The Future of Hydroelectric in Michigan

Consumers Energy is undertaking a review of our 13 hydroelectric facilities as part of our obligation to deliver safe, reliable, affordable, and clean energy for our 1.8 million electric customers. We understand that many communities feel a strong connection to these facilities due to their history and role in tourism, recreation, and community identity. The conversation regarding the facility near you is part of a broader effort to ensure community input into our review. 

Consumers Energy, as the owner and licensee, must file with the Federal Energy Regulatory Commission (FERC) a notice of intent to apply for a new license at least five years before the existing license expires. The current licenses expire within the next 12 to 22 years across the 13 hydroelectric facilities with 11 of those licenses expiring in 2034. Often licenses have 50-year terms assuming the licensed operations remain in compliance.

The upcoming conversations allow us to share information and gain feedback from each community.

Many issues are addressed when considering relicensing a hydroelectric project. Issues involved include environmental, land, recreation, wildlife, water quality, and cultural and aquatic resource issues. Federal agencies, state agencies, and other interested parties engage in the process to ensure these issues are appropriately addressed, and participate in the extensive and detailed documentation, studies, reports, and meetings with the license holder. Consequently, this process takes many years.

FERC offers an education guide on the relicensing process and other comprehensive resources.

We will continue honoring the licensee arrangements that are in effect during the review of the hydroelectric operations. Also, we are the proud sponsors of several events along the rivers including the Au Sable Canoe Marathon. Our relationship to those events will continue during the review.

The review of our 13 hydroelectric facilities is a company-initiated process independent of the state task force. The Michigan Dam Safety Task Force met in 2020 and 2021 at the direction of Governor Whitmer following the May 2020 failures of the dams in mid-Michigan to evaluate:

• The statutory structure, budget, and program design of the state's dam safety program;
• The adequacy of Michigan's dam safety standards; and
• The level of investment needed in dam infrastructure.

Some of the findings and recommendations from the Michigan Dam Safety Task Force Report may influence how state agencies participate in ongoing conversations about our hydroelectric operations.

We value participation from the public and will appreciate public involvement and input throughout the review process. Information pertaining to the community conversations and the facilities review process will be shared on this page.

All feedback received about our dams will be evaluated by top decision makers at Consumers Energy, and considered as we create a plan for the future of Michigan hydro power.

The hydroelectric relicensing process has a five-year timeline. This involves the Michigan Public Service Commission (MPSC) and subsidiaries under the Federal Energy Regulatory Commission (FERC) to weigh in on the Integrated Licensing Process (ILP). The process involves the licensee, Consumers Energy, filing an informed license application with FERC to demonstrate how it will protect or enhance a hydrodam and its surrounding environment. If approved, the proposed plan is then reviewed by FERC staff. Input is given from all parties to provide final recommendations, terms, and conditions for relicensing.

The final decision on whether to relicense or decommission a facility depends upon safety, community, cost of operations, and recreational assets. Compliance with regulatory requirements is most highly considered. Regardless of what decision is made for the future of any of the 13 hydrodam facilities, physical changes to the infrastructure will not occur for many years after the decision has been made. The timeline for relicensing is handled by FERC and takes around five years. It includes the following process:

10-Years Prior to License Expiration:

• A stakeholder engagement process begins with the licensee (in this case, Consumers Energy) to gain information on recreational, cultural, and environmental assets of a hydrodam region. They use informed input from state agencies, tribal, and non-governmental organizations.
  

5-Years Prior to License Expiration:

• The licensee works with the Division of Hydropower Administration and Compliance (DHAC) to submit a Notice of Intent and pre-application documentation before the license expires.
• Data from the stakeholder engagement process informs the future license application that is filed through a FERC-approved study plan.

2-Years Prior to License Expiration:

• If a study plan is approved, it begins a two-year review period by the Michigan Public Service Commission (MPSC) and includes other state and federal agencies.
• Pre-filing a study plan helps MPSC staff find more information and studies needed to prepare the proper environmental documentation.
• Recommendations and finalizing relicensing terms and conditions is done before the license application is officially submitted.
• Once an official relicense application is submitted, it is taken under consideration and ultimately approved or denied.

The energy solutions that worked for the last 100 years are different from Michigan’s current and future needs. Consistent with our Clean Energy Plan—our road map to ending coal use by 2025 and achieving net zero carbon emissions by 2040—we are adding more investments in renewable energy sources like solar and wind. Hydropower comprises a small, yet dependable role in our commitment to providing reliable energy generation. At one time, we owned and operated more than 90 river hydro facilities. Today, hydroelectric power at our 13 facilities generates approximately 1% of the total capacity provided by Consumers Energy. By comparison, approximately 16 wind turbines or up to 500 acres of solar can generate the same amount of energy as the 13 river hydro facilities.

Hydroelectric dams convert energy stored in the water reservoir behind the dam into kinetic energy. When water flows to the turbines it is used to spin the generator shaft. This activates the generator, which, in turn, creates electricity. Later, the water discharges from the unit back into the river. 

There are three types of classifications of hazard potential identified by FERC Licensing. These classifications rate the condition of a dam and likelihood of failure. Here are the three types below: 

• Low hazard status means that dam failure would result in no probable loss of human life and low economic losses.
• Significant hazard status means dam failure would result in no probable loss of human life but can cause economic loss or disruption of major areas in facilities that maintain lifelines of an area.
• High hazard status means failure would most likely cause loss of human life.
  

In order for the reservoirs to be maintained, we’re considering divesting as an option. This will help minimize the cost impact to our customers. Our RFP will be structured to solicit marketing interest in transferring the current license for continued operations while allowing any interested parties to propose other scenarios. While it is true that we would not have a say in the future of the reservoir if the license is transferred, we can anticipate other scenarios that will only be considered if transferring the current license for continued operation is not cost-effective and other solutions to maintain the reservoir are unsuccessful. Today’s announcement is just a first step. As we move forward, we are committed to exploring all options to maintain the reservoirs. 

The RFP process will help identify potential buyers. Our intent would be to transfer all 13 hydroelectric facilities to one buyer – such as an independent energy producer – but the RFP will be open to all qualified bidders. We intend to keep the language open in the RFP in order to allow for creative opportunities. Again, this is very early in the process, and we will learn more as we continue the evaluation.

We heard from community members and local leaders how important it is to keep the reservoir. We are committed to exploring all options for safely manufacturing these reservoirs for decades to come.

Through this RFP, we are exploring if divesting would make sense as an option that would allow for the reservoirs to remain the same while minimizing the cost impact on our customers. 

As we consider bids and potential buyers, safety records and financial assurance will be our top considerations. We will not compromise our commitment to safe hydroelectric facilities in Michigan.

The Federal Energy Regulatory Commission (FERC) also provides a set of safety and financial assurance standards that would need to be met by a new owner, ensuring the dams remain safe.