JACKSON, MI – Consumers Energy is officially in negotiations to sell a fleet of costly hydroelectric dams it says are too expensive to operate.

According to a request to raise electric rates filed with Michigan regulators this week, the utility company has entered negotiations for a potential sale of its river hydro generation fleet, which includes 13 dams and associated facilities.

On Wednesday, June 4, officials confirmed that sale negotiations were underway but declined to say whether the utility is negotiating with a single buyer or multiple parties.

“We believe a sale of the dams is the best path forward for our customers,” said Brian Wheeler, Consumers spokesperson. “Negotiations are in progress, although we need to be clear we have not reached a final decision.”

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In its request for bids, Consumers indicated a “strong preference” for a buyer who would continue to operate the dams, which would be sold for $1 apiece. Consumers would then buy their output through a long-term power purchase agreement.

The utility announced that sale negotiations were happening in a message to employees and members of river community groups on Wednesday. The company said the decision-making process is complex and covers a significant number of details.

The utility first said it would consider selling the renewable energy facilities in August 2023. A request for proposals went out last year.

Many residents in towns around the dams are anxious about potential changes at the structures and impoundments behind them. During meetings the utility hosted in 2023, residents expressed concerns about lost recreational opportunities, impacts on private property, water wells and environmental concerns like impounded silt buildup.

Contrarily, conservation groups want to see the dams removed, arguing that the structures warm rivers and block fish migration.

Some stakeholders warn that a new operator that isn’t a state regulated utility could have unintended negative consequences.

Bob Stuber of the Michigan Hydro Relicensing Coalition, a collection of hunting and fishing groups which advocates for restoring rivers and removing dams, says the organization adamantly opposes the utility selling the dams.

As a regulated utility, Consumers can seek cost recovery for capital improvements and approval for rate hikes from the Michigan Public Service Commission. But there would be no incentive for a new owner to invest in needed upgrades should those 13 dams be sold to a company not overseen by the MPSC, Stuber argues.

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Stuber’s group points to the Edenville Dam flooding disaster as a potential consequence of that sort of ownership structure.

A state task force recommended reforms in the wake of the Edenville disaster that would require potential buyers to prove they could safely operate a dam, but subsequent safety legislation has gone nowhere in the past five years.

Consumers officials have said the company experiences an approximately $150 million-plus annual loss on its hydroelectric fleet because of necessary upgrades.

In this week’s rate case filing, Consumers said it would need to revisit the decision to decommission or relicense for continued operations should the potential sale of the dams fall apart. The utility also sought continued deferral of cost recovery for capital investments at the dams through the rate case test year.

“It looks to me like Consumers is looking at how they can get out of the hydropower business with the smallest black eye because somebody is going to be unhappy,” Stuber said. “Local residents … don’t want these impoundments gone.”

Consumers Energy’s federal operating licenses on the Au Sable, Grand, Kalamazoo, Manistee, and Muskegon rivers are set to expire between 2034 and 2041. Six dams are on the Au Sable, three on the Muskegon, two on the Manistee, and one each on the Grand and Kalamazoo rivers.

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