A Starting Place
The Calkins Dam which is currently owned and operated as a federally regulated hydroelectric facility by Consumers Energy was originally completed in 1935 and created over 1600 acres of lake water from the Kalamazoo River. The man-made impoundment known as Lake Allegan has over 600 homeowners who have made significant investments in their lake real estate and built-up well-established livelihoods over years and generations of homeownership.
Homeowner property taxes provide a major source of financial and economic vitality to Valley Township (population 1,800) with a portion of those taxes directed to the surrounding county. Public Sector Consultants recently documented a current state of the local economy snapshot on the overall market and did not make assumptions about any future changes in the underlying economy in their recent Calkins Bridge Dam Economic Contribution Study. PSC used a widely reputable economic modeling software called IMPLAN to estimate the economic effects of lake visitor spending, supply chain purchases, worker spending and other indirect effects a dam and an impoundment have on a regional economy. PSC estimated that Lake Allegan supports 60 jobs in the region, about $3.85M in gross regional product and more than $858,000 in local, county, state and federal taxes through direct, indirect and induced tax effects from recreational and related spending.
Lake adjacent properties in Valley Township, Allegan Township and the City of Allegan represented $70.71M of assessed value and $53.91M of taxable value in Allegan County. With 461 residential properties that share property lines with the impoundment PSC estimated the net tax revenue contribution has an increase of approximately $1,455.737.
This is a result of the higher assessed property values for impoundment adjacent properties which is $74,173 higher on average than the baseline properties in the study who are not impoundment adjacent. The presence of the lake and river also positively impacted property values by contributing an additional $68.4M in market value to adjacent and nearby properties.
With the upcoming opportunity to broaden the conversation amongst a wider audience within the Kalamazoo Watershed it’s important during this early phase of the lake’s tentative transition from private to public ownership that the Lake Allegan community not only seek out and create friendships with multiple entities whose futures align with the vision of Lake Allegan but to specifically seek out alliances with Georgia Pacific and the Great Lakes Fishery. Both entities have a vested interest with preserving Lake Allegan and retaining Calkins Dam. Obtaining public endorsements from both of these alliances are key to an early success with preserving Lake Allegan and can help with shaping the conversation on why it is preferential to retain Calkins Dam.
Although, PSC’s initial study did not consider how the economic contributions will shift under dam removal/modification scenarios PSC will be evaluating those scenarios in a phase two study using a conceptual decommissioning scenario and this analysis will require certain details about the lake and river changes to determine what corresponding economic impacts may result. Welcome to Consumers Prosperity Group to be convened by the Kalamazoo River Watershed Council whose participants will be providing details to Consumers and PSC on one such scenario which will be to change the impoundment back to a river.
Allegan County Board of Commissioners
As part of the Allegan County Board of Commissioner Approved Strategic Plan 2023-2027 Allegan County’s vision statement says it “is committed to providing our citizens superior and innovative services, being judicious and efficient in the expenditure of resources, and promoting a safe, clean, and healthy environment in which to live, work, and play.”
Calkins Dam has an entry under the following:
STRATEGIC GOAL: Provide valuable and necessary quality services to CUSTOMERS.
PRIORITY CS.3: Collaborate locally and regional.
CS.3.7 Calkins Dam Chair Storey, and Commissioner Beltman are meeting with stakeholders and Chair Storey is working with MAC staff.
Dec-2027 Monitoring: County has already provided two resolutions of support and has participated in related meetings (MAC, Consumers, other stakeholders). At this time, the project will be monitored through the resources above unless more specific actions become necessary.
One of the visioning activities by the Kalamazoo River Watershed Council who is convening Consumers Prosperity Group will be to prepare graphical illustrations on what Lake Allegan could look like without the river hydro and impoundment. It’s reasonable for a county government to have concerns with potentially being delegated as a future administrator of a dam that is 30′ tall and about 1,335′ in length which will be 105 years old in 2040. However, there are numerous open issues for county and lake residents to explore and resolve before making a judgement on the life expectancy of Calkins Dam. According to Public Sector Consultant’s survey results lake residents did respond by expressing an alternative vision that would entail a civic partnership between the county and lake residents by transferring ownership of Calkins Dam to a public entity in conjunction with setting up a special assessment district and establishing a legal lake level. Regardless of Consumers licensing decision, as we approach 2030, which should be a time of greater coalescence between the various stakeholders to conceptualize how public ownership of Calkins Dam can be arranged, our County Board needs to remain engaged in the run up to a more robust decision-making process with the lake association, Consumers and other entities of interest.
Georgia Pacific
Georgia-Pacific, a paper manufacturing company headquartered in Atlanta, has agreed to perform remedial work to contain 80 miles within the Kalamazoo River Superfund site in Allegan and Kalamazoo Counties which is a federal program that is very involved and always lengthy. The Kalamazoo River cleanup areas have been subdivided into 7 sections. Lake Allegan is Area 6. A record of decision on how the PCB removal and remediation will take place in Area 6 is slated for December 2028 with a projected completion date of the PCB cleanup for Lake Allegan by 2032 or thereabouts.
