South Bay Power Plant Demo Stalled Due to Bankruptcy?

The ink had just dried on Dynegy’s South Bay LLC’s contract with the Port of San Diego to demolish Chula Vista’s defunct power plant when Dynegy Holdings filed for bankruptcy.

Dynegy’s website says of the November 7 filing, “South Bay is not a debtor under chapter 11 and is not directly impacted under the filing…. South Bay Dynegy is committed to fulfilling its contractual obligation….”

The October 25 agreement between Dynegy South Bay and the port — which is still in effect — calls for a bifurcated removal of the plant and a demolition timeline.

Ann Moore, Chula Vista’s port commissioner, said the agreement with Dynegy improves upon an earlier agreement secured by former port commissioner David Malcolm.

In a recent interview, Moore said, “I really believe it was a brilliant agreement, and [Malcolm] should be thanked, but there were holes in it. One of them was the period when Dynegy was supposed to either begin demolition or complete demolition. There was no discussion about that in the agreement. So the port had to deal with that because the agreement just said [Dynegy] would ‘diligently pursue and perform.’”

Though Dynegy was not compelled to negotiate a timeline or bifurcation, Moore said removing the structure first is a boon for Chula Vista. “There’s no doubt in anybody’s mind that the remediation of the site is going to be much more complicated and actually involve many more parties.” Several tenants — including San Diego Gas & Electric and Duke Energy — have occupied the site.

About a possible bankruptcy stalling the demolition process, Moore said, “At the end of the day, we do have the Duke guarantees that are very clear: if there’s a bankruptcy they will take over their obligations.”

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