Synopsis: The owner of the plant, Dynegy, has submitted a required plan to comply with a new state policy aimed at phasing out the use of estuary, bay, and ocean water, which kills untold numbers of fish larvae swept into plants. But when use of water from the Morro Bay National Estuary would actually be terminated under Dynegy's plan is anyone's guess.
Four years after a federal court ruled that operating coastal power plants could no longer use estuary, bay, and ocean water for cooling, Dynegy, the owner of the Morro Bay Power Plant, has submitted a plan required to comply with a new state policy aimed at barring the use of such water. But Dynegy's plan could actually avoid compliance with the state policy—possibly forever. That is because of loopholes in the policy that Dynegy is seeking to exploit.
Morro Bay is one of a handful of very old California coastal power plants—51 years old in the case of Morro Bay—that are supposed to stop using such water by 2015 under the state policy adopted last year.
Two years ago, Dynegy told the Morro Bay City Council that "continued operation of the plant is unlikely" after 2015 because of the State Water Resources Control Board policy that was being drafted, virtually banning, in Dynegy's words, "the use of sea water for once-through cooling of power plants." That policy was finalized by the state board last October, and plant owners were required to submit compliance plans this spring.
Morro Bay is unique among the 19 remaining power plants on the California coast—it is the only one that is designated as not needed by the California Independent System Operator (CAL-ISO) for what is called grid reliability, the need for power from any particular plant to ensure that the state has enough electricity to meet its demands. If the Morro Bay plant's electricity is not needed, questions have been raised about why it is allowed to continue to operate, given the untold numbers of fish larvae that are swept into the plant and killed, further diminishing the marine life of the Morro Bay National Estuary, from which the water is taken.
All of the 19 power plants—which have varying dates for compliance with the new state policy—are given various numbers of years to decide whether to close, develop alternative cooling systems, or possibly even replace a plant with a new one.
Despite the Morro Bay plant being designated as unneeded and the plant owner already having said it would probably close it by 2015, Dynegy still filed a "compliance" plan that seems to say: maybe we will stop operating, maybe we will try to "repower" the plant with a new, smaller generating unit, maybe we will explore other alternatives, or maybe we will just keep barely operating—if the water board gives us that option, which the policy appears to allow.
It could be that Dynegy is stalling. The company, including the Morro Bay plant and the newer and productive Moss Landing plant outside of Salinas, among other of its assets, was almost sold twice in recent months and reportedly is still for sale with Dynegy in financial trouble. If Dynegy were able to show that the Morro Bay power plant could possibly operate indefinitely—instead of shutting down in 2015—that might increase its value to a buyer.
Not for the purpose of replacing it with a new plant. There appears to be virtually no chance that a new plant could be built due to new laws, federal regulations, and the energy market, which seems to be headed toward renewables. But the buyer at least could acquire an operating plant, rather than a closed one.
Right now the plant produces electricity for Southern California Edison under a contract with Dynegy during peak summer demand periods in Southern California. The plant operates at only about six per cent of capacity, and only two of its four original generating units still operate at all.
Dynegy's policy compliance plan contains some questionable assertions. For one, the plan states:
"The CEC (California Energy Commission) approved Morro Bay’s (meaning Duke Energy's) Application for Certification on August 2, 2004 (Docket No. 00-AFC-12) and incorporated therein the Morro Bay Power Plant Project, 3rd Revised Presiding Member’s Proposed Decision. The modernization project ultimately was not pursued."
Duke sold its plants in California and left the state in 2005 without seeking to build a new Morro Bay plant.
But by listing Docket No. 00-AFC-12, Dynegy seems to imply that Duke's Morro Bay power plant replacement project was officially approved by the CEC, which, if true, might have some value to a buyer because it has a docket number. However, that is not a docket number signifying that the CEC decision was "docketed," or finalized. It wasn't, so the CEC decision still is not final.
