HomeMy WebLinkAboutCC 2026-01-13_09f Diablo Canyon Restoration of Unity Tax TreatmentItem 9.f.
MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
SUBJECT: Support for Legislation Supporting Extended Operations of Diablo
Canyon Power Plant and Restoration of Unitary Tax Treatment
DATE: January 13, 2026
RECOMMENDATION:
1) Authorize the County of San Luis Obispo to include the City as a supporter of the
County’s request for legislation to authorize operations of the Diablo Canyon Nuclear
Power Plant (DCPP) for an additional 20 years, restore pre-decommissioning unitary tax
treatment for DCPP, and support the California Coastal Commission’s land conservation
and public access plan for lands surrounding the DCPP; and
2) Find that this action is not a project under the California Environmental Quality Act
pursuant to State Guidelines Section 15060, subd. (c)(2)-(3), 15378.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
No immediate financial impact is projected as a result of this report.
BACKGROUND:
San Luis Obispo County is the host county for the Diablo Canyon Power Plant (DCPP),
the only operating commercial nuclear power plant in California which provides
approximately 9% of the State’s total power generation. Historically, the DCPP was
assessed a unitary tax, providing approximately $21 million in revenues for the County,
cities, school districts, and special districts. The DCPP also provides a number of high -
wage jobs within the County, further supporting the region’s economy.
In 2016, Pacific Gas and Electric Company announced that DCPP would close by 2025
after a decommissioning process with a corresponding reduction in local tax revenues,
the loss of approximately 1,500 jobs and other indirect economic impacts to the region.
As a result of this announcement, the City joined other agencies in the County in filing
protests against the decommissioning, which ultimately led to a settlement agreement
between the parties and the passage of Senate Bill 1090 in 2018. SB 10 90 was a
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Item 9.f.
City Council
Support for Legislation Supporting Extended Operations of Diablo Canyon Power
Plant and Restoration of Unitary Tax Treatment
January 13, 2026
Page 2
bipartisan law focused on easing the impacts of the planned closure of DCPP by funding
a Community Impact Mitigation Settlement.
However, in 2022, following an increase in energy demand and future demand
projections, the State Legislature approved, and the Governor signed, Senate Bill 846 to
extend operations at DCPP through 2030 to ensure energy reliability as California
continued developing clean energy supplies. However, this legislation included provisions
to exempt new investment in DCPP from extending its operations . This exemption
prevented the restoration of unitary tax revenues to the region. As a result, unitary tax
receipts have been reduced to $8 million in countywide revenues as the assessed value
of the plant has declined pending its planned closure.
Unitary tax distribution amounts to the City of Arroyo Grande over the past five fiscal years
is as follows:
ANALYSIS OF ISSUES:
On December 16, 20251, the County Board of Supervisors approved the circulation of a
draft letter (Attachment 1) to agencies that have received DCPP unitary tax revenue to
request State legislation in the 2026 legislative session to:
1) Authorize operations of the DCPP for an additional 20 years;
2) Restore pre-decommissioning unitary tax treatment for the DCPP or, in the
alternative, provide other financial mitigations to the County and local
jurisdictions impacted by exemptions to the taxable value of the DCPP during
the period of extended operations; and
3) Support the California Coastal Commission’s land conservation and public
access plan for lands surrounding the DCPP.
The County is seeking support from cities within San Luis Obispo County for this request
to the legislature in the interest of having a unified coalition of agencies to convey the
importance of this issue to the long-term financial stability and public benefit of the region.
Participation in the request would allow the inclusion of the City’s name and/or logo on
the letter to the legislature.
Staff is bringing this request to the Council as the City does not have a Legislative
Platform providing policy guidance on considering this request, and a review of previous
1 https://agenda.slocounty.ca.gov/iip/sanluisobispo/agendaitem/details/19787
Fiscal Year Amount
2021-22 83,300$
2022-23 76,600
2023-24 67,700
2024-25 62,200
2025-26 55,200
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Item 9.f.
City Council
Support for Legislation Supporting Extended Operations of Diablo Canyon Power
Plant and Restoration of Unitary Tax Treatment
January 13, 2026
Page 3
Council direction on DCPP did not clearly support this request . Representatives of the
County will attend the Council meeting in support of this request, which is also being
considered by other cities this month.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Authorize the County to include the City as a supporter of the County’s request, as
recommended;
2. Do not authorize the County to include the City as a supporter of the County’s
request, as recommended; or
3. Provide other direction to staff.
ADVANTAGES:
The City, the County, other local cities, schools, and special districts have traditionally
received a total of $21 million annually in unitary taxes attributable to DCPP, which have
been reduced to $8 million as the assessed value of the plant has declined pen ding its
planned closure. If the County’s efforts are successful, that unitary tax amount could be
significantly restored.
