Consumers Energy Plans to Sell 13 Aging Dams to Private Equity Firm in Controversial Deal

Consumers Energy is looking to exit one of its most unprofitable power generation businesses by selling 13 aging dams to a private equity company, a plan that has drawn sharp criticism from environmental groups, local communities, and consumer advocates.

The utility plans to sell the dams to Confluence Hydro, a subsidiary of Maryland-based private equity firm Hull Street Energy, in a deal valued at just $13 total — roughly $1 per dam. Included in the sale is approximately 32,000 acres of surrounding land that currently supports the reservoirs and their ecosystems.

The Numbers Behind the Sale

Consumers officials say the sale will save money for ratepayers by eliminating an unprofitable hydropower business that currently generates just 1 percent of the utility's annual electricity at nine times the cost of any other source.

But the details reveal a more complex financial picture. Under the plan, Consumers would buy the power back from Confluence Hydro at $160 per megawatt hour — double the market rate for comparable power — with annual increases of 2.5 percent.

The company projects this arrangement would generate between $270 million and $278 million in profits for Consumers over the 30-year contract term.

"We're really struggling to see where the benefit is to the customers," said Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity, which represents industrial power customers.

If approved by the Michigan Public Service Commission, the deal would push total ratepayer costs for the sale-and-buyback plan to $3.4 billion over the life of the contract, or approximately $1,800 per person if divided equally among Consumers' 1.9 million ratepayers.

Criticism From Multiple Angles

Critics call the arrangement double dipping by a utility that has already reaped untold millions from the century-old dams. Some point to incentives written into Michigan's 2023 clean energy law, which was supposed to encourage new renewable energy developments but instead allows monopoly utilities to profit from renewable power sales.

"This is not about profiting from the power, but about ensuring reliability and value for customers under established regulatory standards," company spokesperson Trisha Bloembergen said in response to questions.

The Michigan Department of Natural Resources has taken the rare step of intervening in the case, strongly opposing any attempts to shrink the project boundaries around the dams. The land surrounding the dams provides benefits from fish, wildlife, and public recreation.

"The DNR has witnessed a troubling pattern whereby FERC is increasingly allowing dramatic reductions to project boundaries, both as stand-alone requests by licensees and in relicensing proceedings, and is largely ignoring recommendations by resource agencies to retain existing project boundaries for the benefit of the public," DNR testimony stated.

Land Concerns

A significant point of contention is what will happen to the 32,000 acres of land included in the sale. Environmental lawyers warn that Confluence Hydro could seek to sell off project lands not required for dam operations, potentially releasing up to 15,200 acres from the dams' federal project boundaries.

Confluence Hydro spokesperson Natalie Joubert says the company has no plans to sell or develop any of that land. "Confluence Hydro looks forward to maintaining all public access that exists under Consumers Energy's ownership," Joubert said.

But the Michigan Department of Natural Resources is concerned. The agency has argued that public access to land near the dams should be maximized to mitigate negative effects of damming rivers.

Local Community Divisions

Some local communities support the sale, arguing it preserves the dams and the reservoirs that form their economic and recreational lifelines. The Lake Allegan Association, which supports the sale, says Confluence Hydro representatives have committed to maintaining the dams long term.

"Any of these options, in our opinion, are lower-cost to the customers than what Consumers is proposing," Williamson said.

But other communities fear losing the ponds and recreation areas if the dams are eventually decommissioned. Lawyers representing Croton and Big Prairie townships say they don't want to speculate about Confluence Hydro's plans, but warn that decommissioning would have devastating impacts on local economies.

The Bigger Picture

This deal comes at a time when Consumers Energy has already won approval for significant rate hikes. The utility has sought multiple rate increases in recent months, with regulators approving about $800 million in electric rate hikes during the past year.

The dam sale represents another chapter in the utility's ongoing regulatory battles, as Michigan state officials and consumer advocates continue to question whether monopoly utilities should be allowed to profit from renewable energy sales at rates significantly higher than market prices.

What Comes Next

The Michigan Public Service Commission is reviewing the deal, with the decision expected in coming months. Environmental groups, local communities, and consumer advocates are preparing testimony and legal arguments to shape the outcome.

The case could set important precedents for how Michigan regulates utility-owned renewable energy and how the state balances competing interests among ratepayers, environmental protection, and local community needs.