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: http://x.sanfordlakepa.org/.

Myth: The PMF Spillway Alteration is a “Repair”

Contrary to the belief and description of many individuals and members of the media, the FERC-mandated PMF spillway alterations are not a repair.  The Edenville Dam is quite safe and in no danger of failing.  In fact, the owners of the Edenville Dam have expended in excess of $1.3 million since 2007 for dam safety improvements at Edenville alone.  The only problem is that the dam’s spillway capacity is not adequate to meet FERC’s safety standards for a potential flood that is 1,000 times more devastating than the one in 1986.  (Noah’s Ark, anyone?)

The PMF spillway alteration is an unfunded Federal mandate, which threatens the economic viability of the entire Wixom Lake community.

Boyce Hydro Power, LLC (the holder of the FERC licenses) and its team of highly respected hydrology and geotechnical engineers have been working on the Probable Maximum Flood design solution in conjunction with FERC for more than seven years.  Construction plans and specifications have been developed by Boyce staff and their consulting engineers for this method of complying with FERC’s mandate.  A contracting firm which specializes in dam construction (Gerace Construction of Midland) has prepared the cost estimates.  FERC has approved the plans and schedule and directed Boyce to construct the spillway modification as currently designed.  This time- and money-intensive effort has reached its conclusion.  Approximately $150,000 in related engineering  consulting and design costs have been spent on this effort so far.

Despite efforts by Boyce Hydro Power LLC to either have the PMF alteration requirement waived or reduced, the FERC is unrelenting.  See these documents:

2009–12-10 LWM email to D Stabenow

2010-03-09 Senator Stabenow ltr to LWM re FERC

2012-11-07 FERC ltr to Senator Stabenow re PMF requirements

The PMF spillway alterations do nothing whatsoever to increase income production at the Edenville dam, nor will they have any beneficial effect on the recreational uses or environmental status of Wixom Lake.  (These uses will be disrupted during construction).  They do not increase the overall stability of the earthen portions of the Edenville Dam.

Furthermore, the FERC-mandated PMF spillway alterations will not protect property and residents of Wixom Lake; only those downstream, at Sanford Lake.

The PMF – What is it?

“PMF” stands for “Probable Maximum Flood”.  (In other words, a flood that is probably never going to happen.)

The PMF is an event which is calculated by FERC to occur once every 10,000 years.  (Compare that with the 100-year floodplain that is being defined right now for Gladwin County.)   The Edenville Dam is classified by the government as a “high hazard” dam, which means that if it were to fail, significant property damage and loss of life would likely occur downstream (at Sanford Lake, in this case).  The Federal government mandates all “high hazard” dams to comply with the PMF dam safety standard.

After years of engineering analysis it has been determined that, to pass this massive flood event, the spillway capacity of the Edenville dam must be roughly doubled.  The Edenville Dam has two sets of concrete spillways that can together pass 32,000 cubic feet per second of water (cfs) when fully open.  The PMF at Wixom Lake would require those same spillways to pass 64,000 cfs.  In addition, the spillway modification would require the installation of gates that are more than twice the size of the current gates. See this graphic comparison:

Spillway comparison (2d)1Spillway comparison (2d)2

The Federal Government’s Role

Power producing dams, such as the four hydroelectric projects operated by Boyce Hydro LLC on the Tittabawassee River, are federally regulated and must be in compliance with all directives issued by the Federal Energy Regulatory Commission (FERC).  FERC requires frequent monitoring, inspections, engineering and environmental reports and emergency preparation as part of its oversight.  Much of what is required would be done by any prudent owner of property in its own best interest.  However, FERC has been inflexible regarding the ability of high hazard dams to pass the Probable Maximum Flood (PMF).  FERC has consistently rquired licensees of high hazard dams throughout the country to comply with its criteria for evaluating the PMF and then mitigating and correcting any inability to safely pass the PMF.  Dam owners are expected to comply, regardless of their ability to pay for it.  If they cannot comply, the dam owner must surrender the license under conditions mandated by FERC, which may include draining the reservoir.

Dam Ownership & Responsibility

The owner of the dams is responsible for operating the power stations and spillways, not only for power generation, but also to regulate lake levels (as prescribed in their FERC license), provide flood control, and to provide water to support aquatic life downstream of the dams.  The owner of the dams is also responsible to maintain the structural integrity of the earthen dams and the civil structures.

The Edenville Dam is owned by Edenville Hydro Property, LLC, which in turn is owned by a small family trust created by William D. Boyce, who founded the Boy Scouts of America in 1910.  Mr. Boyce was an industrialist and newspaper publisher from Chicago, Illinois.  Probably his greatest life achievement was the number of people for whom he provided gainful employment through his free market entrepreneurial business accomplishments.  Today his grandson, Lee W. Mueller, and a great-grandson, Stephen B. Hultberg, are Co-Trustees, and both are active in the management of the Edenville Dam.

WD Boyce was himself a pioneer in hydroelectric power, building a small power plant and paper mill on a diversion channel on the Illinois River around 1907.  In those days hydro power was used primarily to turn water wheels to move machinery for production of goods.  As a business visionary, Mr. Boyce pursued development of the new technology of his time, hydroelectric turbines harnessed to electrical generators, and founded a small electrical utility that sold power for electric street lights to numerous cities along the Illinois River corridor south of Chicago.

Mythbuster

There are many myths about the future of Wixom Lake being circulated about the community masquerading as facts.  This site will attempt to provide the reader with the information needed to make informed decisions, and begin to dispel the rumor mill.  The public deserves the truth, and the truth is a very hard thing to find these days.  This site is dedicated to presenting verifiable facts and information in a logical and coherent fashion so the issues can be understood by all.  We believe that knowledge is power and that information, presented out of context, can be deceptive.

 

We’re all in this together

Welcome, those interested in facts and truth about the future of Wixom Lake.  We all know that future is in doubt, and all of us — residents, business owners, and the dam owner as well — want the dam to remain and the Lake’s future to be assured.

Please read on to discover the facts and to dispel the rumors circulating around this issue.

Download and view the PowerPoint Presentation for an overview: The Future of Wixom Lake

Having trouble with the PowerPoint?  Download the free viewer: www.microsoft.com/en-us/download/details.aspx?id=13