By Kennedy Maize
Michigan regulators have granted Consumers Energy a two-month delay in dealing with its controversial plan to sell 13 small and elderly hydroelectric plants to a Maryland-based private equity firm.
The Jackson, Mich., investor-owned utility last week (Sept. 8) asked the Michigan Public Service Commission to remove a decision on the company’s unusual hydro selloff from its scheduled Sept. 10 meeting until November. The utility said it wants “an opportunity to resolve the issues in this case cooperatively” with the parties to the case. The commission agreed.
In an October 2025 filing, Consumers unveiled its plan to spin off 13 very old and quite small hydro plants to Confluence Hydro, a subsidiary of Maryland-based private equity investor Hull Street Energy, for $1/dam, plus a convoluted profit-sharing scheme with Confluence. The hydro dams — built along five Michigan rivers between 1906 and 1935 — total 132 MW of generating capacity. One of the projects — the 9-MW Croton Dam on the Muskegon River — is listed on the National Register of Historic Places.
The deal has sparked political controversy since Consumers dropped the 2,284-page filing at the commission. The motive for the selloff – which is a not entirely accurate description of the complex deal – is, surprise, money.
Under the deal, Consumers would agree to buy back the power from Confluence at $160/MWh — which critics say is double the current rate for purchased hydro power — then sell it back to its Michigan customers, recovering the costs in rates. According to a report by Michigan media company MLive, the deal could net Consumers Energy $270 million.
It also could save the company hundreds of millions in costs to relicense the dams. The filing asserted that the deal “allows Consumers Energy to transfer substantial future operational and environmental liabilities and risk to Confluence and because it is the lowest-cost option for the future of these plants. The transaction also benefits the state of Michigan and the numerous local communities where the Facilities are located by preserving the dams and related impoundments, which provide important economic and recreational benefits in those communities and to the state.”
The earthen dams face renewal of their Federal Energy Regulatory Commission licenses between June 2034 and May 2041. The utility says. “As the relicensing process – which can take up to seven years to complete – approached, Consumers Energy began evaluating the future of the Facilities. The aging plants require significant capital investments in order to maintain their FERC operating licenses.” Confluence, not Consumers, would face those costs.
Consumers Energy is already involved in an expensive and troubled project at the Hardy dam, one of the 13. It is a 1931 dam generating 31.5-MW of power, the most in the group. The company is under FERC orders to repair the spillway as a flood control measure, a $350 million project that was scheduled to start construction in 2023 but has now been delayed that until January 2029, according to an MPSC filing.
The Hardy project is also dependent on the Confluence sale. In the filing, the utility said, “The requested two-year delay allows time for review and approval of the proposed sale and time for the new licensee to coordinate construction activities.”
The Consumers-Confluence compact has attracted three different groups of opponents: consumer advocates, who fear Confluence could walk away when the cost of relicensing hits, leaving the customers holding a very expensive wet bag; environmentalist who fear the consequences if dams end up an abandoned mess; and sport fishing interests, who zealously protect the state’s legendary and lucrative waters. The deal requires approval from both the MPSC and FERC.
Among the opponents of the Consumers-Confluence deal are Michigan Democratic Attorney General Dana Nussel and Democratic Governor Gretchen Whitmer.
The MPSC proceedings have included a contentious March public hearing, a round of “briefs,” which were not particularly brief, yielding “three public transcript volumes, plus a confidential transcript, which, when combined, total 1,322 pages of testimony,” according to MPSC Administrative Law Judge James Varsetti, who is managing the case.
In June, Varsetti advised the commission to kill the deal. In a 312-page opinion, Varsetti recommended that the best course of action to serve the utility’s customers and Michigan’s outdoor environment would be that “the Commission reject the proposed transaction.”
Varsetti was skeptical of virtually every aspect of the utility’s deal with the private equity firm. He rejected numerous ways the companies offered to condition the deal to overcome the shortcomings, including fears about whether the liabilities could revert back to customers in the future. Varsetti’s recommendations are not binding on the commission.
The Quad Report, covering energy policy and politics