Computer rendering looking south shows one potential layout for Vistra Energy’s battery storage facility, with the existing power plant in the background. Photo courtesy Vistra
A proposed battery energy storage system project in Morro Bay appears to be getting more serious — as the City is ready to start talking money.
The City issued a “Request for Proposals” (RFP) July 5, seeking a “qualified land use economics and financial consulting firms and/or persons to conduct an economic and fiscal impact analysis,” on the benefits that would come to the City via Vistra Energy’s, 600 megawatt BESS, slated to be built on a former fuel storage tank farm at the old power plant, which was shuttered for good in 2014. The over 170,000 battery packs would potentially be housed in three, ginormous buildings or in hundreds of smaller buildings with just a handful of battery units in each.
According to the RFP Notice, issued by new Community Development Director, Airlin Singewald, “In May 2024, Vistra Energy sent the City a term sheet [“Term Sheet”] of proposed City benefits from the proposed BESS project. The proposed Term Sheet includes an estimate of fiscal and economic benefits [e.g., sales and property tax revenues] the City would receive from the project, if approved, as well as additional incentives offered by the Applicant.”
Estero Bay News was unable to locate this Term Sheet among the numerous documents posted on the City’s project web page, so we requested a copy of it, under the California Public Records Act, the State’s version of the Federal Freedom of Information Act.
Singewald acknowledged receipt of EBN’s CPRA request and promised to respond officially after discussions with the City Attorney.
The RFP also mentions another report that was done and also couldn’t be found in the archives.
“The estimated property and sales tax revenues cited in the Term Sheet was calculated based on an economic and fiscal impact analysis [Brattle; May 2024] commissioned by Vistra Energy for the proposed BESS project. The Term Sheet and Brattle study will be provided to the selected Consultant.”
EBN requested this study as well. Singewald had not gotten back to us before deadline for this issue, but EBN will do follow up stories after we obtain them.
According to Singewald the Brattle report went further than looking just at tax revenues. “In addition to estimating the tax revenue benefits of the BESS project, the Brattle study evaluated the regional economic impacts of the BESS project using the IMPLAN model, and tax revenue benefits to the City from potential future development on other portions of the former Power Plant property,” reads the RFP notice. “This included retail, parking, parks/open space, hotel, residential, and mixed retail/residential.”
The IMPLAN (IMpact analysis for PLANning) modeling system is simply a Cloud-based system of doing input-output economic studies, or simply put, an in-depth cost-benefits analysis.
The Brattle report apparently had its shortcomings, including something the City noted off a Footnote. “Footnote 4 of the Brattle study,” the RFP notice said, “states: ‘Note that Brattle has not considered any costs that would be incurred by the City in connection with the construction, demolition, or redevelopment activities, such as increased use of public services.
“’Such costs will depend on a variety of factors that are difficult to forecast at this time, such as the City’s decisions to impose fees or assessments on future projects and decisions regarding appropriate infrastructure and maintenance activities.’”
The RFP added, “The Brattle study is more a fiscal benefits than a fiscal impacts analysis.”
The City wants an outside expert to analyze the Brattle report and help them negotiate the Term Sheet. The end game is to arrive at a “Benefits Agreement.”
“The City is currently negotiating the terms in the Term Sheet,” the RFP notice said, “which would result in a Benefits Agreement with Vistra Energy. The requested analysis will assist the City in its negotiations with Vistra Energy by providing a peer review of the applicant’s term sheet, as well as the economic and fiscal study and recommending additional terms to further the City’s economic interests. The analysis would also recommend and evaluate mechanisms for applying any revenues for the City raised as a result of the BESS project.”
In another BESS matter, the City Council was slated on July 10 to discuss all this in Closed Session. Under the title “Conference With Real Property Negotiator” the agenda item stated: “Under Negotiation: Price and Terms of Payment — Community Benefits Agreement.”
That would appear to indicate the City and Vistra will be sitting down at the negotiating table to craft a development deal, just as the City did in the early 2000s, when Duke Energy proposed replacing the power plant with a more efficient and cleaner burning natural gas plant.
That project was processed under the California Energy Commission’s jurisdiction, which approved the Duke-City benefits deal.
And while Duke’s project managed to get a green light from the CEC after some seven years of review, the issue of ending the use of the plant’s once-through cooling system doomed that $800 million project.
Duke and the City had agreed to the company paying a minimum of $2 million a year, including property taxes and a lease payment for continued use of the Outfall Canal to discharge cooling water.
That $250,000 a year lease payment — adjusted annually for inflation — went into the Harbor Fund, with the remainder going to City Hall. And while the City did collect on this deal for a few years, after Duke abandoned its project and sold the plant, which eventually landing with Vistra, it ended when the plant was shuttered for good.
Also as part of that deal, Duke pledged to remove the stacks and 16-story power building.
The deadline for submitting bids on this economic study contract is July 25, with a tentative contract awarded on Aug. 5. It lists a tentative start date of Aug. 12 with a quick turnaround of Aug. 30.
That should mean the analysis would be released well before the November Election, when a citizen’s initiative will be contested that could affect Vistra’s Project.
Measure A-24, proposed by the group “Citizens For Estero Bay Preservation,” would lock in the existing zoning for all properties from Beach Street to Morro Rock including the 107-acre power plant property.
The plant property was re-zoned to “commercial/visitor serving” with the recently completed General Plan/Local Coastal Plan update. Instead of the City Council making the decision, A-24 requires the company to ask voters to approve any zoning changes, so while not an impenetrable brick wall against the BESS, it could be considered a significant roadblock.
At the least, it puts the project in the hands of voters, and potentially in the crosshairs of local politics.
Also, the BESS project includes the company’s promise to demolish the old power plant buildings and the smoke stacks.
Writing a “Master Plan” for the power plant property, sans 22-acres for the BESS — is also in the BESS project goals and being done now by the City.
