to and during the closure of DCPP.  The Workforce Development Board is part of the public workforce system that supports economic expansion and development of talent in the local workforce.  The Workforce Development Board uses local labor market information to develop strategies to focus resources on high growth industries in the area.  The Workforce Development Board contracts with service providers for employment and training activities for youth, adults and dislocated workers.  Services under the Workforce Development Board also include Rapid Response and Layoff Aversion programs to assist employers and their employees during downsizing or business closures.  The Workforce Development Board oversees funding provided through the Workforce Innovation and Opportunity Act and can apply to the Department of Labor for National Dislocated Worker grant funding (120 days prior to layoffs occurring).  These funds can be used for career development, training and supportive services. 

Fort Ord Reuse Authority

The Fort Ord Reuse Authority was established to provide oversight of Monterey Bay economic recovery from the closure and reuse planning of the former Fort Ord military base. The former Fort Ord is located on the California coastline near the Monterey Peninsula consisting of 45 square miles/28,000 acres.  The Reuse Authority exercises planning, financing, and monitoring responsibilities under state law to pursue reuse of the Fort Ord facilities in the best interest of the region.

The Fort Ord closure announcement occurred in 1991, generating a mixture of disbelief, economic impacts, and excitement about potential reuse. The Army base had been part of the history of Monterey County on the Monterey Peninsula since 1917.  Within months, a series of meetings were initiated to discuss recovery from significant closure impacts by creating a vision for reuse.  The meetings included broad community participation including residents, businesses, government, special districts, and others.  From those meetings, it was agreed that reuse should focus on Education, Environment, and Economic Development (“the three E’s of Fort Ord Reuse”).

Initial efforts to organize governance for reuse faltered.  The late Senator Henry Mello sponsored special legislation to establish a local agency charged with the task of planning, financing, and implementing reuse.  That agency was entitled the “Fort Ord Reuse Authority”, formed in 1994.  The Fort Ord Reuse Authority has a governing body of 13 voting members and 12 non-voting members and is comprised of representatives from cities, the county, special districts, public educational institutions, the military, and state and federal legislators.

The Reuse Authority is scheduled to close its doors on June 30, 2020.  A transition plan, including a methodology for allocating assets/liabilities; a methodology for infrastructure improvement timing; and the creation of an entity structure to implement obligations and financing options, is currently being developed.

There are a number of similarities between the reuse of Ford Ord and the potential reuse of DCPP.  The presentation stressed that it is important to expand upon and leverage what the local community already does well and to promote very active community involvement and buy-in. 

Hourglass Project

Hourglass Project is a new alliance of business leaders committed to building a resilient, inclusive and prosperous Central Coast economy.  The project arose out of concern that Central Coast Region is on a path to economic stagnation.  The Hourglass Project focuses on more than San Luis Obispo County, they are seeking a regional approach to drive economic transformation in a three-County area (northern Santa Barbara, San Luis Obispo and southern Monterey).  Hourglass has partnered with Deloitte US as a strategic and implementation partner.

Hourglass is collaborating with government entities, private industry, academia and philanthropic organizations.  With $300,000 grant from San Luis Obispo County (using Senate Bill 1090 funds), Hourglass was publicly launched in November 2018 and a CEO hired in February 2019.

Hourglass has identified the following regional challenges within the four lines of effort based on consultations with city managers, regional representatives, a workforce poll and interviews.

Business Development

  • The startup ecosystem lacks regional support
  • Businesses find it challenging to attract and retain talent due to cost of living
  • There is limited access to venture capital

Infrastructure

  • The region lacks a cohesive, shared utility model across the region (e.g. broadband and water)
  • There is no master transit or transportation plan for the Central Coast Region
  • Existing transportation infrastructure does not meet current regional needs

Housing

  • There is a lack of affordable housing
  • Zoning is currently restrictive to alternative housing options

Education Pipeline

  • There is a minimal pipeline from undergrad or graduate school to be employed in the area with a high-paying, relevant career
  • There is no local, accessible California State University institution

The Hourglass Project engaged over 100 regional leaders in four sub-regions through five immersive strategy labs.  These conversations were designed to engage community members from the public sector, private sector, education and key stakeholder organizations in order to develop a comprehensive overview of regional assets, opportunities and priorities.  These inputs are being used by Hourglass to inform a strategy for the region’s path forward. 

