Plans afoot to shutter (finally) Morro Bay’s skyline-busting power plant

October 15, 2008


Officials at the Morro Bay Power Plant are planning to bring down the curtain on the 54-year-old facility and currently are telling city council members that “continued operation of the plant is unlikely” beyond 2015.

Plant owner Dynegy’s representative Randy Hickok made the pronouncement in a Sept. 9 letter to the council, a copy of which was obtained by CalCoastNews. Hickok suggested the existing plant could even be shut down within three years, and blamed tough water quality rules proposed by the state for minimizing the prospect of new plant construction. The council will discuss Dynegy’s most recent plans later this month in a session closed to the public.

Morro Bay City Attorney Rob Schultz said Wednesday that “unless there is some dramatic change in the proposed state rules, “they [the plant] probably can’t survive after the 2015 date.”

Noting that “energy lobbyists are working hard” for some of those changes, Schultz said Dynegy “has left some wriggle room” in their plans.

Nevertheless, if the Texas energy company cannot sign a contract to sell electrical power generated by the plant after 2011, or if city officials remain uncooperative about renewing an outfall lease, “the plant will be retired,” Hickok wrote.

The electrical plant has long been a political flashpoint in the beachfront city, its three 450-foot-tall smokestacks almost as recognizable as Morro Rock. Apart from community opposition because of its incongruous oceanfront location, the plant has proven problematic to its owners by continually running afoul of state water quality regulators for discharge. And its generators and pumps, which use water from the Morro Bay National Estuary, have been identified as the cause of wholesale destruction of marine life in the waterway. The plant’s production gradually has been greatly reduced, operating at only six percent of capacity the past two years, with extremely limited operation during summer spawning months.

Regulators with the State Water Resources Control Board, following a 2007 federal appellate court ruling, are developing a new policy restricting the often-destructive method of “once-through cooling” (OTC). This outdated methodology draws a steady flow of intake water to cool plant generators, and which is then released, super-heated, back into the ocean. The impact on the local estuary has been significant.

Dynegy official Hickok informed the council the proposed new state policy “would likely have a materially adverse impact to any continued usefulness of (the) Morro Bay (plant).” Hickok cited a virtual ban on “the use of sea water for once-through cooling of power plants” in California, and noted the city’s ongoing opposition to alternative cooling methods proposed by Dynegy officials.

The state’s policy, if eventually adopted, would require “all new and expanded coastal power plants using sea water for cooling” to use “the best technology to minimize the intake and mortality of all forms of marine life.”

Even if Dynegy officials decided to change the plant’s cooling technology to comply with state mandates, they would still have problems with Morro Bay officials.

A “closed-cycle cooling” system, working much like a common radiator by reusing its water in containment, would be required for renovation or modernization of the plant. Without such a system, the plant cannot continue to function. Dynegy’s Hickok acknowledged that city officials long have opposed closed-cycle cooling because of detrimental visual impacts of tall cooling units and noisy operation.

Schultz, the city’s attorney, said Morro Bay officials “absolutely” will continue their opposition to such a system in a new plant.

However, he added, “We’ve seen absolutely no inclination on their part [Dynegy] to build a new plant.”

Adding extra weight to problems facing a new plant proposal is the current economic climate, which could deter private investors for years to come. Without signed contracts for delivery of stable sources of electrical energy, those investors would be reluctant to commit.

Critics of the plant contend that no closed-cycle design yet developed provides adequate protection for the estuary, or for a resulting diminishing of air quality.

Jack McCurdy, co-chair of the non-profit Coastal Alliance on Plant Expansion (CAPE), hailed the Dynegy owners’ statement.

“We consider this to be a victory in CAPE’s long fight to make certain that if a new or re-powered Morro Bay plant were built, adequate protections would be ensured. No proposed designs of such a plant have met those standards,” McCurdy said. McCurdy is a retired Los Angeles Times reporter and Pulitzer Prize recipient.

An initial study by staff of the California Energy Commission in 2005 showed that California’s 21 coastal power plants using “once-through cooling are contributing to declining fisheries and the degradation of estuaries, bay and coastal waters (by killing) billions of aquatic organisms, including fishes, fish larvae and eggs, crustaceans, shellfish and many other forms of aquatic life from California waters each year.”

Also, a study funded by the plant’s previous owner, Duke Energy, showed that a new facility would destroy between 16 percent and 33 percent of the fish and crab larvae in Morro Bay each and every year.

