Au Train Dam does not have funds for necessary upgrades

This story was produced by My UP News correspondent Jessica Goska. Find the original story here.

After an unprecedented draining of the Forest Lake reservoir in Au Train, water levels are trickling their way back up.

At the same time, the owner of the 124-year-old pair of dams is telling regulators they are out of money, in an apparent attempt to continue avoiding remediation projects that have been called for since before they bought it.

It’s a situation that both parties say didn’t have to go this far.

“When FERC issued their order transferring ownership in 2010, that order included language that the dam needed to be brought up to current safety standards,” said Ryan McCone, a dam safety specialist with the Michigan Department of Environment, Great Lakes and Energy (EGLE).

Meanwhile, the vice president of the company that owns the dam said they have proposed plans for remediation, but they were rejected.

He said now, “to put it bluntly, ‘you have to spend money’ is what they’re telling us. And we keep telling them we don’t have money to spend.”

A tale of two regulators

In our reporting of this story, we experienced a bit of who’s-who whiplash. That’s because while the dam is licensed to UP Hydro, LLC, they are owned by Renewable World Energies (RWE). 

Then with regulations, the Federal Energy Regulatory Commission (FERC) oversees the dam and hydroelectric project itself, while EGLE keeps a check on the environment affected by it.

Even the dam is technically two dams — with one flowing north to Lake Superior and the other flowing south to Lake Michigan.

‘The impoundment is now basically a mud flat’

Last month, EGLE sent a letter to RWE saying the water level was too low, and the flow rate out of the impoundment was not high enough.

In fact, “too low” is putting it lightly. 

While an inspector from EGLE said the state of the reservoir looked passable in the beginning of August, by mid-September, fans of fishing the body of water — which had recently been stocked with nearly 40,000 walleye — were posting videos online of the drained, muddy mess that it had been reduced to.

This isn’t the first time a fishery was lost due to dam issues in the Upper Peninsula this year. You can read our story from July about Black River Lake.

On Oct. 17, EGLE sent a violation notice to RWE, saying the draining of the basin was done without their knowledge or approval. EGLE then requested RWE tell them what happened, when the water level will be brought back, and how they will address the concerns the department had before the drawdown had happened.

https://76a7e4d6e0709c887d43c68054de45f2.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html If EGLE had signed off on it, McCone said they could have helped mitigate harm to the water and wetland ecosystem. “The impoundment is now basically a mud flat,” said McCone, “and the damage to the aquatic organisms, and habitat that it had provided has likely already occurred.”

Why did the draining happen, anyway?

We were told two slightly different versions of this story.

In both, the stories begin with the dam’s apparent inability to withstand a worst-case-scenario flood, and FERC’s order for RWE to enact an interim solution in lieu of them pursuing a permanent solution, such as installing flood gates.

When we spoke with Jason Kreuscher, vice president of RWE, he told us the company was caught between a rock and a hard place with the regulators. 

He said FERC had ordered them to propose two types of ways to improve the dam’s safety; a long term solution, and an interim solution.

The interim solution RWE went after was to lower the water level until they could drop the top of the spillway to their license minimum.

Then, when RWE proposed lowering the water level to the minimum their license allowed, Kreuscher said FERC wanted them to drop it even lower. From there, he said RWE had issues with EGLE not allowing them to reduce their outflow rate.

Kreuscher said establishing the low water level, paired with an uncompromising outflow rate and an uncharacteristically dry second half of the year led to the devastation of the reservoir.

Meanwhile, EGLE said the company dropped the talk of lowering the water level this Spring. Regulators recounted the events, saying, “in the April 1, 2024 filing, the licensee stated that the deficiencies identified by Michigan DNR can be addressed but the studies required by Michigan EGLE to obtain the relevant permits are costly and, therefore, cannot be completed.”

In our later conversations with EGLE, they would tell us that the minimum outflow requirement was key to maintaining a healthy ecosystem downstream.

