Michigan Department of Natural Resources Director Scott Bowen had offered a rebuke of a state electricity company’s plan to sell its hydropower dams, warning the facilities will become the state’s liability if the sale proceeds.
The department has intervened in Consumers Energy’s plan to sell its suite of 13 hydroelectric dams to a Maryland private equity firm. It’s the first time the department has gotten involved in a case before Michigan’s energy regulators, who will rule on the sale, DNR Director Scott Bowen said, “a rare thing for us.”
The dams are roughly a century old and stop the flow of some of Michigan’s most prominent rivers including the Manistee and Au Sable. Consumers is regulated by the Michigan Public Service Commission, so the commission has some oversight in their management while they are Consumers property.
Bowen predicted the dams will become the state’s liability if the sale to Confluence Hydro is approved.
“Taking them and the protection of the (Michigan) Public Service Commission away and giving it over to private equity is just a recipe for us to manage them,” Bowen said during a Natural Resources Commission meeting Wednesday.
Consumers Energy is asking the Michigan Public Service Commission to approve its sale of the 13 dams for $1 each to Confluence Hydro, LLC, a subsidiary of a private equity firm Hull Street Energy.
It will buy the power back for $160 per megawatt hour, about twice the typical price for hydropower. The high price is supposed to incentivize Confluence to maintain the dams, Consumers officials told the MPSC in their filing.
“Selling the dams to Confluence Hydro is the best and most affordable option for Consumers Energy’s customers and the communities we serve,” Consumers Energy Spokesman Brian Wheeler said. “We firmly stand by our sale agreement for the dams, and we’re focusing our work on achieving that goal.”
“The views that were expressed at the NRC meeting are out of step with what we have heard from communities and most stakeholders regarding the future of these sites.”
Members of communities near dam impoundments say they want the dams left intact because they generate recreation opportunities. Confluence Hydro CEO Ed Quinn previously told The News the company heard those residents “loud and clear.”
“Our plan is to maintain, upgrade and relicense the dams so they continue to operate safely and generate clean, reliable energy for the long term,” Quinn told The News in November.
Why Michigan DNR is intervening in Consumers dam sale
In its motion to intervene in Consumers’ case before the MPSC, the DNR said it is uniquely situated to provide commissioners with insight and data about the unusual transaction proposed between the utility company and Confluence Hydro.
DNR Habitat Management Unit Supervisor Jessica Mistak previously told The News the department would like state or federal regulators to require the dams’ future owner to account for the future costs of decommissioning the dams.
The state already owns 204 dams, Bowen said during the NRC meeting. He said Consumers’ proposed sale to Confluence Hydro is “a long-term way of getting 13 more of them, only bigger, bigger problems.”
The DNR asked for $50 million last year to address problems at its state-owned dams but was given zero, Bowen said.
“We keep getting ‘no,'” he said. “We just have to have an honest conversation with serious people about what we’re going to do with these dams,” Bowen said.
Michigan NRC plans to oppose Consumers dam sale in resolution
Opponents to the sale gave a presentation to the Michigan Natural Resources Commission on March 11. The Natural Resources Commission sets Michigan’s hunting and fishing rules.
The dams are on “hugely important rivers” from a fishing perspective, said Bryan Burroughs, Michigan Trout Unlimited Executive Director, said during the presentation. Some of the dams already have been harming fish by warming water downstream and changing other water characteristics, he said.
“We’ve been living all this time with these incredibly unique rare resources that already are not what they would be naturally,” he said. “We’ve been living with that for over 100 years.”
Tom Baird, a former NRC chair and former President of Anglers of the Au Sable, said during the presentation that the dams would fall into further disrepair under private equity ownership because “considerations of repair, maintenance, safety upgrades, etc. are all viewed as cost items to be minimized.”
Natural Resources Commissioner Brandon Fewins, of Traverse City, said he would draft a resolution in opposition of the dam sale.
“We don’t have a vote,” he said during the meeting, “but we have a voice. As an NRC I think we should be using our voice more often on these types of issues.”
Commissioner Mark Eyster, a former state administrative law judge who has worked on cases before the Michigan Public Service Commission, described them as an “uphill fight” for groups opposing regulated utility companies such as Consumers and DTE Energy.
“The utilities generally have all the cards in their hand when they show up to the table,” he said.
None of the commissioners spoke in favor of the proposed sale.
ckthompson@detroitnews.com
This article originally appeared on The Detroit News: DNR takes rare step, intervenes in Consumers Energy dam sale proposal
Reporting by Carol Thompson, The Detroit News / The Detroit News
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