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Posted on: June 11, 2021

Council Approves Agreement with Vistra Corp, Unlocking Potential Opportunities for the Community

Morro Bay, CA – City Council on June 9, 2021 approved an agreement with Vistra Corp (Vistra), current owners of the Morro Bay Power Plant site.  Vistra has also approved the agreement. The agreement (following a 90-day escrow period) provides the following benefits to the community: 

  • Allows the City to purchase needed easements from Vistra for the Water Reclamation Facility (WRF) project for $1. 
  • Requires Vista to tear down remaining power plant structures by 2028, or pay the City $3,000,000. 
  • Opens up opportunity for Vistra to potentially redevelop the old Morro Bay Power Plan (MBPP) site. 
  • Provides opportunity for robust community conversation and engagement about the future of the MBPP site, including informing City Council decision about whether or not the City should require Vistra to keep the “stacks.”  

Following approval of the item, Mayor Headding offered that, “we feel this agreement is a good deal for the City, as it provides the opportunity for Vistra to tear down worn out, contaminated power plant structures, and opens the door for future redevelopment of this key site in our community.  We look forward to working closely with the community on reviewing these opportunities.”   

In approving the agreement on a 5 – 0 vote, the City Council and City will now focus on the future of the site.  That includes engaging with the community about the future of the stacks and reviewing the potential battery storage project proposed by Vistra, which is under review now by City staff.  

The proposed project will go through a rigorous environmental and planning review process prior to anticipated (if project moves forward) public hearings with the Planning Commission and City Council.  To learn more, please visit the proposed project webpage.  

The City will also ask for community input about what could potentially happen on the rest of the power plant site.  

Frequently asked questions on the agreement can be found below:

Frequently Asked Questions about Proposed Morro Bay – Vistra MOU Agreement

Does approval of the proposed Vistra MOU agreement mean the City Council approves Vistra’s proposed battery storage project?

No. Vistra’s proposed project will need to follow all of the City’s standard processes, including planning, review, evaluation and consideration for approval.   The proposed project and potential Environmental Impact Report (if the project continues to move forward) will be reviewed in the future at public hearings by both the Planning Commission and City Council. 

Is the Council “green lighting” the project as Vistra has proposed it?

No. The City is eager to have public input, which could modify the proposed project, and perhaps more importantly, the Council has not made any decisions yet on the proposed project (nor is Council making any decisions about the proposed project if the proposed Vistra MOU agreement is approved). 

Will the public have opportunities to provide input?

Yes. This proposed project will require an Environmental Impact Report per the California Environmental Quality Act (CEQA). CEQA has extensive provisions for public input both in framing factors to consider in evaluation of the proposed project’s potential impacts and in commenting upon the impacts.   There are also anticipated  public hearings before both the Planning Commission and City Council as the project moves through the review process. 

What happens if the proposed battery storage project isn’t approved?

The battery storage project (BESS) could provide sufficient economic returns to Vistra to fund removal of the existing turbine building (and the stacks, if the community chooses). If the proposed battery storage project becomes uneconomical for Vistra, or Vistra otherwise decides not to proceed, and Vistra does not tear down the Morro Bay Power Plant by 2028, the Vistra MOU agreement requires that Vistra will nonetheless pay $3,000,000 to the City. 

How can we learn more about the proposed battery storage project?

Current project information is posted on the City’s “Current Planning Projects” page and includes the project application, project description, plans, a prior presentation from Vistra to City Council, and all current environment studies for the project.   The page will be updated continually as additional project material is developed.   Link to City’s Current Planning Projects page:     

How will the City address public safety, view impacts, etc.?

Each of these topics, and many more, are key elements in the CEQA review process, with independent experts providing analysis for consideration. 

What if the proposed project has environmental impacts that can’t be mitigated?

If the proposed project includes any unmitigated environmental impacts, the City (to approve the proposed project) will have to adopt a statement of overriding consideration as part of an adoption of the EIR, at a noticed public hearing.  Further, additional public benefits would need to be extended to the community if there are any exceptions to the City’s development standards.  

The California Coastal Commission told the community that the new Water Reclamation Facility had to be built inland to avoid coastal hazards/sea level rise concerns, so why is the BESS being proposed so close to the coastline? 

The City’s current wastewater treatment plant, located off Atascadero Road, is located in a Tsunami inundation zone, and FEMA 100 year flood zone AE and in an area potentially subject to sea level rise impacts by the year 2100.  Also, the City attempted to obtain a Coastal Development Permit (CDP) for demolition of the existing plant and construction of a new plant in same location.  The CDP was denied in 2013 by the Coastal Commission because the project was deemed inconsistent with the City’s Local Coastal Plan (LCP) zoning provisions, failed to avoid the coastal hazards noted previously, and was in a sensitive view area identified in the LCP.   

The BESS is located in a tsunami inundation zone, as are most of the areas in the City that are located immediately adjacent to the waterfront.    The anticipated EIR will look at this issue as part of the environment review process that has just started for the proposed project.  Other issues noted above do not apply to the specific location of the proposed BESS project on the former tank farm site at the power plant.