In 2022 with an announcement of additional funding to the Great Lakes Restoration Initiative of $1B dollars from the Bipartisan Infrastructure Law, plus appropriations, and funding from other sources like Georgia Pacific for the Kalamazoo cleanup; 14 EPA Areas Of Concern in the US were projected to be completed by the end of this decade (2030). Except 3 projects which won’t make that deadline and 2 of those 3 sites are in Michigan. One is the Kalamazoo River, and the second is the Saginaw River Watershed and Saginaw Bay. The reason for the longer timeframe on the Kalamazoo River relates to the PCB contaminated sediment that has built up behind the river’s dams. Several dams have already been removed along with the PCB’s cleaned up, but two or three more small river dams may need to be removed, each needing to have a comprehensive plan to handle the PCB’s behind them.
Calkins Dam is unlike the smaller upstream river dams and the time and money that will have been spent to remediate PCB’s from Lake Allegan’s lakebed, primarily for the purpose of fish consumption could be as costly as the other upstream cleanups because of a higher quantity of PCB’S having made their way into a larger lakebed. Although PCB’s are a suspected carcinogen and can have negative effects on the human immune, reproductive, and endocrine systems, the waters of Lake Allegan have been designated as safe to recreate in but the State of Michigan says most of the fish from the Kalamazoo River and Lake Allegan should not be eaten. Therefore, the level of PCB remediation in Lake Allegan will be commensurate with a threshold that will allow for the future consumption of fish.
Should Calkins Dam be removed because the lake community cannot demonstrate a long term financial commitment to transition ownership, the financial responsibility for what could potentially be a second more costly and time-consuming PCB remediation project to rid the lakebed of all PCB’s, because of the lake water having been drained, will be a critical point of contention. Assumedly it would be Georgia-Pacific’s responsibility but certainly not without considerable legal consultation in advance before undertaking a second cleanup. With the lakebed exposed, but only remediated to the point of making it safe for fish consumption, draining this private lake owned by Consumers Energy could potentially re-expose humans to any remaining suspected carcinogens not previously remediated. Thus, it is the lake community and Friends of Lake Allegan’s belief that Georgia Pacific will adamantly seek to prevent Calkins Dam from being removed along with any lake draining and believes that Consumers reputation and financial interests will best be served by avoiding this scenario as well.
So as the cleanup continues, so does a legal battle over who foots part of the current bill. Estimates for the cleanup costs could end up being in the range of $800 million to $1B according to Jim Saric the EPA project manager. Georgia-Pacific sued three other parties deemed responsible for the contamination NCR, International Paper, and Weyerhaeuser to try to recover their costs for remediation of the Kalamazoo River. The U.S. Court of Appeals for the Sixth Circuit ruled last year that Georgia-Pacific’s claim was barred by a statute of limitations. Georgia-Pacific is appealing that decision to the U.S. Supreme Court. Friends of Lake Allegan wishes Georgia Pacific success with their hearing before the Supreme Court. However, Friends of Lake Allegan would like to suggest that a good first step between the lake community and GP would be a memorandum of understanding and a public endorsement from GP that the retention of Calkins Dam and the preservation of Lake Allegan are mutually beneficial visions for Georgia Pacific, residents of Lake Allegan, Valley Township, and Allegan County.
Great Lakes Fishery Commission
In December 2022 when hearing of Consumers detailed review of its 13 hydro plants on five Michigan rivers Lisa Walters from Great Lakes Fishery Commission sent a lengthy letter to Consumers which was also posted in FERC’s E-Library, documenting their concerns. The 1954 Convention on Great Lakes Fisheries between the United States and Canada established a Commission as the binational organization responsible for control of invasive sea lamprey, facilitation of cooperative fishery management, and coordination of fisheries research in the Great Lakes. Excerpts from the December 2022 letter pertaining to the Kalamazoo River and Calkins Dam are summarized below.
“Invasive sea lamprey are the largest threat to the health and sustainability to the binational organization’s fisheries. Sea lamprey control is essential not only to the states and tribe’s fishery management objectives, but also to the realization of billions of dollars of annual economic benefits. Sea lampreys are resilient and will expand their range in the absence of control. The Muskegon, Manistee, AuSable, Kalamazoo, and Grand river systems contain thousands of miles of prime sea lamprey spawning and rearing habitat. Invasive sea lamprey are controlled in Great Lakes tributaries using two primary methods: application of lampricides to kill larval sea lamprey in their natal streams and use of barriers and dams to block migratory sea lamprey from spawning and reaching larval habitats.”
“Dams on the Muskegon, Manistee, Au Sable, Kalamazoo, and Grand rivers are especially vital to continued success in controlling sea lamprey for the benefit of Great Lakes fisheries and associated recreation and tourism – an estimated $7 billion annual economy. Four of Consumer’s dams under review, Croton, Foote, Tippy, and Calkins Bridge, currently serve as sea lamprey barriers and are considered critical to the Commission’s ability to control sea lamprey.”