DISADVANTAGES:
None identified by staff.
ENVIRONMENTAL REVIEW:
The agenda item is not a project subject to the California Environme ntal Quality Act
(“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable
indirect, physical change in the environment (State CEQA Guidelines Sections 15060,
subd. (c)(2)-(3), 15378).
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. Letter Requesting Legislation Supporting Extended Operations of DCPP, Coastal
Land Conservation, and Restoration of Unitary Tax Treatment
Page 75 of 621
Draft
COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS
John Peschong District One Supervisor
Bruce Gibson District Two Supervisor
Dawn Ortiz-Legg Chairperson, District Three Supervisor
Jimmy Paulding Vice-Chairperson, District Four Supervisor
Heather Moreno District Five Supervisor
Katcho Achadjian Government Center County of San Luis Obispo
1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5450 | (F) 805-781-1350
boardofsups@co.slo.ca.us | slocounty.ca.gov
12/16/2025
To: Members of the California State Legislature
Cc: Relevant Legislative Committees
Subject: Request for Legislation Supporting Extended Operations of Diablo Canyon Power Plant,
Coastal Land Conservation, and Restoration of Unitary Tax Treatment
Dear Members of the Legislature:
On behalf of the County San Luis Obispo Board of Supervisors, we write to express our firm
support for legislative action to enact measures authorizing Diablo Canyon Power Plant (DCPP)
to operate for up to twenty (20) additional years, restore unitary tax treatment for DCPP, and
support coastal land conservation and public access near the facility.
As the host county for California’s only operating commercial nuclear power plant which provides
approximately 9% of the State’s total generation of power, San Luis Obispo County recognizes
Diablo Canyon as a critical component of the State’s clean energy infrastructure. Extending the
plant’s operational life for up to 20 years would provide stable, carbon free baseload power that
strengthens grid reliability, reduces greenhouse gas emissions, and advances California’s clean
energy and climate goals.
Continuation of operations, however, must be accompanied by fiscal fairness for the communities
that host and support the facility. We therefore urge the Legislature to restore pre-
decommissioning unitary taxation for DCPP during any extended period of operation. Historically,
unitary tax revenues have been distributed to the County, cities, school districts, and special
districts, supporting essential public services, educational programs, infrastructure maintenance,
and public safety. Restoration of this tax structure is critical to maintaining the fiscal stability of
local governments and public agencies.
If restoring the pre-decommissioning unitary tax treatment proves infeasible, we request alternate
financial mitigations to the County and local jurisdictions impacted by exemptions of taxable value
on the DCPP during the period of extended operations established by the statutory prohibition
against including operating costs in PG&E’s rate base.
In tandem with extended operations, we support further conservation and public access
frameworks for lands surrounding Diablo Canyon. Protecting these coastal and natural resources
ensures long term environmental stewardship while providing opportunities for responsible public
Attachment 1
1 of 2
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Draft
County of San Luis Obispo Government Center
1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5000 | (F) XXX-XXX-XXXX
info@slocounty.ca.gov | slocounty.ca.gov
access and public benefit. This balanced approach of clean energy, fiscal stability, and
environmental conservation serves both local communities and the broader interests of the State.
In addition, future DCPP allocations related to changes in the values being assessed for portions
of the property that may legislatively transition from highest and best use assessed acres of land
towards lower value assessed acres of land due to new conservation restrictions should not
financially penalize the affected region with lower assessed revenue figures.
Accordingly, we respectfully request that the Legislature:
1.Support the Nuclear Regulatory Commission’s regulatory approval process and establish
a state licensing pathway to authorize DCPP to operate for up to 20 additional years.
2.Enact legislation restoring historic pre-decommissioning unitary tax treatment for Diablo
Canyon Power Plant including land valuation for the duration of its extended operations
or provide alternate equivalent financial mitigations.
3.Support the California Coastal Commission’s land conservation and public access plan for
lands surrounding Diablo Canyon, in coordination with appropriate regulatory and
conservation agencies.
Taken together, these actions represent a prudent and forward-looking policy framework that
balances California’s clean energy needs with local fiscal health, environmental protection, and
community interests.
Thank you for your attention to this important matter. We stand ready to work collaboratively with
the Legislature to enact legislation that reflects these priorities and supports a sustainable and
equitable future for San Luis Obispo County and the State of California.
Sincerely,
Chair
County San Luis Obispo Board of Supervisors
San Luis Obispo County
Attachment 1
2 of 2
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