Morro Bay’s city attorney has called for a closed-session meeting to discuss the sale of the Morro Bay power plant, which is in the process of being sold to a Princeton, N.J., energy company as part of a $1.36 billion deal.
Morro Bay mayoral candidate and Councilwoman Betty Winholtz said the news of the potential sale came as a surprise — and in the middle of the city’s negotiations with Dynegy for its outfall lease, which means about $250,000 a year to the city.
“I’d love to start now to talk about what can happen when this thing finally goes away,” she said.
Winholtz said the city attorney called for the closed-session meeting, which will be Aug. 31 at 8:30 a.m.
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She said she’d like to see the plant turned into other uses, such as a hotel, resort, museum or boat-building facility.
Former Mayor Bill Yates, who is running against Winholtz in November, says his ideal would be for a newer, more efficient plant that brings tons of money into the city.
“The last thing we want is for it to be shuttered and abandoned,” he said. “That would really be an eyesore.”
In a complicated three-way deal, expected to close at the end of the year, the Blackstone Group will buy the owner of the Morro Bay plant, Houston-based energy company Dynegy, then will sell it and three other power plants to NRG Energy, according to a recent NRG news release.
It is still too early to tell what that means for the fate of the plant, and the company currently can’t discuss anything regarding the sale, said Lori Neuman, communications director for NRG.
With its three towering beige stacks at the north end of the Embarcadero, the power plant has become one of Morro Bay’s most controversial landmarks.
According to Heritage Shared.org, construction on the first electricity generating unit in Morro Bay began in October 1953. Over the next decade, the plant grew to four units with three 450-foot stacks.
The plant is antiquated and operates rarely — during periods of peak energy demand. Its dwindling revenues have concerned Morro Bay, which relied on millions of tax dollars from the plant in the past.
Former owner Duke Energy had pursued plans to modernize the plant in 2004 at a projected cost of $800 million. That price included tearing down the existing natural gas-fired boiler plant and its stacks.
But Duke sold the plant to LS Power in early 2006, before it received all of the permits, and Dynegy acquired LS Power in 2007.
Plant manager Steve Goschke has told The Tribune in previous interviews that with the focus on renewable energy and the current regulatory environment, a replacement project would cost at least $1 billion; whoever owned the plant would need several years to acquire permits.
He was unavailable to comment on the plant’s future.
Dynegy had planned to demolish six abandoned fuel oil tanks at the facility last month, because the plant now runs exclusively on natural gas. But it is still waiting for oversight by the California Energy Commission to proceed, said David Byford, senior director of communication for Dynegy Inc. in Houston.
New California regulations are in place to restrict ocean water for cooling the plant, which would require expensive renovations to the plant, and Dynegy officials had told state officials this summer it planned to shut down the plant’s operations by 2015.
— Melanie Cleveland