The FERC side of the story

A June 2024 letter from FERC to RWE sheds their perspective on the issue, corroborating that the agency was amenable to a temporary drawdown until the north dam’s spillway capacity could be improved.

FERC also agreed that they had approved a drawdown to the lowest RWE was allowed to go, and that RWE would have to drop the water level three more feet for their long term solution of dropping the spillway to be in compliance.

But — FERC also said RWE needed to get permits and approvals from any other agency that would be affected by the drawdown, and that lowering the water level was not necessarily the only safety measure they should be taking.

What’s more, other correspondence between RWE and the two regulators say the company eventually scrapped the plans to modify the spillway, planning to instead pursue the cheaper option to permanently maintain a lower water level.

An April 2024 letter from EGLE reads, “RWE stated there are currently no plans for dam modification; rather, the proposed plan is an indefinite drawdown of the impoundment.”

All about the bottom line

In their Nov. 12 letter, RWE told regulators that they were bankrupt, and bleeding $140,000 a year from the Au Train dam project.

While a permanent drawdown likely appeared the cheapest way the company could bring the dam into compliance, the reservoir was also surrounded by protected wetlands and streams. 

That meant EGLE would want impact studies and mitigation efforts for affected ecosystems.

Kreuscher described to us his experience of how it went down:

“We started that permitting process and it became apparent the things that would be required for [the permanent drawdown] process included wetland delineations, shoreline monitoring of strain, an organism monitoring and relocation were going to be costly. 

And again, we don’t have funds to do that type of thing. So a wetland delineation alone would require someone going out and physically looking at 15 miles of shoreline. For what? 

If they found any wetlands that would be harmed by this process, then it requires remediation and or creation of wetlands in another area… there’s just a lot of requirements out there that would be extremely expensive to do.

A lot of these things, we would be happy to do if the plant made a ton of money, but it doesn’t.”

Double trouble

From what Kreuscher described, his company had only a handful of realistic options:

• Leave the water level alone, and get in trouble with the federal regulators
• Lower the water level, and deal with the State of Michigan

Instead, RWE seems to be in hot water with both.

Since FERC required the dam owner to get the green light from the state for any drawdown to happen, being in trouble with EGLE meant they were still under the gun with FERC.

In their most recent letters, state and federal regulators made several demands, ranging from an explanation of how they water level, new plans and proposals for maintaining dam safety, and information to help them understand how the surrounding environment will be impacted.

In our conversation with Ryan McCone from EGLE, he had no bones about placing the blame on RWE.

“For 15 years, they’ve known these modifications needed to occur,” said McCone.

Another claim from Kreuscher was that over the course of their ownership, regulations have increased costs to a point far beyond the relatively fixed income received from the dam’s power station.

To that, McCone said the idea of costly regulations popping up in the last 15 years is simply not true. “What has popped up is there have been some higher profile dam failures in recent years,” said McCone, “and so it’s become much more part of the public consciousness or public awareness that this is a real issue with real consequences.”

On RWE’s failure to make the numbers work out, McCone said, “they’re the responsible party, they purchased the dam. You know, I would presume they did their market research to know what it would take to be profitable. The state and FERC had no control over that decision.”

Who will be left with the dam problem?

On Nov. 12, Kreuscher signed off on a letter from RWE to FERC that begins by summarizing what the agency has most recently asked of them. In response, RWE said:

“The licensee has no means to complete the necessary upgrades. UP Hydro has a net loss of around $140,000 for the last 12 months. As such, the licensee cannot provide a plan and schedule to complete these items.

The proposed sale of land has not progressed as the land is secured by a mortgage with Stephenson National Bank and Trust who is working to foreclose on a large portion of the land and in turn sell to Michigan DNR.

It is my understanding that the bank has had discussions with the Commission regarding this and the process to move forward. As the land would ultimately be under the control of MIDNR, the licensee anticipates that no amendments to license plans will be necessary.”

We asked Kreuscher what the future of the dam looked like and if RWE would still be involved a year from now.

“I can’t speculate on that, to be honest,” Kreuscher said.