PG&E Plans to Leave Contamination at Closed Power Plant

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

June 5, 2020

This map from the Department of Toxic Substances Control shows the eight ‘Areas of Concern’ or AOCs found to be polluted at the Morro Bay Power Plant. PG&E is proposing to leave the pollutants in the ground and instead limit the future uses of the property. Map courtesy DTSC

A State agency that monitors and regulates toxic substances is seeking public comments on a proposal to not clean up several contaminated areas at the long-closed Morro Bay Power Plant.

The California Department of Toxic Substances Control or DTSC extended the public comment period for a draft “Statement of Basis,” a document that lays out Pacific Gas & Electric’s plan to deal with its messes.

According to the DTSC notice, “Pacific Gas and Electric Company began generating electricity at the power plant in 1955 using natural gas or oil as a fuel source. In 1998, PG&E transferred ownership of the site to Duke Energy Morro Bay, LLC and then to Dynegy. In 2014, Dynegy closed the power plant.

“As the original owner of the power plant, PG&E remains responsible for investigating and addressing environmental conditions resulting from historical power generation activities.”

Any future plans to “demolish or redevelop the property are not a part of this project and will be handled separately by Dynegy,” according to the DTSC’s notice. Dynegy is now part of Vistra Energy after the two Houston Texas companies merged in 2018.

So what’s under the surface at the power plant? “PG&E has conducted environmental investigations at the Site that have found the presence of total petroleum hydrocarbons (TPH), polycyclic aromatic hydrocarbons (PAHs), metals, pesticides and volatile organic compounds (VOCs) in soil and groundwater that are greater than residential levels,” according to the DTSC.

But they don’t plan to clean it up. “The Statement of Basis proposes managing impacts in place by implementing a land use covenant [LUC] that restricts areas of the site to future commercial/industrial uses and restricts the use of groundwater across the site.”

This could prove problematic for the City of Morro Bay as parts of its plans for a new sewer treatment plant and water recycling facility include use of some areas of the power plant.

For example, the preferred project plans include running a raw sewage line from the City’s underground lift station in the parking lot on Front Street (lift station No. 2), through the power plant to connect with a new lift station under a property on Main Street next to Lemos Pet Supply store.

Also, the City’s investigations into the water recycling portion of its plans has been looking into possibly using an area of the power plant across from Lila Keiser Park for recycled water extraction wells, though that site would not appear to be a strong contender for the final plans.

According to a May 6 City report, “Overall, it is important to note the City’s existing wells on the MBPP site and the components of Water Reclamation Facility project that will run through that site (i) will not be impacted by this effort, (ii) is not impacted by the chemicals of concern and (iii) do not impact the concerns DTSC has raised.

“The wells and WRF components (pipeline and injection sites) are not located in any of the AOCs (areas of concern). That was verified with staff at DTSC. Conversely, the WRF project and City wells will not impact the Statement of Basis for the Morro Bay Power Plant.”

And Dynegy has submitted plans for a 200-megawatt, lithium battery facility to be built directly behind the main power plant building in an area marked AOC No. 4 on a DTSC map.

That 45,000 square foot, 2-story structure would house over 60,000 enormous batteries to store energy from sustainable sources.

That 450-foot long building will need some 720 to 1,000 piles driven 50-feet into the ground to anchor the foundation for earthquake safety, in a process that’s sure to upset the soil. But those potential impacts will be looked at as part of Vistra’s application.

Allowing PG&E to essentially leave contaminants in place, would mean the 117-acres of prime waterfront land couldn’t be used for residential use, unless fully cleaned up first.

According to DTSC, “A Soil Management Plan would also be established that describes the safe handling and disposal of contaminated soil should it be disturbed during any future earthmoving work.”

DTSC will require Dynegy to inspect and issue annual reports “to ensure the land use remains compliant with the LUC and that the site use remains protective over time. This proposed remedy would offer long-term protection of human health and the environment under approved land uses without causing any disruption to the community.”

As for environmental reviews, the DTSC said it’s not required. “The remedy will not require construction or implementation of a physical remedy; thus this activity is not a ‘project’ within the definition of CEQA [California Environmental Quality Act]. Therefore, this project is exempt from CEQA.”

Over the years DTSC has often handled contamination cases at the plant, most memorable being oil spilled underneath a fuel oil tank farm (AOC No. 1), and in the removal of thousands of pounds of asbestos wrapped around outdoor oil pipes at the tank farm.

Also, a chemical holding pond on site that was used to cool and store corrosive chemicals used in scouring the plant’s boilers has been the subject of past scrutiny by DTSC, is listed as AOC No. 8.

Over the years, various exercises have been undertaken on future uses of the power plant, and it along with the current sewer plant site on Atascadero Road figure prominently in the City’s future economic dreams.

Does DTSC’s actions and the fact that PG&E will not be cleaning up known contamination hurt future redevelopment? The City doesn’t think so.
“The proposed remedies outlined by DTSC,” the City report said, “does not mean no future residential or mixed-use development can occur on that site. It does mean, however, any residential or mixed-use project could be developed on the MBPP site, as long as the developer mitigated the contamination sufficiently for DTSC to approve uses beyond commercial/industrial, which would be allowed by the proposed LUC.

“The DTSC serves as the gatekeeper to ensure the use of the MBPP site is commensurate with the contamination on that site,” the City continued. “Further, the DTSC is not positioned to require the immediate removal of the contamination. That being said, the City does have some leverage with any current or future owners of the MBPP site, as the City can take possession of that site for $1, because the MBPP has not provided at least 876,000 megawatts of power after September 30, 2013, and if the MBPP infrastructure is not fully demolished on or before March 31, 2034. That may incentivize the current or any future owner to demolish the plant and address contamination in order to make a profitable commercial, industrial, residential or mixed-use development possible. The City also retains its land use entitlement regulatory control of the MBPP site.”

In the early 2000s, as part of Duke Energy’s failed plan to replace the plant with a modern, fuel efficient power plant, estimated it would cost $80 million to remove the 165-foot tall, 14-acre power plant building and its three, 450-foot tall smoke stacks.

That figure today would almost certainly be millions higher, and likely be even millions more expensive in 2034, when the City claims it could buy the property for $1. This expense is perhaps why Dynegy has been unable to sell the property since it was shuttered in 2014.

Readers can access the DTSC’s reports online at:

The extended comment period expires Friday, May 22. Email comments to DTSC Project Manager John Bystra at:

You May Also Like…