What’s going on regards the future of the Morro Bay power plant owned by Dynegy Inc?
There was a little more clarity at this week’s Morro Bay City Council meeting with an agenda item regards an annual $525,000 payment due from the power plant operator to the city as of January 21 of this year.
Council heard that Dyngey wants to postpone the payment because of uncertainties over its future.
To quote the staff report.
“In February 2014, the ISO is expected to determine whether the plant is needed or not needed “
“In November 2013, Dynegy filed a notice with the California Independent System Operator (“ISO”) initiating the retirement process for the Morro Bay Power Plant. In February 2014, the ISO is expected to determine whether the plant is needed or not needed . If the plant is not needed and no contracts can be found for operation, the process will continue with an estimated final closure in June 2014.”
The staff report continues on what could happen next.
“Due to the uncertainty regarding the plant’s future, Dynegy requested deferral of the January 2014 CDF payment, in the amount of $525,000, to allow Dynegy to obtain more information as to the plant’s future, and to allow both sides to explore a possible trade of property in lieu of that payment. Dynegy did not request a specific amount of time, but indicated they would have more information by the end of February. The March 14 date follows the Council’s first regular meeting in March, to allow staff to come back to Council in the event an additional deferral is requested. The January CDF payment is neither budgeted nor planned. Dynegy has the option of canceling future CDF payments by giving the City notice by February 28, 2014.”
The California ISO manages the state’s wholesale power grid and is charged with insuring California has adequate power reserves. Including the the permanent shutdown of the San Onofre Nuclear Generating Station and the looming compliance deadlines for large once through cooled power plants in the region – like Morro Bay- the state is poised to lose 7,000 megawatts of generation that could disappear in the next several years.
Now with the never ending drought, the state is unlikely to have much hydroelectric power this summer and that could be a factor in keeping the Morro Bay plant alive with some state contract.
Dynegy said in their financial report last year that they were working with Greenwich Conn-based Starwood Energy to see if the nat gas fired plant could be re purposed for some green power use. The plant no longer has a long term contract to sell electricity and has been running at something like 5% of capacity or less – a key reason why it is shutting down.