Rendering shows the proposed layout of Vistra Energy’s ‘Battery Energy Storage System’ or BESS Project, which the company has now formally withdrawn from the City’s consideration. Image courtesy Vistra
Opponents of a proposed Battery Energy Storage System (BESS) Project in Morro Bay have reason to celebrate, after plant owner, Vistra Energy, formally withdrew its project from the City’s jurisdiction.
The announcement came April 4 in a letter from Vistra: “In 2020,” said the letter signed by Vistra’s Senior Vice President for Development, Claudia Morrow, “we filed a development application that proposed to reuse a small portion of the site, adjacent to critical transmission infrastructure that helps deliver electricity across California, to develop an energy storage facility. We appreciate all the City’s work undertaken to complete the required analysis and environmental review of the proposed project.”
The City hired a consultant to do the extensive environmental review and planning work for the massive project, which sought to build a 600- megawatt BESS on the old power plant property on a 22-acre site that was once a fuel oil tank farm for the original 1,200 MW power plant.
That plant started out in the 1950s burning fuel oil, diesel, kerosene, whatever fuel was available, and in the mid 1990s switched over full time to natural gas. It closed for good in 2014.
It’s been a rocky road for Vistra from the beginning, as a citizen’s group quickly formed to work on a ballot measure, A-24, that locked in the commercial visitor-serving (C-VS) zoning on the 107-acre power plant property.
A-24 passed easily in the November 2024 Election.
Also, the City Council in response to public pressure, passed an emergency ordinance that prohibits any “grid-sized” battery storage facilities from being built within the City Limits. Those were just two of the roadblocks Morro Bay and its citizens have thrown up on the BESS Project.
Also, the Coastal Commission commenting on the City’s efforts to write a master plan for the power plant property — excluding the BESS Project site — threw cold water on the whole idea, reminding the City that this is within the Coastal Zone and is subject to coastal hazards — tsunami, flooding, and sea level rise — that were used to derail the City’s and Cayucos’ first sewer treatment plant project in 2013.
Also, the Commission staff noted that coastal dune scrub, a protected habitat, had encroached into the old tank farm area, raising an endangered species issue.
However, the State Legislature passed Assembly Bill 205 in June 2022, that establishes a work-around process for projects like Vistra’s BESS to apply directly to the California Energy Commission for permitting. With the exception of the State Lands Commission and the Coastal Commission, AB205 takes precedence over State agencies, and all local laws, even bans like Morro Bay’s ordinance on battery facilities in town.
While AB205 requires the CEC to try and resolve conflicts with local laws like Morro Bay’s anti-BESS ordinance, it doesn’t have to deny them.
However, the Moss Landing Fire probably changed public perceptions on such facilities, which the State believes are needed to even out the supply-demand deficiencies that are inherent with so-called emissions-free energy — solar and wind.
Because solar plants don’t produce energy without the sun, and wind turbines don’t work when the wind isn’t blowing, these two sources often produce energy when it isn’t needed. So, battery facilities and other energy storage systems, are needed to store the excess energy and send it back out at night.
Vistra, with A-24 fast approaching, pulled a move that threw folks off balance a bit. Last October, just days before A-24 was to go before voters, Vistra asked the City to pause its review of the project and hinted that it wanted to test the AB205 route to permitting and construction. That didn’t sit well with the City as its consultant, hired specifically to work on the BESS Project, needed to be paid and the company had agreed to pay those costs.
The City’s position was that “pausing” the project review was unacceptable, and an ultimatum of sorts was issued by the City. Vistra responded pretty definitively with its April 4 letter.
“By this letter,” Morrow said, “Vistra hereby withdraws its pending application for approvals of a master plan and renewable energy project. We ask that the City cease any further processing of the application.”
The company remained non-committal about its future plans for the old power plant site.
“When there is more to share about our redevelopment plans,” Morrow said, “including the potential to use the Opt-In Certification Program (AB205) to objectively review a plan to renew and reuse the Morro Bay Power Plant site, we will inform you and the community.”
In an official press release from the City, the government acknowledges that it hasn’t a clue what Vistra’s intentions are at this point.
“To the City’s knowledge, Vistra has not initiated an Opt-In Certification application. The CEC will notify the City if they receive an application from Vistra. If Vistra applies to the CEC, the City will closely engage in the process to protect the community’s interests.”
