Consumers Energy Reaches Agreement to Sell 13 Michigan Hydroelectric Dams
Rhea-AI Summary
Consumers Energy (NYSE:CMS) has signed an agreement to sell its 13 hydroelectric dams along five Michigan rivers to Confluence Hydro, a Hull Street Energy subsidiary. The sale aims to reduce long-term costs for customers while maintaining the dams' operation and community benefits.
The transaction requires regulatory approval and could close in 12-18 months. Under the agreement, Confluence Hydro will enter a 30-year power purchase contract with Consumers Energy and plans to seek renewal of the dams' federal operating licenses expiring in 2034. Current hydro operations employees will be offered positions with Confluence Hydro.
The dams represent less than 1% of Consumers Energy's business. Hull Street Energy brings significant experience, currently operating 47 hydroelectric facilities across North America.
Positive
- Sale will reduce long-term costs for Consumers Energy customers
- Buyer commits to preserving reservoirs and maintaining community benefits
- 30-year power purchase agreement ensures long-term energy supply
- All current hydro employees will be offered jobs with the buyer
- Buyer has extensive experience with 47 hydroelectric facilities
Negative
- Dams' federal operating licenses expire in 2034, requiring renewal
- Transaction approval process could take up to 18 months
- Company divesting assets that generate clean energy
News Market Reaction – CMS
On the day this news was published, CMS gained 0.31%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Buyer Commits to Keeping Dams in Operation, Preserving Reservoirs and Benefitting Local Communities
"We believe a sale of the dams is the best path forward for our customers. This sale balances two important needs, to lower costs for Consumers Energy's customers while continuing to care for communities that depend on the dams," said Sri Maddipati, Consumers Energy's president of electric supply. "After numerous conversations with community members over the last three years to gather insights and feedback, we are confident this sale will preserve the reservoirs that hold the key to economic, recreational and community benefits at each of the dams."
Consumers Energy has agreed to sell the facilities to Confluence Hydro, a wholly owned subsidiary of Hull Street Energy. Hull Street Energy is an investment firm that has significant experience owning, operating and investing capital in power generation assets across
"Safety has always been foundational to everything we do," said Ed Quinn, Chief Executive Officer of Confluence Hydro. "With decades of experience operating hydro facilities, we are committed to preserving and modernizing these important resources to maximize their contribution to the grid. We deeply admire and respect the Consumers Energy team and the culture of safety and operational excellence they have built. We see extraordinary opportunity to leverage our combined strengths to build a best-in-class hydro company – one that protects communities, supports employees, mitigates risk, and delivers reliable, clean energy for the future."
The sale will need approval from state and federal regulators and could take place in approximately 12 to 18 months. Under the agreement's terms, Confluence Hydro will enter into a contract with Consumers Energy to provide power from the facilities for 30 years. The company plans to seek approval to renew the dams' federal operating licenses, which are set to expire beginning in 2034.
The purchase agreement represents a milestone in a process that Consumers Energy started three years ago to explore the best options for the century-old dams. They could have been sold, decommissioned or remained in the energy provider's portfolio of power sources.
Jean Kang, Consumers Energy's vice president of generation operations, said the company was impressed by Hull Street Energy's experience with other dams and commitment to safety that should allow it to own and operate the dams cost-effectively.
"Consumers Energy's dams are a small part of our business, less than
Consumers Energy today notified its hydro operations employees of the sale. They will be offered jobs with Confluence Hydro. Consumers Energy will continue to own and operate the dams until the sale is complete.
Consumers Energy today also informed community members and will schedule meetings with each of the affected communities around each dam for this summer and fall. People should go to ConsumersEnergy.com/hydrofuture for updates and to learn more.
Clear Energy Brokerage & Consulting, LLC served as Consumers Energy's deal advisor. Troutman Pepper Locke, LLP acted as the company's transaction counsel.
Consumers Energy is
For more information about Consumers Energy, go to ConsumersEnergy.com.
FAQ
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