$270M pledged to sweeten Michigan dam deal with Bethesda-based firm

Consumers Energy has sweetened the pot for the proposed sale of 13 hydroelectric dams in Michigan, protecting against “unforeseen safety issues” with a pledged $270 million Hydro Safety Fund.

Consumers hopes to sell the dams, including the Calkins Bridge Dam in Allegan and the Webber Dam in Ionia County, to Hull Street Energy LLC — a private equity firm based in Bethesda — and the company’s wholly owned subsidiary, Confluence Hydro LLC, for $13, according to reporting by The Detroit Free Press.

The sale is currently under consideration by the Michigan Public Service Commission. In June, Administrative Law Judge James Varchetti recommended the body reject the sale, writing “the proposed transaction is inconsistent with public policy and public interest.”

If the sale goes unapproved, the utility provider intends to decommission the dams — removing the infrastructure and draining the reservoirs.

The Hydro Safety Fund would be state administered, according to a release, and would comprise shareholder dollars the company would otherwise receive from the sale.

“This safety fund directly addresses concerns some have raised about the future of the dams,” wrote senior vice president of electric supply Chris Fultz. “We have heard and understand these concerns, and this filing reflects our commitment to demonstrating good faith and accountability.”

Confluence Hydro has also offered a pair of updates, including a community engagement plan “focused on proactive and productive conversations” and a “robust suite” of recreational and conservation programs.

“We’re excited to continue the legacy of these dams and maintain the high standards for community engagement and public access (set by Consumers),” wrote Confluence COO Jillian Lawrence.

Confluence Hydro also wrote it won’t reduce land in forthcoming relicensing processes, unless “doing so serves public interests and is informed by thorough stakeholder consultation.”

The sale includes a power purchasing agreement, through which Consumers would purchase energy from Confluence at a starting rate of $160 per megawatt-hour — approximately double the going market rate for comparable hydropower. The three-decade agreement includes an annual price increase of 2.5%.

A handful of government bodies, including Allegan County, have passed resolutions in support of the sale.

“I think (the sale) is the best solution we have at this time to keep the dam operational and to save the integrity of Lake Allegan,” Board Chair Scott Beltman said May 28. “The vast majority of the people that I’ve talked to … are supportive of this sale, and they feel it’s the best option to save that beautiful lake and area.”

Reporting by Mitchell Boatman, Holland Sentinel / USA TODAY Network via Reuters Connect.