Don’t Blame Them; They Just Work Here

It has come to our attention that some of Boyce Hydro’s employees have encountered rude and belligerent behavior from some members of the public, just because they work for Boyce Hydro.  Not only is this kind of behavior unacceptable in civil society, it is misdirected.   Persons with complaints about how Boyce Hydro goes about its business have no right to take those complaints out on hard working members of the Boyce Hydro staff.  They don’t make policy; they carry it out.

Boyce Hydro’s operators are responsible for starting and stopping the machines, opening and closing the head gates when required, monitoring the water levels in the reservoirs to ensure compliance with the Federal licenses, monitoring the earthen dams to make sure they are stable and draining water properly, and many other tasks.  This is a full time job for four men and a 24-hour a day job in spring.  Boyce Hydro employs nine full time people from the local area, two local contractors and their staff virtually year round, and several young men during the summer to help with various construction and maintenance projects.  Like you, all these people have families, shop, dine and otherwise enjoy their community.  Anyone who denigrates hard working people like these just because they don’t like the company they work for should be ashamed of themselves.

Like it or not, Boyce Hydro is a part of your community.  Boyce Hydro employs some of your neighbors, buys materials and supplies from local businesses, hires local contractors and generally contributes to the economic well-being of parts of Gladwin and Midland Counties.  Also, all of this activity is paid for due to the fact that Boyce Hydro is in the business of electrical energy production from the renewable resource of water.  This fact makes it possible for the four reservoirs – Sanford, Wixom, Smallwood, and Secord – to exist.  As a private enterprise, Boyce Hydro is self-supporting.  Were this not the case, the public would have to pay for the maintenance and repair of 87-year-old earthen dams and concrete civil structures and water level regulation through assessment districts or taxes.

Contrary to popular belief, the extra property taxes that are paid by lake-front homeowners do not contribute to any of the dam maintenance or daily operations.  Not one penny of public money is provided to Boyce Hydro for these important services.  If the dams stopped making electricity tomorrow, all of the maintenance and repair tasks would have to continue – at someone’s expense.

So the next time you see a Boyce Hydro employee, you might just want to say “Thank You.”  He’s working so you can have a lake to boat on and fish in.

Less than 50 cents a day

The question was posed in an article in the Midland Daily News on May 23rd:  “If $170 a year would save your lakefront property, would you pay it?” (See MDN story 2013-05-23.)

Preliminary calculations provided to the Wixom Lake Association’s DPSG by Boyce Hydro Power LLC (BHP) indicate that, if the community were to support a bond to fund the PMF spillway alteration project, and if BHP receives rate parity from Consumers for its energy, thus providing enough additional after tax revenue to pay approximately 30% of the estimated annual debt service for a long-term revenue bond, the estimated 3,400 residents around Wixom Lake might have to contribute approximately $150 or less per year.  That’s less than $0.50 per day per household.

License Surrender – What it Means

What will FERC do if Boyce Hydro Power LLC cannot afford to commit to the PMF spillway alteration construction schedule?  FERC asserts that it cannot allow an “unsafe” dam to continue to operate, and it doesn’t give the licensee very many options.  FERC says, “comply, or else.”  The “or else” is license surrender.  Absent the ability to pay for the construction (and BHP will not begin the construction if it cannot afford to finish it, contrary to rumors), the only option is to surrender the license.

A license surrender means the dam’s ability to produce power would be revoked and potentially the spillways would be breached to allow the lake to be drained and the rivers to return to their natural condition.  This could be a time-consuming process, and in the meantime FERC could require BHP to lower Wixom Lake eight or more feet to provide a “buffer” for flood control until it is completed.  If this comes to pass, residents will have recreation curtailed for a lot longer than if the construction were funded, and their property values will certainly be reduced.

Costs and Financing – Correction to DPSG White Paper #2

A group of concerned citizens within the Wixom Lake Association, the Dam Project Study Group (DPSG), has posted information on the WLA’s website which contains certain inaccurate and potentially misleading information.  Boyce Hydro Power LLC has brought this to their attention, but after several days the record has not been corrected.  See below:

  1. Company structure: Boyce Hydro LLC is the operating company retained by Boyce Hydro Power, LLC, the FERC licensee, which leases the dam from a business entity owned by the W.D. Boyce Trusts.
  2. Contracts for purchase of power and RECs:  Boyce Hydro Power, LLC’s Power Purchase Agreement (PPA) with Consumers Energy expires in 2022, and there is no certainty that it will be renewed at that time. Its agreement with Detroit Edison (DTE) for the purchase of Renewable Energy Credits (RECs) expires at the end of 2015 and there is no certainty that it will be renewed or at what rate.  There is no increase in the price for RECs on the horizon.  RECs are calculated on energy production, not income from other sources. If DTE does not renew, and a new buyer for RECs is not found, this source of income could dry up in just a couple of years.
  3. Potential for income utilization:  The White Paper lists the potential increase of income for all four of the Boyce Hydro Power FERC-licensed dams, not just Edenville.  However, the Edenville hydroelectric facility is a stand-alone business entity and it is incorrect to assert that revenue from the other entities can or will be used to pay the debts of another.