One of these labs covered the closure of DCPP.  It was held on June 14, 2019.  No one from the DCDEP was invited to attend the lab or provide information about the workshops and public meetings that had been held by the DCDEP to obtain community input regarding the closure of DCPP.  Hourglass did recognize that the DCDEP had brought the surrounding community together through a number of stakeholder workshops to identify the potential reuse of the site.  However, they noted that an actual plan for reuse had not yet been developed.  In this lab the Hourglass Project convened key leaders in the community to identify a path forward to develop a unified ask for the site on behalf of the community and to determine a shared development model and risk-sharing approach.

Recommendations from the Hourglass Project will be forthcoming later in 2020.  The DCDEP anticipates a more active role with the Hourglass Project relative to the reuse of the DCPP site, with a focus on assuring that any future reuse plans include conservation of the 12,000-acre Diablo Canyon Lands for use by the public, preservation and protection of any Native American sites, and reuse focusing on the already developed and disturbed areas of Parcel P with uses that are supported by the surrounding communities and the county citizens.

Repurposing of the DCPP (Parcel P)

In 2018, the DCDEP held workshops and a public meeting about the potential for repurposing the 700-acre DCPP site (Parcel P) for alternative uses.  There were a number of presentations from various individuals and groups about what the site could be used for in the future once it has been decontaminated and decommissioned.  In addition, the community weighed in and indicated support for repurposing of the site for other uses.

This Strategic Vision contains visions, goals and recommendations regarding repurposing in Section IV-D.  There will need to be ongoing discussions and efforts made regarding the potential reuse of the site (the developed and disturbed areas of Parcel P).  This will include ongoing discussions with the County of San Luis Obispo and the work that is underway by the Hourglass Project and any other local and regional economic entity.

Through these vision statements, goals and recommendations, it is the intent of the DCDEP to create an environment after the closure of DCPP that promotes a successful and sustainable economy while reflecting a future that embraces our community values and builds upon existing economic drivers.

Vision Statements

  • The decommissioning and decontamination process should begin immediately upon shutdown thus avoiding SAFSTOR in order to limit economic impacts and provide economic opportunities
  • The activities associated with decommissioning should promote a successful and sustainable economy while reflecting a future that embraces our community values and builds upon existing economic drivers, including agriculture, education, technology and tourism
  • The County of San Luis Obispo and San Luis Obispo Council of Governments should play a leadership role in supporting and promoting economic development
  • The policies of local government should support and promote the retention of existing local businesses and workforce during and beyond the closure of DCPP
  • The funds provided to local governmental entities for economic development through Senate Bill 1090 should be used to promote and support local economic activities
  • The conservation of, and sustainable access to, the 12,000-acre Diablo Canyon Lands should be embraced and promoted as a vital part of local economic health
  • The safest possible storage of highly radioactive spent nuclear fuel should be undertaken to protect economic stability

Goals

Decommissioning

  1. The permitting for decommissioning should be completed efficiently, while allowing for substantial public input, in order to not create delays in the decontamination process

Repurposing

  1. The 12,000-acre Diablo Canyon Lands surrounding the plant should be conserved and made available for public use as soon as possible, to promote regional tourism and the economic vitality of neighboring communities
  2. The evaluation of existing reuse and redevelopment projects in California should be used to ascertain successes and drawbacks of repurposing and its impact on local economic development
  3. The potential reuse and repurposing of the already disturbed and developed areas of Parcel P should be supported by PG&E throughout the decommissioning process
  4. The storage of spent nuclear fuel on site should be accomplished in the safest manner possible to allow for repurposing and reuse of existing infrastructure, as well as the development of new uses on the already disturbed areas of Parcel P

