Hydropower at Argo Dam?

Ann Arbor Energy Commission holds off on dam recommendation
Members of the Ann Arbor Energy Commission look at a hybrid plug-in Ford Escape after their Tuesday evening meeting.

After their Tuesday evening meeting, members of the Ann Arbor Energy Commission checked out a hybrid plug-in Ford Escape parked outside the county administration building on North Main. From left: Fulter Hong, Charles Hookham, Bill Verge, David Wright, Mike Delaney and Jason Bing. The car was brought by Delaney, who works for DTE Energy Ventures in Ann Arbor.

At the start of last Tuesday evening’s meeting of the Ann Arbor Energy Commission, Bill Verge commented that for the first time since he’s been on the commission, people in the audience outnumbered commissioners. “I’m quite happy about that,” he said.

The reason for the interest? Argo Dam.

The dam has been at the center of a heated debate over whether to repair it or remove it completely – the latter option would result in the elimination of Argo Pond. The city’s Park Advisory Commission and Environmental Commission have both weighed in with recommendations to city council, the body that will ultimately decide the dam’s future.

Because Argo Dam has the potential to generate electricity, as Barton and Superior dams already do, the Energy Commission decided to look at the issue, too. Nearly a dozen people showed up on Tuesday night to see what the commission would recommend. (As soon as the commission finished with that segment of its meeting, all but a couple of people in the audience departed.)

Is Hydropower Really Viable?

Before commissioners discussed the Argo Dam situation, they heard a presentation by Matt Naud, the city’s environmental coordinator. Naud explained that the city bought four dams on the Huron River from Detroit Edison in the 1960s: Barton, Argo, Geddes and Superior. In the 1980s, the city deemed it feasible to generate electricity from hydropower at Barton and Superior. At Barton, a 900-kilowatt turbine generates about 4.2 million kilowatt hours of electricity each year. At Superior, a smaller 520-kilowatt turbine generates about 2.3 million kilowatt hours per year. The amount of energy generated varies by month, depending on the river’s flow. Peak months are typically in the spring.

In 2008, the city commissioned a study looking at the feasibility of hydropower at Argo and Geddes. That study, conducted by the consulting firm Stantec, concluded that Argo and Geddes had the capacity to generate varying amounts of electricity. At Argo, installing a 370-kilowatt turbine would yield an estimated $2 million kilowatt hours per year. Significantly more could be generated at Geddes, according to the report – an estimated 3.35 million kilowatt hours from a 670-kilowatt turbine.

For each dam, the cost to install hydropower is estimated around  $4.35 million, plus $300,000 for toe drain repair on Argo. Based on an assumption that the city would take out a 30-year bond at 5.5% interest to pay for each project, Naud estimated that it would take 39 years before Argo would generate enough power to pay back that cost. The estimate was 21 years for Geddes.

The city now sells power to DTE for less than 6 cents per kilowatt hour, Naud said, but the investment payback calculations are based on an initial rate of 8.35 cents, with a 5% increase in that rate every year for the next 30 years.

Naud then posed a series of questions for the commission to consider, including:

  • If an economic analysis suggests that reinstalling hydropower is viable, how do environmental effects of the dam impoundments influence the decision to install hydropower?
  • Should a hydropower feasibility analysis include expenses such as dredging costs to mitigate the impoundment effects on the environment?
  • Who pays to maintain the dams to preserve future hydropower potential?
  • When a community partner (such as the VA Hospital or Consumers Energy) is interested in generating power at the dams, how does that affect the city’s decision?
  • If hydropower is seen as a redundant power supply for homeland security purposes, what can electricity from one or more dams run, and when? What’s the cost to run the infrastructure from the dams to points of use?

Naud expanded on a few of the issues addressed in these questions. The VA Hospital, for example, gets incentives from the federal government for using renewable energy – generating their own renewable energy would earn them “super double bonus points” from the feds, Naud joked. The hospital is not interested in owning any of the dams, he said, but they are interested in exploring the use of hydropower in some kind of partnership with the city. The hospital is doing a feasibility study, Naud said, but he wasn’t sure what the next steps might be for them.