We appreciate the fact that there is a group attempting to get information to the public, however, for that information to be of value, it must be accurate.

How Much — and Who Pays?

Construction estimates from a reputable local firm, Gerace Construction, put the cost of the PMF spillway alterations at roughly $8 million.  That’s $8,000,000.00.  This may not seem like a lot of money these days.  But to a small company, such as Boyce Hydro Power, it is a sizeable hurdle to overcome.  The Edenville Dam is already encumbered with debt, which was incurred in order to finance FERC-mandated dam maintenance and stability improvements.  These improvements have been ongoing and Boyce Hydro Power has spent over $1.3 million on the Edenville Dam for various safety improvements since 2007.

Several factors influence Boyce Hydro Power LLC’s ability to fund the FERC-mandated PMF alterations:

  • Private financing is not an option unless the dam makes more money from the sale of its single product, electricity;
  • The PMF spillway alteration does not increase the dam’s ability to generate income in any way;
  • Negotiations with Consumers Energy over rates have failed to obtain future rate increases;
  • Consumers Energy pays Boyce Hydro Power 30% less than the average it pays for hydroelectric power to the 14 other independent producers in the state, per documents filed with the MPSC (see 2012 Consumers rates). (Note: if this document does not open in Adobe Reader, it will not display properly.)
  • Costs of operations continue to rise, from gasoline (imagine how the price of gasoline and diesel affects the price of everything) to employee benefits such as health insurance, not to mention the cost of maintaining and repairing 88-year old concrete structures, machinery, and generating equipment.

An increase in the rates Consumers pays Boyce Hydro Power LLC would provide a significant boost to the Company’s ability to defray some of the cost of the PMF, but not all of it by any stretch.  The Company has been lobbying for State and Federal relief, so far to no avail.  Grant funding has not been found for which the PMF alteration project would qualify.

Boyce Hydro Power is pursuing the rate increase avenue aggressively, but it remains to be seen whether or not those efforts will be successful.  If there is a rate increase that achieves parity with the other independent hydro power producers, Boyce Hydro Power would be able to dedicate additional after tax cash flow — potentially $252,000 per year from the Edenville hydroelectric operations — to funding part of the total PMF alteration construction, if it is financed by a long term bond fund.

Estimated annual debt service for public bonds in the amount necessary to finance the PMF spillway alterations will probably cost over $700,000 per year. More to come on this topic.

The Draw Down – Why and When

A  lot has been said and written about the proposed draw down of Wixom Lake as a necessary component of the FERC-mandated PMF construction.  The drawdown is required during the phase of construction in which the sheet pile cofferdam is installed while work on concrete pier extensions takes place.  3D PMF alteration3

The pier extensions provide the ability for “stoplogs” to be installed in front of the spillways and for the sheet pile cofferdam to be removed.  All of this makes it possible for the rest of the construction on the spillway to be done “in the dry.”

3D PMF alteration4

While the cofferdam is in place, half of the dam’s ability to pass flood waters is out of service.  That is why the drawdown is necessary, and why it takes place in summer.  The drawdown is a precautionary measure.which provides a “buffer” in the reservoir in case of an unexpected flood, so that the one remaining spillway structure has a chance to pass enough flood water to avoid dam failure.  While rare, floods have been known to happen in summer.

The FERC-mandated construction schedule calls for this to take place on the Tobacco dam in the summer of 2014 and on the Tittabawassee side (the powerhouse) in summer of 2017.

Myth: Similarities with Sanford in 2010

Contrary to uninformed opinion and popular belief, the situation at Sanford Lake in late summer 2010 was an emergency.  This is a well-established fact.  By definition, emergencies are not planned, not anticipated, and not funded.  (See 2010-09-16 Sanford draw down article.) The PMF alteration at Edenville is not an emergency.  Boyce Hydro Power has been attempting to educate legislators (both state and federal) and members of the public about it since at least 2009.  In 2011, a presentation was given to the Wixom Lake Association by Co-Member Manager Lee Mueller and the Company’s consulting engineer, Stephen C. Doret, who flew in from Massachusetts for the event.  A version of the PowerPoint presentation included in this blog (PMF spillway alterations) was given to the Association to distribute as it saw fit.  The final PMF solution, therefore the costs for the FERC-mandated project, were unknown at that time, but it was certain that the revenue from operations would be insufficient to pay for it or finance it.

The public is generally unaware of how much money and physical effort is expended to maintain the aging dam that provides them with a lake for recreation and property values.  No financial contributions from lakefront property owners have been made in the past 88 years to support the existence of Wixom Lake.  The dam owner simply does the work and pays for it for two main reasons: 1) it is in the company’s own best interest; and 2) FERC requires it.  Meanwhile the repair and maintenance work that goes on daily at the dams is more or less taken for granted by the community.  At Sanford, a select few members of the community did voluntarily contribute to the dam repair in order to ensure that FERC would allow the reservoir level to return to normal for the 2011 summer season.  These funds were offered voluntarily.  They were NOT extorted.  In fact, Sanford Lake residents still should contribute to help offset these costs and get involved in the future of Sanford Lake by visiting the Sanford Lake Preservation Association here: