Duke, Morro Bay reach outfall lease agreement


It's been six years in the making: Duke Energy and the city of Morro Bay have inked a lease agreement for continued usage of the outfall canal next to Morro Rock. The natural gas power plant in Morro Bay is cooled by water that is then released into the outfall canal. The city manages the Morro Bay Estuary on behalf of the State Land Commission, and therefore the outfall lease agreement as well.

The City Council voted 3-2 to approve the deal, which will bring $1.5 million to the cash-strapped city by January. Mayor Janice Peters voted to sign the agreement, as did Council members Thad Baxley and William Peirce. Councilwomen Melody DeMeritt and Betty Winholtz voted against the proposed agreement.

Duke announced in September that it planned to sell the Morro Bay plant.

"[The agreement] protects us from whatever buyer Duke finds," said Mayor Peters. "And as for other uses for the plant, it gives us basically a two-year window to look into that."

Peters said the deal was probably "not the best [the city] could get" because of the climate after the energy crisis, but "it's more than fair for what Duke is using the property for."

The income that the city will receive in January from Duke will be used to refill the reserves that have been tapped over the last year, said Peters. The city will also soon begin working on a proposed sales-tax increase. Results from a survey gauging public support are expected soon.

And, Mayor Peters said, an ad-hoc committee has already begun researching alternatives to a power plant at the Duke site.

"All of us would love it if it would be something else," said Mayor Peters in a phone interview. "But it also has to be some income-producing property."


-John Peabody

Add a comment