PG&E announces $85 million deal over Diablo Canyon closure

SAN LUIS OBISPO - Pacific Gas & Electric has agreed to pay $85 million to neighboring cities and a school district affected by the closure of the Diablo Canyon nuclear power plant, the California utility announced Monday.

The state's largest utility reached a deal to provide economic support in the region when the Central Coast plant shuts down in 2025, depriving the area of property taxes and potentially affecting local businesses through the loss of plant workers.

The agreement includes San Luis Obispo County, a coalition of local cities and the San Luis Coastal Unified School District. Another part of the deal involves promises to environmental groups and to unions representing plant employees. The deal needs approval from the California Public Utilities Commission.

Diablo Canyon is California's last operating nuclear generating station. Its twin reactors hug a Pacific Ocean bluff midway on the coast between Los Angeles and San Francisco.

However, PG&E and environmental groups agree that California no longer needs the electricity from Diablo Canyon, given increased energy efficiency in the state and the growing availability and affordability of solar and wind power and other renewable energy.

PG&E President Geisha Williams has said the utility could pivot to wind, solar, biomass, geothermal or hydropower to replace the energy Diablo Canyon currently provides - about 9 percent of the state's power.

Under the new agreement, PG&E pledges to use renewable energy to produce 55 percent of its electricity by 2031, the utility said.

"PG&E does not believe long-term customer rates will increase as a result of the joint proposal," the utility said.

Under the agreement, PG&E create a fund to provide $75 million in nine annual payments to fund essential local services, with most of the money going to the school district. Another fund will supply $10 million for economic development.

PG&E also agreed to provide programs to retain and retrain employees, and as much as $62.5 million for emergency planning for up to 25 years as the nuclear plant is decommissioned and its nuclear fuel removed and stored.

The entire settlement could thus be worth nearly $150 million.

"PG&E is privileged to be part of the Central Coast community. We've been here for over a century and will continue to be an active community member for decades to come, working with local leaders to sustain a strong and diverse economy," Williams said in a statement.

"PG&E is a valued community partner and its efforts to negotiate with us and address our major concerns related to the plant's closure further confirms that PG&E cares about the future of our community," county Board of Supervisors Chair Lynn Compton said in the same statement.

Decommissioning the nuclear plant is expected to take decades and billions of dollars, "resulting in continued employment and economic spending in the community," PG&E stated.