Vistra’s April 4 letter was the latest in several correspondences the City has had with the Houston based energy company. Back on March 12, Mayor Carla Wixom sent a letter giving Vistra an out before it wastes time and money on a project that isn’t likely to ever be approved.
“We recognize Vistra’s efforts to identify viable uses for this site;” Mayor Wixom’s letter said, “however, as you are aware, the community has overwhelmingly expressed its opposition to the proposed Battery Energy Storage System project. The passage of Measure A-24 in November 2024 reaffirmed the city’s commitment to preserving this site for visitor-serving and commercial uses, requiring voter approval for any industrial development.
“Furthermore, in response to public concerns, the City Council adopted Ordinance No. 670, placing a temporary prohibition on grid-scale BESS projects while we develop comprehensive safety and land-use regulations.”
She noted that the folks in Sacramento are also having a change of heart, especially after the spectacular explosion and fire last January that destroyed a 300 MW BESS that Vistra owns at the Moss Landing Power Plant.
“The legislative landscape is shifting as well, with Assembly Bill 303 poised to introduce stricter statewide oversight following the recent fire at Vistra’s Moss Landing BESS facility,” Mayor Wixom wrote.
The Mayor laid down a sales pitch trying to give Vistra another path moving forward. “Given these realities, we recognize that Vistra faces significant regulatory, financial, and community-related challenges in moving forward with the BESS project at this location. Rather than a prolonged, uncertain, and costly entitlement process, we believe there is a more constructive path forward — one that benefits both Vistra and the Morro Bay community.”
The letter then tells Vistra the City would like to talk about “Vistra transferring ownership of the property to the City.”
The letter lists four reasons this would be a good move for Vistra:
• Resolve regulatory and entitlement challenges: With Measure A-24 in place and growing state-level scrutiny of BESS facilities, industrial redevelopment at this site faces high hurdles. A property transfer would allow Vistra to avoid years of legal, environmental, and political challenges.
● Demonstrate corporate leadership and community partnership: By facilitating a land transfer, Vistra would turn a contentious situation into an opportunity to showcase goodwill, environmental stewardship, and a commitment to responsible corporate citizenship.
● Enhance Vistra’s public image: The Moss Landing fire has placed increased scrutiny on BESS projects along the California Coast. A cooperative approach in Morro Bay could help reinforce Vistra’s reputation as a responsive and community-focused company.
● Provide a clean exit strategy: Rather than navigating an uphill battle for project approvals, Vistra could streamline its portfolio by removing an asset with complex development obstacles while earning positive recognition for reinvesting in community-oriented solutions.
Discussions after that March 12 letter saw the City stress that the current situation — Vistra’s pause on project review — couldn’t continue. Vistra answered the donation pitch in its April 4 letter: “We received your communication of March 12, 2025,” Morrow said, “and we respectfully decline your offer to gift the City of Morro Bay our private property.
“Vistra looks forward to working with you in good faith in the future.”
The 107-acre power plant property, sitting idle since 2014 may stay that way for some time to come. And the power plant itself, with its three 450-foot tall smokestacks could remain for a long time. The City and Vistra had an agreement that the City would give the BESS Project an honest and fair hearing and in exchange, Vistra included a provision that it would remove the stacks and 16-story power building as part of the BESS Project.
With that project now officially dead with the City, it remains to be seen if the City has the juice to get the CEC to include the plant removal provision in its process, should Vistra move forward and apply through AB205.
The City too was being pleasant. “We look forward to the opportunity to collaborate and find a resolution that serves both Vistra and our community,” Mayor Wixom’s letter concluded.
And Vistra’s letter also asks the City to cease working on a Power Plant Master Plan. It’s unclear at this time if the City will continue with that effort, which it already started on, or if it would simply roll over that issue into work on updating the Waterfront Master Plan, which is being paid for with grants from the Coastal Commission.
That should be one of the first things the City Council will have to sort out. The Waterfront Master Plan hasn’t been updated since it was first written in the mid-1990s, and the power plant currently doesn’t have an official plan on the books for its future redevelopment.
The withdrawal of the BESS Project entirely from the City, also means the tens of millions of dollars Vistra said it would be getting in taxes and fees through construction of the BESS, is in jeopardy, too.
And with demolition of the old plant estimated at $40-plus million, Morro Bay’s Waterfront could remain in the shadows of the smokestacks far into the future.
