Talks between Morro Bay and Duke Energy abruptly ended on Monday.
At stake are the lease terms for the plantâ€™s outfall area, where discharge water used in the plantâ€™s cooling system is released into the ocean. Morro Bay administers the discharge area on behalf of the state.
Rob Schultz, Morro Bayâ€™s city attorney, said that Dukeâ€™s offer to lease the outfall area for $100,000 per year would be in a violation of state regulations. Shultz said the estimated price of an outfall lease is much higher.
Duke has said that the plant is no longer viable and therefore they cannot enter into the proposed long-term lease with the city.
If Duke cannot come to agreement with the city of Morro Bay, it may adversely affect their permit application for a new plant with the State Water Board; a plan that would not likely go against the wishes of the city. A meeting between Duke and the Water Board scheduled for Dec. 2 will possibly be postponed to allow for more negotiation time with Morro Bay, said Jack McCurdy of the Coastal Alliance on Plant Expansion.
Dukeâ€™s lease with Morro Bay ends on Nov. 15.