Local Government

  1. The retention and promotion of existing businesses, as well as the establishment of new businesses and industries that offer diverse living wage/head of household jobs that have growth potential and are clean and green, should be supported by local governments

Local Labor

  1. The use of local labor and local businesses should be used during decommissioning to reduce impacts due to the loss of local jobs and job opportunities

Recommendations

Decommissioning

  1. Recommend that PG&E and the County ensure an efficient and collaborative permitting process that includes comprehensive public involvement, in order to prevent any delays to the start of decommissioning and decontamination immediately upon shutdown and precluding SAFSTOR which could have potentially severe local economic impacts

Repurposing

  1. Recommend that local governmental entities and PG&E review and consider other repurposing programs (including the Fort Ord Reuse Authority and the Concord Reuse Project) for guidance on successful economic development measures and pitfalls to be avoided
  2. Recommend that PG&E and the County actively engage with decision makers at the UC, CSU, and Community College systems, to promote the potential repurposing of facilities to advance the educational mission of those entities and provide local economic enhancement
  3. Recommend that any regional entity, such as the Hourglass Project, Economic Vitality Corporation or similar organization, collaborate with the DCDEP in the development of repurposing strategies and ideas that are supported by the local community
  4. Recommend that PG&E undertake a detailed and thorough analysis of the existing facilities on Parcel P and their potential for repurposing given site constraints and the potential conflicts created by management of spent nuclear fuel and other demolition waste and activities
  5. Recommend that PG&E undertake an analysis of the potential for construction of new facilities on already disturbed areas of Parcel P to support repurposing of existing on-site facilities
  6. Recommend that PG&E, the County or a regional entity consider having a design competition to crowdsource creative repurposing ideas to improve awareness of the opportunity for reuse of the DCPP site and stimulate out of the box thinking and ideas
  7. Recommend that PG&E consider the repurposing of the facilities on Parcel P, the conservation and public access of the Diablo Canyon Lands and the recommendations relative to dry cask systems in this Strategic Vision when choosing a new spent nuclear fuel storage management system
  8. Recommend that PG&E consider making facilities available outside of the DCPP property (ex: Energy Education Center, Kendall Road) for repurposing early in the decommissioning process
  9. Recommend that PG&E, the County, and the local land conservancy engage with State Parks and other potential management entities as soon as possible to create, and begin implementing, a conservation and public access plan for the Diablo Canyon Lands to stimulate economic growth in the tourism sector

Local Government

  1. Recommend that the County of San Luis Obispo evaluate whether the hiring of a skilled economic specialist position (with a focus on the development of new, and retention of existing, businesses in the region) would lead to definite and measurable positive economic results
  2. Recommend that local governments perform an analysis of existing policies and fees to determine whether any changes should be made to encourage business to relocate to this area and ensure retention of existing businesses
  3. Recommend that local governments, PG&E and other local economic or governmental entities support and promote any recommendations from a regional entity that create a diversified local economy and are viable, sustainable, embrace community values, build upon existing economic drivers, including tourism, agriculture, education, and technology, and offset potential economic impacts of closure and where feasible, offer incentives to bring these recommendations to fruition

Local Labor

  1. Recommend that PG&E ensure that local labor and local businesses are used to the greatest extent possible to ease the impacts of the loss of local jobs due to the closure of DCPP and that any formal mechanism, such as a non-discriminatory Project Labor Agreement or other agreement, be fair and equitable
  2. Recommend that PG&E, in recognition of the substantial economic opportunities that will be created through decommissioning, demonstrate its continued commitment to the local workforce through a formal partnership with the local building and construction trades council and that such partnership include recognition of the importance of, and incorporate outreach to, local businesses and local workers
  3. Recommend that PG&E give full consideration to an array of community benefits in any negotiated agreement, such as but not limited to: employment of local workers, career pathway apprenticeship training , encouragement of small and local businesses, outreach to veterans, programs promoting the employment of women and minorities, programs for disadvantaged youth and any other programs targeting underserved portions of the community
 
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