Michigan Gov. Gretchen Whitmer unveils opposition to Consumers Energy's plan to sell its dams

DETROIT — Gov. Gretchen Whitmer announced her opposition to Consumers Energy's plan to sell its 13 hydropower dams to a private equity company in a Thursday letter to state energy regulators, warning the deal "would impose unacceptable safety and financial risks on Michiganders."

The Democratic governor urged Michigan's three Public Service Commissioners, all of whom she appointed, to reject the sale unless Consumers and buyer Confluence Hydro change the terms of their deal to include more safeguards to protect the dams from falling into disrepair and becoming a public liability.

Whitmer pointed in her letter to recent failures and other problems with dams in Michigan, including the Edenville and Sanford dams owned by Boyce Hydro that failed in 2020, the run-down and privately owned Au Train Dam in the Upper Peninsula that lost its federal license to produce power and the feverish fight to prevent the Cheboygan dam from failing during widespread flooding this spring.

"The proposed sale of these 13 dams does not provide sufficient safeguards to prevent these failures from happening again," Whitmer told commissioners in her letter. "The deal lacks firm, enforceable protections to ensure the dams will be properly maintained and safely retired when they are no longer economical to operate."

Why Consumers Energy wants to sell its dams

Consumers Energy wants to sell its 13 hydropower dams to Confluence Hydro, a subsidiary of Maryland private equity company Hull Street Energy. Consumers would continue to buy the electricity generated by the dams through a power purchase agreement, but at twice the normal price for hydropower. That deal would give Confluence Hydro an incentive to maintain and operate the dams, Consumers executives have said.

The 13 dams average about 100 years old. They are the Calkins Dam on the Kalamazoo River, the Webber Dam on the Grand River, the Hardy, Rogers and Croton dams on the Muskegon River, the Hodonpyl and Tippy dams on the Manistee River and the Mio, Alcona, Cooke, Foote, Five Channels and Loud dams on the Au Sable River. They collectively generate about 1% of the company's power supply.

The sale announcement came after a years-long planning process in which Consumers weighed whether to relicense the dams and continue using them, sell them or decommission them. Selling them to Confluence Hydro would allow communities to keep the impoundments they rely on for tourism and recreation while also transferring the liability of the dams to Confluence Hydro and avoiding the cost of decommissioning them, Consumers executives have said in defense of the deal.

"If they produce energy, we pay for it, but the value is more than just the energy capacity or the renewable energy credits that get produced," Rick Blumenstock, Consumers executive director of electric supply engineering, told Michigan Natural Resources Commissioners in April. "It's avoidance of future capital that you noted earlier, as well as the full transfer of all future liabilities associated with the dams."

Some community groups and residents who live near the dams support the sale. Croton Township Trustee Andy Fias, who lives near Croton Dam in Newaygo County, said the dam's impoundment significantly raises property values in the township.

"One third of my township's $200 million in taxable value comes from the water frontage afforded by these dams," Fias said in an Aug. 7 press release in support of the sale. "It's estimated that the Croton Dam attracts 13,000 fishing trips to our area each year. Without the MPSC's approval of this sale, that could mean removal of the dams and devastation for our property values and local wealth."

Opponents line up against dam sale plan

A coalition of conservation and fishing groups praised Whitmer's Thursday letter, describing Consumers' plan to sell its dams as "misguided."

"There are better solutions for Michigan's ratepayers, rivers, dam safety and the public's interest," said Howard Learner, an attorney representing Anglers of the Au Sable, Great Lakes Council of Fly Fishers International, Michigan Steelhead and Salmon Fisherman's Association, Michigan Trout Unlimited and Michigan Hydro Relicensing Coalition, groups that intervened in the sale case before the MPSC.

"It's time to finally stop the dams sale. People of goodwill should focus on better solutions for each of the 13 dams individually, which are on five different rivers with different biological and fisheries considerations, in different communities, and require different repair costs for dam safety."

Whitmer's letter is the latest addition to mounting opposition to the dam sale.

Attorney General Dana Nessel in July called on the Michigan Public Service Commission to reject the deal because Consumers and Confluence executives have said they would not agree to any conditions, such as a requirement that Hull Street Energy assume responsibility for the dams if one of its subsidiaries goes bankrupt.

Whitmer echoed many of those concerns in her Thursday letter to commissioners. She said the sale agreement "lacks firm, enforceable protections to ensure the dams will be properly maintained and safely retired when they are no longer economical to operate."

"In short, this deal allows the private equity firm and its investors to capture the financial benefits while nearby residents and Michigan taxpayers bear much of the long-term risk," Whitmer wrote.

In June, Administrative Law Judge James M. Varchetti recommended the sale "simply be rejected" because of his concerns that Confluence Hydro could safely maintain the dams.

The Michigan Department of Natural Resources also took the rare step of intervening in the case before Michigan Public Service Commissioners, who will determine this year whether or not to approve the sale. DNR Director Scott Bowen criticized the deal and predicted the dams would eventually become the state's liability if the sale is allowed.

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