Consumers Energy Plans $270 Million Payday From Sale of Kalamazoo River Dams, Critics Call It Double Dipping

Utility to Buy Back Power at Double Rate While Selling Dams for $1 Each

Consumers Energy has announced plans to sell 13 aging hydroelectric dams across Michigan, including one on the Kalamazoo River, to a private equity subsidiary for $1 apiece while buying the power back at double the market rate. The plan would bring the utility at least $270 million in new profits over 30 years while ratepayers foot the bill.

Critics are calling it double dipping by a utility that has already reaped untold millions from century-old dams.

It comes with a 30-year power purchase agreement in which Consumers will pay about twice the normal cost of hydroelectric power.

Consumers Energy officials have described the sale as a cost-saving measure for its ratepayers, but regulatory filings reveal a different picture. The company wants to charge ratepayers an 8.75% return on power it buys from the dams, generating between $270 million and $278 million over 30 years.

What Dams Are Included

The 13 dams being sold are located on the Kalamazoo, Grand, Muskegon, Manistee and Au Sable rivers. The Calkins Bridge Dam on the Kalamazoo River is one of the structures planned for sale.

The Calkins Bridge Dam on the Kalamazoo River is one of 13 slated for sale as Consumers Energy looks to exit an unprofitable hydropower business.

The sale would allow Consumers and its customers to avoid vast repair or demolition costs by enlisting new owners who have vowed to keep the dams intact.

How The Deal Works

Confluence Hydro, a newly created subsidiary of Maryland-based Hull Street Energy, would buy the 13 dams for $1 apiece. Confluence would then sell the power back to Consumers at $160 per megawatt hour — double the market rate for comparable power — plus a 2.5% annual increase.

Confluence Hydro would buy the dams for $1 apiece, then sell the power back to Consumers at a $160 per megawatt hour — double the market rate for comparable power — plus a 2.5% annual increase.

The deal would allow Consumers to collect an 8.75% return on the power it buys from the dams, generating between $270 million and $278 million over 30 years.

Ratepayer Impact

The sale would push ratepayers' costs closer to $174 per megawatt hour. Total ratepayer costs for the sale-and-buyback plan would reach $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.

If approved by the Michigan Public Service Commission, the profit margin would push total ratepayer costs for the sale-and-buyback plan to $3.4 billion over the life of the 30-year contract.

Local Opposition

Local natural resources advocates have joined state regulators in scrutiny over the plan. Mesick residents have strong feelings about keeping the dams, with Village President David Clous noting the impact on hundreds of miles of river.

If the dams go away, it doesn't just affect the dam, it affects hundreds of miles of river.

Tim Birtles, director of the Cadillac region's Trout Unlimited chapter, echoed regulators' concerns about safeguards to prevent Confluence Hydro from leaving the agreement.

My personal concern is that if the private entity purchases the dam and they decide to walk away from it, then the state of Michigan is going to be stuck with it.

Regulatory Process

The sale is pending final approval from a panel of three Public Services Commission staff. Their decision on the case is expected between late 2026 and early 2027.

During testimony, Consumers Energy Executive Director of Engineering Rick Blumenstock said that the dams would be decommissioned if regulators modified or blocked the sale.

Legal Loophole

Utilities typically aren't allowed to profit off power sales. Their profits come from building infrastructure that customers pay off gradually, plus a guaranteed rate of return, in a process called depreciation.

But noting that hydropower is renewable energy, Consumers officials argue the sale-and-buyback plan makes them eligible for an exception that lawmakers carved out in 2023 for utilities that sign long-term renewable energy contracts.

The intent, said state Sen. Sam Singh, an East Lansing Democrat who cosponsored the law, was to speed the energy transition and lower costs by encouraging competitive bidding for renewable developments.

Company Response

Consumers officials contend the sale is a win for ratepayers and the small communities where life revolves around the artificial lakes created by the dams.

This is not about profiting from the power, but about ensuring reliability and value for customers under established regulatory standards.

An administrative law judge will issue a preliminary recommendation on the proposed sale in June. Consumers said the Public Service Commission's final decision is expected in August.