Consumers Energy will sell its 13 hydroelectric dams in Michigan to a Maryland-based company for $1 each, under an agreement announced Tuesday.
The utility would sell the dams to Confluence Hydro, a subsidiary of Hull Energy, while entering a 30-year contract to buy power generated by the dams, under the terms of the agreement. Consumers said it's an effort to reduce long-term costs while keeping the dams operational.
The dams are along five rivers: the Au Sable, Manistee, Muskegon, Grand and Kalamazoo.
Collectively, they generate about 1% Consumers Energy's power capacity. The company said it launched a review process in 2022 to determine the best course of action for the dams’ future. Sri Maddipati, president of electric supply for Consumers, said the utility faced three options: sell, continue operations, or remove the dams.
The sale, which first requires approval from state and federal governments, could take place in 12 to 18 months.
Consumers Energy said it also hopes to renew the dams’ licenses, which are set to expire beginning in 2034.
"Today, we reached a step ... that we believe preserves the dams' past while powering their future," Maddipati said.
Community groups representing residents of the lakes created by the dams cheered the news Tuesday. Neighbors had feared the dams would fall into disrepair and need to be demolished, or that Consumers would choose to remove them. They said that would result in lost recreational opportunities and diminished property values.
But Bob Stuber, the president of the Michigan Hydro Relicensing Coalition, said he's still worried that the aging dams will be overlooked.
“After the sale of the power project, profit may get put before compliance,” Stuber said. The dams are old, he said, "and all too often the public gets stuck with the bill when these projects are no longer economically viable and sometimes the dam owners simply walk away from them.”
Stuber also said Consumers’ presentation of the issue felt “local-centric,” or that they’d reached out to local communities instead of their entire ratepayer base.
Ed Quinn, chief executive officer of the recently formed Confluence Hydro, said the dams would require “significant investment to continue operating well into the future.” Consumers Energy’s 55 dam employees will be offered jobs with Confluence Hydro, Quinn said.
Maddipati said the 30-year power purchase contract will be an incentive for Confluence Hydro to maintain the dams as well as provide the resources to make investments toward the dams. He said Consumers Energy’s strengths lie in electricity and natural gas, not the hydroelectric business.
“As it relates to the ability to operate the river hydros, this is a small and specialized part of our business,” Maddipati said. “The river hydro business and operating dams is a core part of Confluence and Hull Street's expertise, so they can bring that expertise to bear, where that was just a small piece of our business.”
Maddipati declined to specify the terms of the electricity-purchase arrangement, but said those details would emerge as the companies seek regulatory approval.
Editor's note: Consumers Energy is among Michigan Public's corporate sponsors.
