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Power plant to stay in Morro Bay 

Following months of negotiations between its operator and the city, it looks like the aging Morro Bay Power Plant will stay for now.

At a special Dec. 5 meeting, the Morro Bay City Council approved an amendment to its outfall lease agreement with Dynegy Morro Bay, LLC, which runs the plant.

The new agreement will bring some $800,000 a year to the city in the form of various fees and concessions, according to a city staff report. The new agreement also includes monthly rent payments as well as extras for increased fire services, and $35,000 to organize a long-term planning process for what to do with the site when the aging plant eventually ceases operations.

Under the agreement, Dynegy also promises to reimburse the city up to $35,000 to cover the lease negotiation process, according to the report.

But that’s not all. The agreement includes additional perks for the city. Under conditions for approval, Dynegy will also guarantee a 10-year continual lease with the city for Lila Keiser Park and its adjacent property on J Street, agree to provide property for a new bike path after the plant closes, and deed the Front Street right-of-way to the city to allow for the development of the long-awaited Maritime Museum.

The plant’s licensing is under the jurisdiction of the California Energy Commission, though the city administers its outfall lease. Heated discharge water from the plant is pumped through subterranean pipes that lie beneath city property. The heated water is then discharged into Estero Bay through a canal at the base of Morro Rock.

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