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Morro Bay officials push off payment from Dynegy while negotiations continue 

With the Morro Bay power plant officially shuttered, city officials are continuing negotiations with the plant’s operator, Dynegy, and granting the company another two months to come up with more than half a million dollars in payments owed to the city.

As part of an agreement between the city and Dynegy, the company previously made annual payments as part of a Community Development Fund, according to a city staff report. This year, Dynegy owes $525,000, but that payment has been put on hold since Jan. 21 while city officials and Dynegy haggle over a final payment amount and potential property trades.

     The payment was first deferred when it became clear that the plant would close, which it did in February. For now, city officials are in discussions to buy a number of Dynegy properties, including Lila Keiser Park, a fisherman’s gear storage area, the harbor and Coast Guard storage yard, and another piece of the northern portion of Dynegy’s property. The city has allowed Dynegy to defer its payment until May 16.

Interim City Manager Ed Kreins said that the loss of the annual payments is a “major hit” to the city’s finances, but noted that previous city officials “wisely” cut back on expenditures to ensure that the lost funds were absorbed into the budget before the plant officially closed.

Dynegy spokeswoman Katy Sullivan said she could not speculate about any plans to demolish the power plant, telling New Times “that would be a long planning and permitting process.”

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