December 4, 2022
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PG&E reaches settlement over Diablo Canyon closure


The Diablo Canyon Power Plant sits on prime coastal property near Avila Beach.

The Diablo Canyon Power Plant sits on the coast near Avila Beach.

The Pacific Gas and Electric Company agreed to pay between $122.5 million to $147.5 million to seven San Luis Obispo County cities, the county and the school district to offset some of the negative impacts from the eventual closure of the Diablo Canyon Power Plant.

PG&E announced plans in June to close its power plant by 2025, leaving the area without one of its most prominent employers and source of property tax revenue and high-paying jobs.

Per the agreement, a $75 million Essential Services Mitigation Fund will be distributed to the county in nine equal annual installments through 2025. The county will divvy up the funds to impacted local agencies, the bulk of which will go to the school district.

PG&E will also create a $10 million Economic Development Fund. The Coalition of Cities — including Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo — will receive a $5.76 million, the county will receive $3.84 million and the remaining $400,000 will be allocated for regional economic development activities. The county will share a portion of the $3.84 million with the city of Grover Beach as well.

The third part of the agreement includes payments between $37.5 million and $62.5 million over the course of 15 to 25 years in continued funding for offsite community and local emergency preparedness and planning efforts until all spent fuel is in dry-cask storage and the two nuclear reactors are fully decommissioned.

“This groundbreaking agreement will soften the significant impact our community will feel once Diablo Canyon is no longer here,” SLO County 3rd District Supervisor Adam Hill said in a news release. “There is still a difficult road ahead, but if we continue to work together, we will shape a prosperous future for our community. This collaborative effort is something of which we can all be proud.”

The joint proposal to close Diablo Canyon under review by the California Public Utilities Commission includes $520 million over nine years for employee retention and severance programs.

A Santa Barbara-based nonprofit, the World Business Academy, sued the California State Lands Commission in August over the approval of Diablo’s temporary land lease extensions. The commission erred, according to the lawsuit, when it gave PG&E an extension without performing an environmental review of the impacts on the surrounding sea life and ecosystem. The group wants the plant to shut down when the original land lease permits expire in 2019.

Diablo Canyon has about 1,500 well-paying jobs with an average salary of more than $100,000. Its payroll accounts for 1.5-2 percent of the total payroll of the entire county, which is equivalent to the agricultural sectors’ total payroll, Robert Kleinhenz of Beacon Economics said at an economic forecast in November.

The facility provides more than 9 percent of the energy that fuels the entire state.

While public schools and the county will miss out on property tax revenues when it closes, it will take several decades and plenty of man-hours to decommission the plant over several decades, Kleinhenz said.

• Contact Alex Kacik at