Morro Bay city officials debate the future of the Morro Bay Power Plant



One year after the Morro Bay Power Plant’s closure, city officials are again planning how to handle the property formerly occupied by Dynegy.

On Feb. 24—the same day Dynegy announced its 2014 financials, which included an announcement that it was unable to find a buyer for its three California power plant sites—Morro Bay city officials held their first substantive talk on the property since the plant officially closed in February 2014.

“I think this is one of the best conversations that we’ve had about the power plant since it’s closed,” Councilwoman Christine Johnson said at the end of discussions about the property.

Once an economic boon to the city, the now-shuttered gas-firing plant presents a challenge to city leaders, as any attempt to redevelop the property would require a massive financial investment, and the city has a limited ability to control how the property is reshaped in the future.

“While we maintain a certain level of influence over the eventual use of the property, we have influence—we don’t have control,” City Manager David Buckingham told the City Council.

The city is in the process of converting the so-called “triangle lot,” a 2.5-acre piece of property facing the water, into a free public parking lot, Buckingham said. Other pieces of the property, such as a PG&E-maintained chunk of land at the rear of the plant, remain outside the city’s control, though Buckingham said it would be unlikely that sections of the property would be split off and redeveloped.

Dynegy reported to investors a $19 million operating loss for 2014. The company also announced it had closed the sales process for its California assets—Morro Bay, Moss Landing, and Oakland—because “the bids received were below our view of the portfolio’s value.” However, Buckingham said he didn’t believe the sale was entirely closed.

The city has the option to purchase the property as is for $1 in about 2033, though Buckingham roughly estimated the remediation costs at $100 million.

According to Mayor Jamie Irons, a number of groups have expressed an interest, with proposed uses ranging from abalone farms to wave power generation. The City Council voted to create a subcommittee tasked with tracking interest in the property and coordinating a way to redevelop it so it gives the city as much influence as possible.

“I believe we have leverage for this,” Councilman John Headding said.

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