“A total of 56 miles of stream downstream of Calkins Bridge Dam comprised largely of Rabbit Creek but also including portions of Swan, Bear, and Mann creeks is currently treated for sea lamprey and can produce an estimated 54,000 sea lamprey larvae. These tributaries are treated every 2-4 years at a cost of $350,000 per treatment. Water quality in the lower Kalamazoo River due to historical industrial pollution and contaminated sediments is thought to keep sea lamprey production relatively minimal.
With the lower river listed as a federal Area of Concern, improvements in water quality are expected in the coming decade and as a rule, improvements in water quality will result in higher numbers of sea lamprey in a river. Continued blockage of sea lamprey at Calkins Bridge Dam is necessary for the continued logistical and financial ability of the Commission to successfully control sea lamprey in Lake Michigan.”
“Should sea lamprey be allowed access to some or all 1,461 stream miles upstream of Calkins Bridge Dam, the lampricide treatment cost would increase to $1.3 million per treatment. Additionally, the Michigan Natural Features Inventory notes that the federally listed endangered snuffbox mussels are present in Ackley Creek, upstream of Calkins Bridge Dam, so special measures must be taken to avoid mortality of logperch, their host fish. Treating with lampricides in streams containing threatened and endangered species requires the Commission’s control agents to work within firm criteria such as limited timing windows for treatment, reduced lampricide concentrations through known critical habitat, and requirements to round up organisms before, during, and after treatment. The necessary effort to adhere to these criteria further raises the cost and decreases the effectiveness of treatment.”
In summary without sea lamprey barriers like the Calkins Dam, the Commission, in its current capacity, does not have the resources to address the required regular treatment of the additional habitat with lampricides. Even with significant investments in lampricides and staff to complete the additional lampricide treatments, the increase in “residual” sea lamprey populations would negatively impact Great Lakes fish communities and restoration goals. “In other words, there is no equivalent alternative to effective sea lamprey barriers” other than for the Calkins Dam to remain as part of the Kalamazoo River.
Consumers Energy/Public Sector Consultants
In 2023 Consumers Energy in coordination with their lead consultant, Public Sector Consultants, researched economic contributions of 13 river hydroelectric plants and facilitated conversations between the utility and ratepayers to help plan for a future of reliable, affordable clean energy. PSC’s work included 11 community meetings, 1 statewide economic contribution analysis, 13 economic contribution studies and the engagement of 1,700 Michigan residents as Consumers searches for a way out of the hydroelectric dam business primarily because of the cost with generating hydroelectric power outpacing the return on investment by more than $100M annually according to Norman Kapala, VP of Generation for Consumers.
Even though the cost of keeping the dams would be passed along to all 1.8 million of Consumers electric ratepayers at a very low cost of $3.60 more per month and a large business at $1,040 more per month, Consumers is under near constant scrutiny by the Michigan Public Service Commission according to Maggie Pallone, the lead consultant at PSC, to contain the growing cost of electricity, especially as it transitions away from burning coal, which is the cheapest way to generate electric power but also the most environmentally harmful. Plus, new state laws require Consumers to get 80% of the electricity from “clean” energy sources by 2035, a mandate that company officials contend cannot be met by relying on the small amount of electricity generated by their hydroelectric dams, which for all 13 dams produces about 1% of the company’s total electric output. Relicensing the dams comes with a major long-term cost for maintaining the earthen structures along with the high costs associated with the numerous regulatory updates that will be required for a renewed federal license with FERC for another 30 or 40 years, which is required for all operating hydroelectric dams in the US. According to Consumers, the cost to relicense all 13 dams would be $1.4B vs $631M to decommission.
The series of community meetings over the past year has Consumers thinking more about the impact of decommissioning the dams on local real estate, recreation and drinking water wells, which they hadn’t initially thought about. So, Consumers is looking at other possibilities, such as selling the facilities, possibly to potential buyers like California-based electricity providers in search of renewable energy facilities to meet their state’s more stringent clean energy mandates. No decision has been made to sell the dams and lake communities are expected to review the RFP once it’s publicly available. Consumers has also indicated they have filed applications for federal grants and are using the cost to relicense vs decommission as a benchmark as they search for external funding opportunities, either from the state or the federal government. Company officials have started to talk with state lawmakers about the need for state aid to pay for infrastructure costs associated with the dams, arguing that the dams provide extensive recreational opportunities both above and below the 13 dams. Consumers has said that if sufficient external funding is not available it will be necessary for Consumers to determine a long-term exit strategy.
One of those exit strategies that Consumers has suggested has been to explore an alternative structure that maintains some level of the lake and/or blocks sea lamprey. Lake Allegan residents did indicate thru Public Sector’s survey results that this alternative structure, whether it be a retrofit or an upgrade to the existing dam, is of interest, not only to lake adjacent residents but also to non lake adjacent residents. Thus, it is Friends of Lake Allegan’s belief that either the existing or an alternate structure that controls the current lake level is the best and only alternative available to lake residents once Consumers finally determines they likely cannot attain external funding needed to relicense.