Michigan Dams: A Risky $1 Deal?

Michigan Natural Resources Commissioners on Wednesday scrutinized a proposed deal where private equity firm Confluence Hydro would acquire Consumers Energy's 13 hydropower dams for $1 per dam. Executives from both companies presented their case, facing pointed questions regarding the financial viability of the transaction.

Commissioners expressed skepticism about why Confluence Hydro believes it can profit from the dams when Consumers considers them a financial burden. Consumers' representative argued that selling the dams is a more cost-effective option for customers than decommissioning or continued operation, despite a 30-year power purchase agreement with Confluence at roughly double the standard hydroelectric power cost.

Concerns were also voiced about the potential loss of state regulatory oversight. Unlike Consumers, Confluence Hydro would not be regulated by the Michigan Public Service Commission, raising fears of reduced protection for the state's public trust resources. The Natural Resources Commission, which sets hunting and fishing regulations, has no vote on the sale but highlighted its significant implications.

Confluence Hydro executives stated their commitment to long-term operation and maintenance of the dams, with plans to relicense them into the 2070s. They indicated that revenues from the power purchase agreement would fund necessary upgrades and operations, dismissing notions of being real estate developers interested in selling off associated land. The Michigan Public Service Commission is expected to rule on the sale later this year.