- State utility regulators have set a December deadline to rule on the Consumers Energy dam sale
- Unless the utility can show negotiations with sale critics are bearing fruit, regulators will make a decision Dec. 17
- Consumers calls the sale best for its ratepayers; critics contend it’s too risky and expensive
Michigan regulators on Thursday gave Consumers Energy one last chance to negotiate with critics of its controversial plan to sell 13 Michigan dams to a private equity company.
But unless those negotiations are fruitful, this is the last extension regulators will give before deciding whether to approve or reject the sale on Dec. 17.
“Absent a firm showing that a critical mass of parties beyond Consumers remain interested in settlement, this will be the final extension,” said Dan Scripps, chair of the Michigan Public Service Commission.
The three-person commission was originally poised to rule on the sale in September, but Consumers has twice sought last-minute extensions as it works to win over critics who see the sale as a bad deal for ratepayers and the public.
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After a month of talks with little progress, company officials say they still hope to reach a settlement.
“We are providing for a little more time to reach a constructive agreement that will be a win for our customers, Michigan and the communities we care about,” said Chris Fultz, the utility’s senior vice president of electric supply.
But sale opponents — including state environmental regulators, utility ratepayer advocates, Michigan Attorney General Dana Nessel and outside environmental groups — argue the company is merely stalling for time.
“It’s time for Consumers to stop the delay,” said Bob Stuber, executive director of the Michigan Hydro Relicensing Coalition. “They have had plenty of time.”
For years, Consumers has been looking to exit a hydropower business that generates little power at an enormous cost. The 13 century-old dams on the Au Sable, Grand, Kalamazoo, Manistee and Muskegon rivers generate just 1% of the utility’s annual power output and need hundreds of millions of dollars in upgrades to keep operating.
Rather than making that investment or decommissioning the dams, Consumers wants to sell them for $1 apiece to Confluence Hydro, a newly created subsidiary of the Maryland private equity firm Hull Street Energy.
Consumers would then commit its customers to buy back the power generated by the dams at twice the market rate, plus a $270 million cut to Consumers, which has vowed to funnel those profits into a dam safety fund. The deal would cost $3.4 billion over the life of the 30-year contract, or about $1,800 per person if divided equally among Consumers’ 1.9 million ratepayers
Consumers contends that is hundreds of millions cheaper than keeping or demolishing the dams, the other two options it explored.
But sale critics argue the deal contains loopholes that would allow Confluence to reap profits from the sale while failing to invest in the dams’ maintenance or eventual removal, ultimately leaving taxpayers to inherit vast costs and public safety risks should the dams fall into disarray.
Some of them also question whether a sale is the cheapest option.
For nearly a year, Consumers refused to budge as critics sought changes to the deal. The utility’s stance changed after an administrative law judge urged the Public Service Commission to reject the sale, calling it “highly problematic” and “inconsistent with the public interest.”
Since its first extension request in September, utility officials have met repeatedly with sale opponents but shown little interest in making meaningful concessions, Nessel told Bridge.
She said she remains opposed to the sale and doesn’t believe further settlement talks will be fruitful.
“We know what happens when you have a private owner of critical infrastructure, and they decide they’re not making money anymore, and they stop proper maintenance of a dam,” Nessel said. “I don’t think we want to relive that.”
Unless the parties file a settlement agreement or collectively ask for more time by Dec. 9, Scripps said, the commission will rule on the sale plan at its Dec. 17 meeting.
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