Naud also discussed in greater detail the issue of emergency power. The city’s water treatment plant and wastewater treatment plant have backup generators – that’s why raw sewage didn’t get dumped into the Huron River during the August 2003 blackout, Naud said. Using federal homeland security funding, the city also installed generators at Huron and Pioneer high schools, which could be used in emergency situations. But if a power outage continues for more than 30 days, Naud asked, how might the city handle that?

He outlined how existing power sources might be used to operate critical functions. The landfill, which generates power that the city sells to DTE, is about 2,500 feet from the center of the Wheeler Service Center, a facility bounded by Stone School, Ellsworth and Platt roads. Barton is the closest hydropower site to the water treatment plant, about 5,000 feet away. And the Superior hydropower facility is about 7,000 feet away from the wastewater treatment plant, going along the railroad tracks (assuming, Naud noted, that Bill Ford won’t let them go through his yard).

What if hydropower were installed at Argo and Geddes? Argo would be about 5,500 feet from the center of the water treatment plant and 3,200 feet from city hall. Geddes would be about 2,000 feet from the center of the wastewater treatment plant.

Under an emergency scenario, the landfill generates enough power to run Wheeler Service Center, Naud said, if the city can get out of its contract that supplies power to DTE. Getting electricity for the other sites is more problematic. Even with power from both Barton (existing) and Argo (estimated), there still wouldn’t be sufficient power to run the water treatment plant year-round, Naud said – for about four or five months of the year, river flow would be too low to generate sufficient amounts of electricity. The scenario is even worse for the wastewater treatment plant: Tapping both Superior (existing) and Geddes (estimated) wouldn’t provide sufficient power during any month. Finally, if Argo had hydropower, it could generate enough electricity for city hall for a significant part of the year, Naud said.

Naud characterized his presentation to commissioners as “food for thought.” He outlined a timeline for next steps that includes a working session on Argo that city council will hold an hour prior to its June 15 meeting, starting at 6 p.m. (The council meeting starts at 7 p.m.) Council will hold a public hearing on whether to keep or remove the dam at its July 6 meeting, he said. The Michigan Department of Environmental Quality, which has been pushing the city to either repair or remove the dam, has set a July 31 deadline for a decision, said Naud.

Commissioners’ Questions and Discussion

Several commissioners had questions for Naud of a general nature regarding the Huron River Impoundment Management Plan, of which the Argo Dam issue is a part. We won’t repeat that coverage here: For background on those broader issues, see our reports on the city’s Park Advisory Commission, which voted 5 to 4 in favor of keeping the dam, and the Environmental Commission, which voted 8 to 4 in favor of removing it.

Some questions, however, related specifically to the hydropower issue. Charles Hookham asked whether installing hydropower at Argo or Geddes would require relicensing by the Federal Energy Regulatory Commission, known as FERC. Yes, Naud said, and that process would cost an estimated $300,000 per dam.

Hookham, an engineer, said that the Stantec report focused on conventional hydropower, not advanced turbine technology. He said that advanced technology might not generate as much electricity, but its payback on investment might be quicker than for conventional systems, and it might be more environmentally friendly.

One commissioner asked if the city had considered taxing recreational users on Argo Pond, such as rowing groups, to help pay for dam and impoundment maintenance. Naud said that though no plan had been proposed, discussions about that possibility were under way. He said if the dam were used to generate power, then energy users should be asked to help pay, too.

When it came time to discuss a resolution recommending that city council either repair or remove Argo Dam, Hookham said he’d rewritten a resolution to state that the commission did not have sufficient information at this time to make a recommendation. He said the commission’s focus should be on energy issues, not on environmental or impoundment management. The main issue, he said, was that once the dam is gone, it’s gone – a new one wouldn’t be built in its place, and that meant there’d be no opportunity for hydropower.

