Port and Dynegy Come to Agreement on South Bay Power Plant Negotiations

Wednesday, 26 October 2011
Contact: Marguerite Elicone (619) 686-6222

The Port of San Diego and Dynegy, Inc. have come to an agreement with regards to the dismantling of the South Bay Power Plant.

In a letter received on October 25, 2011, Dynegy told the Port of San Diego that it is willing to approach the project of dismantling the power plant as a two-step process. This includes removal of the above-ground structures followed by a removal of subsurface structures and in-water structures to a depth of four feet below grade.

In August of this year, Dynegy began asbestos abatement at the plant, located at 990 Bay Boulevard on the waterfront of Chula Vista. Currently tenting is covering the plant's structures to prevent hazardous materials from escaping. Asbestos abatement is expected to continue through May of 2012.

The plant is owned by the Port of San Diego and was operated by Dynegy. It ceased operating on December 31, 2010 after the California Independent System Operator deemed that its power was no longer needed. Dynegy holds the lease to the plant, which is comprised of approximately 150 acres of land and 242 acres of water.

"This agreement is great news for the Port and the City of Chula Vista," said Commissioner Ann Moore, who represents the City of Chula Vista on the Board of Port Commissioners. "We now have a plan of action and will work with Dynegy and the City of Chula Vista to ensure it is carried out swiftly and safely."

Dynegy will begin the process of demolishing the plant structure by first obtaining a demolition permit from the City of Chula Vista and a Coastal Development Permit from the California Coastal Commission.

"Dismantling and demolishing the South Bay Power Plant is a critical step in our plans for the Chula Vista waterfront, which is one of the prime pieces of coastal real estate in all of California," said Scott Peters, Chairman of the Board of Port Commissioners. " Once that demolition permit is issued and approved by the California Coastal Commission, we'll be out there helping to knock it down."

"We have worked very hard and diligently to reach this agreement over the last 10 months," said Commissioner Moore.

The South Bay Power Plant has been in operation since 1960. San Diego Gas & Electric (SDG&E) was its first operator. In 1999, the Port acquired the plant from SDG&E, with the purpose of facilitating its removal from the bay front. Since then, the plant was operated by Duke Energy, LS Power and Dynegy.

In early 2009, the Port and Dynegy began the planning process for the power plant's demolition, based on the assumption that the California Independent Systems Operator (CAISO) would remove the plant's Reliability Must Run status.

Demolition and remediation of the plant's site is a multi-agency collaboration. Along with the Port and the City of Chula Vista, the California Coastal Commission, the San Diego Air Pollution Control District, Cal-OSHA, San Diego County Department of Environmental Health, the Regional Water Quality Control Board and the California Department of Fish & Game are also part of the permitting process.