Instead, two state agencies will decide the fate of the battery plant.
On Monday, the Texas-based corporation Vistra Corp. paused its application with the city to build a 600 megawatt battery plant on the Embarcadero property.
Instead, Vistra plans to opt-in to a new state process that allows companies to bypass local governments and apply to the California Energy Commission for approval of large renewable energy projects.
The state process "will provide a more defined pathway" for project consideration and permitting, Vistra wrote in a letter to the city.
Ultimately, the city will lose its primary form of leverage with Vistra: conditions attached to the coastal development permit.
"We, city staff, are certainly disappointed in this," Morro Bay community development director Airlin Singewald said at a Planning Commission meeting Tuesday. "There are opportunities under AB 205 that we intend to take advantage of to engage fully in the process to make sure that we have the best possible outcome for the community of Morro Bay."
Vistra said it plans to continue working with local leaders alongside state leaders through the process.
"Vistra recognizes that the plant property is adjacent to the most precious and defining aspect of Morro Bay, your coastline and harbor," Vistra said in the letter to the city. "Together, we will ensure that the plan to deploy zero-carbon energy technologies at the former fossil-fuel site will be done in a manner that is good for the environment."
Why did Vistra pause its Morro Bay application?
Vistra switched gears because the city added at least 18 months of review before the city took "any preliminary vote" on the project, the company said in a statement to The Tribune.
"The uncertainty and ongoing delays in obtaining a decision regarding a permit to construct were impacting the planning for the project, including long-lead time items and matters involving transmission," the statement said.
Vistra originally needed two key approvals from the city: a coastal development permit and an amendment to the Local Coastal Program, which would change the property's zoning from visitor-serving commercial to industrial.
At first, the city was processing the amendment and permit at the same time, Singewald said.
However, the California Coastal Commission advised the city in an August letter to process the amendment first and the permit second. The city could only approve the permit if it aligned with the property's land use, he said.
This new timeline meant the Morro Bay City Council would vote on the amendment in May next year. If the amendment was approved, the Morro Bay Planning Commission wouldn't vote on the coastal development permit before November 2025, he said.
The Energy Commission, however, has a more stringent project review timeline than the city.
The commission must approve or deny a project within 270 days of receiving a complete application, according to a report from the Morro Bay city attorney's office.
Then, the California Coastal Commission must vote on the project no more than 90 days later, the report said.
Vistra plans to apply to the Energy Commission early next year, the company said in a letter to the city.
The city halted its efforts to develop the Local Coastal Plan amendment and coastal development permit on Monday as requested, Singewald said.
How does the state process work?
Assembly Bill 205 allows developers to submit large renewable energy projects to the California Energy Commission for approval — bypassing local jurisdictions such as the Morro Bay City Council.
Under AB 205, the Energy Commission can approve a project that does not meet local land use rules if "the project is required for public convenience and necessity," its website said. This is called the opt-in certification process.
In Morro Bay, the California Coastal Commission would have to approve the battery plant, too.
Energy attorney Brian Biering told The Tribune in June that the law was created to push forward projects designed to support the state's increasing energy demand while meeting renewable energy goals.
Raised in Los Osos, Biering attended Morro Bay High School — just down the street from the proposed battery plant site. He previously worked for the Energy Commission and now practices law in Sacramento with the firm Ellison Schneider Harris Donlan.
"The idea was, the state has an interest in energy projects," Biering said of AB 205. "Nobody wants a power plant in their backyard, but we've got to have power plants somewhere."
The process is still young, though. Gov. Gavin Newsom signed the law in 2022, and the commission hasn't yet approved or denied a project through AB 205.
As of Wednesday, only two of six applications submitted through the opt-in certification process had been deemed complete. The fate of the two projects will show the state how the commission handles permitting.
Luckily, the city won't be entirely shut out of the process.
City officials will be invited to a meeting with the Energy Commission and Vistra before the application is accepted, according to the Morro Bay city attorney's office report.
The Energy Commission will also hold at least two public meetings in Morro Bay before approving the project. The first will be scheduled within 30 days of accepting the application, and the other will give the public a chance to comment on the draft environmental impact report.
Vistra must also enter into a benefits agreement with a coalition of Morro Bay community-based organizations, which could include the city, an Indigenous group, a labor union or a non-profit, the report said. The agreement could require Vistra to offer funding for community improvements like a park, paved roads and bike paths, annual contributions to a community-based organization or offer certain terms of employment.
Meanwhile, the California Coastal Commission must approve the coastal development permit, too.
What will the city lose?
If Vistra applies to the Energy Commission, the city will lose decision-making authority for the battery plant.
Before, the city could have picked a preferred design for the battery plant and established conditions for the project, such as requiring Vistra to train the fire department or tear down the Morro Bay Power Plant smoke stacks.
In 2021, Vistra agreed to demolish the stacks by 2028 or pay the city $3 million. The agreement still stands, but the cost of demolition is likely higher than $3 million — and the city now has no way to force Vistra to remove the deteriorating infrastructure, Singewald said.
Additionally, Vistra could more easily bypass local land use rules through the opt-in certification process.
Last year, a community group called Citizens for Estero Bay Preservation mobilized to oppose the battery plant. While touting the slogan "No batteries by the bay," the group gathered more than 1,000 signatures from registered voters to place Measure A-24 on Morro Bay's ballot this November.
If passed, the initiative will freeze the land use on the property as visitor-serving commercial — prohibiting industrial developments like a battery plant.
The Energy Commission, however, can ignore local zoning if it proves the project is "required for public convenience and necessity," its website said.
Meanwhile, the Coastal Commission is also allowed to approve a project that violates local land use as long as it complies with the Coastal Act, Singewald said.
Whether or not Measure A-24 passes, the Energy Commission and Planning Commission could legally approve the battery plant.
© 2024 The Tribune (San Luis Obispo, Calif.). Distributed by Tribune Content Agency, LLC.
