A proposal to build the world’s largest Battery Energy Storage System facility is starting to become clearer in terms of what the project can offer the City of Morro Bay, but it’s also causing quite a stir.
The City recently released a study Vistra commissioned on the economic benefits of its $900 million project, but another document detailing what Vistra is actually offering to the City is being kept in confidence, despite a reporter’s attempts to obtain it.
And as an illustration of how contentious the issue could become, even discussing the negotiations in closed session has spawned a formal complaint against the City Council by a local activist.
A Battle Over Brattle
The Brattle Report was released May 31, but wasn’t widely known until the City started looking for a consultant to do what is essentially a “benefits analysis” of the project.
That’s when Estero Bay News discovered the report even existed, as it was mentioned in the Request for Proposals (RFP) as an information source for bidders, along with another document, an offer sheet sent to the City by Vistra.
EBN requested both under the California Public Records Act.
The Brattle Report has since been posted to the project archives on the City website (see: www.morrobayca.gov and Search “BESS project” to get to the archives). But the City refuses to release the offer sheet.
“I wanted to confirm that Vistra’s proposed Term Sheet is exempt from disclosure under the PRA due to deliberative process related to ongoing negotiations,” reads the official position from Community Development Director Airlin Singewald.
Closed Session Complaint
Vistra’s offer sheet was discussed on July 10 in closed session by the City Council and raised red flags for a local activist, former councilwoman Betty Winholtz, who filed a complaint with the City 2-days later charging a violation of the Brown Act, California’s open meetings law.
In her complaint, Winholtz wrote, “On July 10, 2024, the City Council held a closed session meeting to discuss a Community Benefits Agreement with Vistra Corporation. This action violated the Brown Act because the City Council took up a matter in closed session which the Act does not permit to be discussed in closed session.”
She pointed out that the law says what can and can’t be discussed in closed session and lays out the legal remedy for violations, namely lawsuits and “the judicial invalidation of them upon proper findings of fact and conclusions of law.”
To that not-so-subtle threat she demanded the City Council do a “formal and explicit withdrawal,” from any deals made; it disclosed at a future meeting all documents related to the action taken; and the Council give the public a chance “for informed comment by the members of the public at the same meeting.”
City Gives a Little
Her demands were agendized for another meeting on July 23, and the City Attorney restated his previous position that no actions were taken at the July 10 closed session that required reporting under the Brown Act.
But Winholtz’s letter caught the council’s eyes and led to a modicum of disclosure.
City Attorney Chris Neumeyer in official minutes, said, “However, in the interests of transparency the Council asked that a ‘report out’ be made on otherwise confidential information.”
The item, he continued, “concerned Council review under Govt. Code 54956.8 with staff of a potential community benefits agreement with Vistra Energy after they sent a proposal to City.” (That proposal was the offer sheet the City has declined to release.)
“A potential community benefits agreement includes potential real estate transactions, such as the deeding of Lila Keiser Park to the City and joint real estate ventures to generate City income, as well as other related potential benefits,” Neumeyer’s report said. “No commitments were made. No final action was taken on any agreement or contract with Vistra Energy.”
But that’s not to say nothing at all came of the discussion. “Rather, the Council conferred with City staff on a non-binding, tentative response to Vistra Energy’s proposed community benefits agreement to continue the conversation.
“Vistra Energy was informed that the City may amend the response subject to further City staff review and public input.”
Going Public
The City Council apparently plans to eventually bring the public in on the deal making.
“The Council will seek community feedback and input,” Neumeyer’s report said, “on the community benefits agreement subsequent to the initial rounds of non-binding and tentative discussions.
“Furthermore, no community benefits agreement will be approved without being agendized at a public Council meeting for review and discussion.”
As for Vistra’s offer sheet, which the City is still keeping to itself, a source close to City Hall said it was basically what the Brattle Report identified (see related story) and consisted mostly of increased taxes that the City is entitled to without a special deal.
Location is the Key
But all these negotiations, while they could lead to a sweetheart deal for the City in terms of boosted tax revenues, will still come down to the law, in particular the California Coastal Act, and its limitations on uses within the Coastal Zone, which the power plant is entirely inside.
In a letter from Coastal Commission staff commenting on the BESS project, the commission’s position boils down to a BESS not being a so-called “coastal dependent use,” that is needing access to the water to work.
The old power plant, as well as Duke Energy’s proposal to replace it, used seawater to cool steam, and thus by definition were coastal dependent.
But the power plant is dead, so too any attempts to replace it with another energy generator, and instead the BESS Project is being put forth.
The Commission’s letter also points out the site is subject to the same kinds of coastal hazards — i.e. tsunamis, sea level rise and flooding by Morro Creek — as the City’s proposed new sewer treatment plant on Atascadero Road, a decision that forced the new plant to be moved inland at great expense.
“It has become clearer,” the Commission’s Aug. 2 letter said, that there “are likely significant development constraints to that — or other — development in that area.”
Normally, as a rule of thumb, uses forbidden in the coastal zone must provide a greater than normal public benefit to get approval.
Whether or not the BESS can satisfy this requirement, could rely largely on what’s in that offer sheet and the City’s counteroffer, and ultimately, whatever development deal the City works out with Vistra.