And, after seven years having passed since it was issued in 2004, some on the CEC staff feel certain the decision is invalid now because of age.
The state board policy has two tracks, one of which plant owners must comply with by dates assigned to their plants. Track 1 requires a plant to reduce its water intake for cooling to almost the equivalent of what is called closed-cycle cooling, in which a limited amount of fresh or possibly ocean water is recirculated within the plant for cooling purposes, much like water in a car radiator.
If the plant owner "demonstrates to the State Water Board's satisfaction" that compliance with Track 1 is "not feasible," Track 2 can be selected. Under Track 2, the owner must reduce the withdrawal (known as entrainment) of marine life in water for cooling to a "comparable level" that could be achieved under Track 1.
Dynegy claims Track 1 would not be feasible for the Morro Bay plant for a number of reasons, nearly all of which were endorsed by the CEC when it approved the Duke replacement project. However, the CEC staff found closed-cycle cooling to be feasible for a new plant, which Dynegy doesn't mention. But that was in 2004.
Federal air quality standards are tougher now, plus the CEC staff found that if a new plant used closed-cycle cooling, it would no longer be "coastal dependent" on ocean water, which would be prohibited anyway. Therefore, a new plant, if needed, should be built, for example, eastward where few, if any, people are exposed to the health risks from air emissions, and not in Morro Bay, a CEC staff report said.
So even though Dynegy says it has no specific plans for the plant, it proposes exploring technologies that might enable it to comply under Track 2 and "will submit an amended Implementation Plan with a revised implementation schedule that provides more definitive timeframes and/or approximate dates" after investigating possible ways to comply with Track 2.
"Dynegy currently does not have any definitive plans to retire or repower any of the Morro Bay Units," its plan states. "However, unless the Policy’s December 31, 2015 final compliance deadline for Morro Bay is suspended or otherwise extended, if Dynegy determines in its sole discretion that no commercially viable impingement and entrainment control measures capable of achieving compliance with Track 2 exist for any of the Morro Bay Units, Dynegy anticipates ceasing water intake flows to the Morro Bay Unit(s) by December 31, 2015."
But here's the catch. The state policy, at least as Dynegy sees it, could allow the plant to continue to operate through payment of money as mitigation for the continuing destruction of larvae taken into the plant in water used for cooling. It cites this language from the policy:
"The options you may choose from include . . . A demonstration that the interim impacts (destroying larvae) will be compensated for by providing funding to the California Coastal Conservancy, which will work with the California Ocean Protection Council to fund an appropriate mitigation project."
Dynegy's plan states, "For the period of time that any one of the Morro Bay Units operates beyond October 1, 2015, using once-through cooling without achieving final compliance and continuing until the Unit(s) achieves final compliance, Dynegy chooses to provide funding to the California Coastal Conservancy for purposes of working with the California Ocean Protection Council to fund an appropriate mitigation project that mitigates the interim impingement (meaning marine life pinned on water intake screens and entrainment impacts). The amount of the mitigation funding would be determined in the future."
But that isn't all. In order to determine appropriate mitigation projects, Dynegy would be asked to fund studies that, the policy states, "shall be at least 36 consecutive months and shall occur during different seasons, including periods of peak use when the cooling system is in operation (such as the summer months when energy is in high demand). Sampling shall be designed to account for variation in oceanographic conditions and larval abundance and behavior such that abundance estimates are reasonably accurate."
And even after such Track 2 controls are implemented for mitigation, "another entrainment study . . . shall be performed and reported to the State Water Board."
And there is more. "The need for additional entrainment studies shall be evaluated at the end of each permit period. Entrainment studies shall be
required when changing operational or environmental conditions indicate that new studies are needed at the discretion of the State Water Board."
Thus, use of once-through cooling at the Morro Bay plant apparently could go on indefinitely—despite the federal court decisions stating that
mitigation of impacts of once-through cooling as a substitute for terminating once-through cooling are prohibited. The state board policy does not mention those federal decisions.
