Future of Morro Bay Power Plant uncertain after owners announce $1.7 billion merger

City officials are waiting to hear how a proposed merger between the owner of the shuttered Morro Bay Power Plant and another Texas energy company might affect the waterfront site of the former 650-megawatt facility.

Dynegy Inc., which owns the 90-acre property, announced Monday that the company will be sold to Vistra Energy, creating a “leading integrated power company” with a market value of more than $10 billion. The deal is valued at $1.7 billion, based on a calculation by Reuters.

Though the Morro Bay plant is privately owned, the city has some influence over its eventual use.

On Friday, Morro Bay Mayor Jamie Irons and community development director Scot Graham said separately that the city has received no word from Dynegy or Vistra Energy about the proposed sale or the future of the property.

Irons, who formerly worked as an instrument controls technician at the Morro Bay Power Plant, said Dynegy’s been “very quiet.”

“It’s a big transition, so I have no idea how long it might take for them to reach out,” Irons said. “It’s my hope that we might have some conversations soon; my guess is it might come from us.”

Dynegy spokesman David Byford said Friday that the proposed deal between the two companies is far from complete, and any movement on the Morro Bay property is “going to take a good, long while.”

“Dynegy has been looking at different options for the facility in Morro Bay, but for now, it’s business as usual,” Byford said.

Requests for comment to Vistra Energy’s media relations department were not answered Friday.

Under the agreement approved by the companies’ boards of directors, Vistra Energy will absorb Dynegy in a tax-free, all-stock transaction, and the companies expect to close the transaction during the second quarter of 2018, according to a joint news release.

The transaction is subject to regulatory approval from the Federal Energy Regulatory Commission and the Federal Communications Commission, as well as from the companies’ shareholders.

In addition to the retired Morro Bay plant, Dynegy owns plants in Moss Landing and Oakland. The Morro Bay plant, with its landmark 450-foot smokestacks towering over the bay, officially shut down in February 2014.

Houston-based Dynegy currently operates some 27,000 megawatts of power throughout the Northeast, Mid-Atlantic, Midwest and Texas. Since 2014, the debt-laden company has tried to divest from its three California sites, putting up and taking them off the market at least twice.

Dynegy’s proposed acquisition comes as low gas prices have driven down electricity rates across the country, resulting in several energy industry mergers this year.

Company representatives and Morro Bay city officials have discussed possible redevelopment opportunities for the Morro Bay property, though none have come to fruition.

Approximately one year ago, Seattle-based Trident Winds applied with the federal Bureau of Ocean Energy Management to build a 765-megawatt wind energy project some 33 nautical miles off the coast of Morro Bay. The project, which is still in the application phase, included routing power through one or more transmission lines to the Morro Bay Power Plant, where it could be distributed to the state power grid.

This story was originally published November 3, 2017 at 4:41 PM with the headline "Future of Morro Bay Power Plant uncertain after owners announce $1.7 billion merger."