Morro Bay residents are planning the site’s use if and when it should become available. The so-called “Futures Group” appointed by the city council has recommended a thorough examination of alternative uses, including the possible establishment of a redevelopment agency. Other uses which have been proposed include a marine museum, an arts center, and restored natural habitat for public use.

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Member Opinions:

By: Myself on 3/6/09

Its too bad that the City of MB didn't go to bat for the power plant and Chevron's Estero plant,to help them stay in business, now there wondering where the money is coming from to run the town, so they've turned to robbing the tourists and the waterfront bussiness to keep itself from going under, the locals can hardly afford to eat out on the waterfront any longer.

By: paperboy on 10/20/08

The MB power plant had its day and that day is now passed. Don't expect it to run past 2011, because the state is requiring PG&E and other utilities to buy from clean/green energy sources. That means Morro Bay, Moss Landing and about 20 other power plants in the state will have to change cooling systems, accept capacity restrictions or just shut down.

Moss Landing, which was re-powered in 2002, could probably survive a capacity restriction because it feeds directly into Silicon Valley and the S.F. Bay Area, but Morro Bay is history.

With 20-plus plants facing extinction, you can assume the rate payers in the state will get hit with rate hikes to pay for new plants or new cooling systems. Power companies always pass these kinds of expenses on to theri rate payers. I wonder if the state power grid can even survive closing them all at the same time.

I worry what the state will be forced to do. Merchant power companies, like Dynegy and Duke Energy before them, were willing to invest in power plants because of the profit potential through deregulation. It was their bucks at risk and when it all blew up in their faces, investment in the state's power supply pretty much dried up.

But that didn't stop the Legislature from passing laws that mandated changing to green power sources that really don't exist right now and are questionable as to whether they will ever be built.

This is the next big crisis coming down the road folks, how to replace the aging power plants at a time when the credit markets, banks and stock market are in free fall and no one is lending money? Who's going to lend the money to build the new green energy plants? I believe green energy and green technology in general is the wave of the future but the present state of the economy worries me that it won't ever get off the ground.

Locally, Morro Bay now has about 40 F/T employees and hires hundreds of temporary workers during outages. In its prime, the plant had more than 100 F/T workers and a more than $7 million a year payroll. It also pumped between $6 and $7 million into the local economy through goods and services.

And remember, the same state rules being worked on now to eliminate sea water cooling will eventually lead to the shutdown of Diablo Canyon by 2020 and the eventual loss of its jobs, payroll and goods and services expenditures. PG&E will also immediately seek to have the plant property re-appraised to cut its property taxes, so the county, cities, special districts and school districts that share in that bounty will lose millions. It will be a huge economic hit for the entire county, but hey, we'll save a lot of plankton…

By: Gsan on 10/18/08


Number of years plant standing after shuttered: 18

Taxpayer cost to demolish plant: $50 million

By: Newsome on 10/18/08

I have often wondered whether the plant-closing-enthusiasts and the n0-solar-on-the-Carrizo-enthusiasts are one and the same. And whether they are relations with those that want to deny the wind power projects on SB county ridgelines.

By: Harlow on 10/17/08

A lesson in economics involves not throwing billions of dollars into a senseless war and ignoring the homefront. Here we all now sit. Even worse than what Vietnam did to the economy.

Hasn't anyone figured out that the worst TERRORISTS have always been right here?

By: Tim on 10/15/08

The fill placed out to Morro Rock was installed by the Army Corps of Engineers as an aid to navigation in the 1930's- the power plant had nothing to do with it. There is no way it would be removed simply due to the plant closing, nor should it be.

By: Joe on 10/15/08

That would be something huh Jorge? Not just tearing up all that new construction, but removing the spit would pretty much kill surfing in MB. Would it have to go back to before the government was using that land or just back to when the plant was built?

Here's a 1903 USGS map with notes from 1927 on it…

By: JorgeEstrada on 10/15/08

If the plant were to go, would the rock be restored to an island again? In most ventures where natural resorces are defamed the requiremnet is to restore as best to original state when decommissioning the operation.

By: Gsan on 10/15/08

Wasn't it the City's greed and brinksmanship earlier this decade that caused the call-off of the well-planned replacement plant?

By: Countdown on 10/15/08

About time. When I first visited Morro Bay in the 70's I was amazed at how such a visual monstrosity could have been allowed to be built there.