Naud said that city staff didn’t need a resolution directing them to take a look at new hydropower technology. He mentioned again that the city had commissioned the Stantec study, but acknowledged that the study didn’t evaluate advanced turbine technology. They’d have to act quickly to get a bid request together for an additional study, he said, and to figure out how to pay for it.

Another factor to consider is that no one in the state is putting in low-head hydro, Naud said. ["Head" refers to the pressure of falling water, which is linked to the distance that the water falls. "Low head" refers to a relatively short drop in elevation.] Hookham responded, saying that no one is looking at low-head because it’s a high-cost proposition at the moment. But if you look at what the Environmental Protection Agency might do with regards to a carbon tax, that might put an “interesting twist” on what makes economic sense, he said. [If the government levies a tax on carbon emissions such as those generated by coal-burning power plants, that could make hydropower – which doesn't generate greenhouse gasses and thus would not be taxed – a lower-cost option than traditional power sources.]

Commissioner Jason Bing asked whether anyone had a sense of the opinions of those commissioners who weren’t able to attend the meeting. [Four commissioners – including the chair, Robert Black – were not at Tuesday's meeting. Those attending were Jason Bing, Michael Delaney, Fulter Hong, Charles Hookham, Dina Kurz, Bill Verge, and David Wright.] Andrew Brix, the city’s energy programs manager, said that Black had suggested holding a special meeting between now and July to focus on the Argo Dam issue. Several other commissioners agreed that this would be a good approach – the resolution was not moved, and the group agreed to coordinate with other members to set a date for a special meeting.

As of Friday, Brix said that the special meeting had not yet been scheduled.


  1. By Bob Martel
    June 12, 2009 at 6:23 pm | permalink

    A 39 year payback on a hydro investment is not a good use of resources, even if they are “the government’s.” A 15 – 20 year payback is more reasonable. Perhaps in the future some combination of higher prices for the electricity and lower costs for the technology will make sense.

  2. By Joe Edwards
    June 12, 2009 at 7:30 pm | permalink

    I believe a study conducted by the Corps of Engineers will show the cost of retrofitting Argo and Geddes dam will be significantly less than $4 million per dam calculated in the Stantec study (based on the current bid environment in SE Michigan and other alternative technologies not considered, such as turbine described in the article). I also believe the average cost of electricity over the next twenty years will be two or three times greater than the 5 cents a kilowatt/hr used by the city in calculating the 40 year payback. This projected cost does not even consider the affects of a carbon tax that is being promoted by the Obama administration.

  3. By Peter Washabaugh
    June 13, 2009 at 10:06 pm | permalink

    Following on Joe’s comment, the cost model used by the city does not include several features:

    1) Reduction in Carbon: If the this energy was generated by a coal fired power plant then it would produce ~ 2 lb of C02 per kWh (e.g. see Page 2 of the DoE report: link to .pdf file). This would mean that hydro at Argo could save ~ 4,000,000 lbs of carbon dioxide annually.

    The lighting upgrades in downtown AA save ~ 2,425 tons of C02 annually or ~ 4,850,000 lb of C02 (link to LED lighting article). Thus, argo hydro would be ~ 80% of this.

    2) There is a separate market for “Carbon Offsets”. If you produce carbon free power, there is a market price for the carbon that you didn’t generate. On most of the planet it is $0.01/kWh – $0.005/kWh (e.g. see link to TreeHugger). However, for us, if you go with the DTE Green currents program you get the conscience-freeing privilege of paying $0.02/kWh. (see link to DTE Green Currents). So, hydro at Argo could generate an additional $40k/year through the carbon market.

    3) The wholesale rate used in the model would be appropriate if the city were to use the power. However, the retail rate is more like ~ $0.12/kWh (re: my home’s electric rate – it includes the power and the transmission lines to get to my house) Selling at this price might be accomplished by powering homes or businesses local to the dams. This would require getting in the transmission line business.

    Alternatively hydro at Argo is very close to the core of the city: We might set-up an electric power station to charge electric vehicles. This would allow something like retail-rate sales without having to transmit the power over distances.

    There might be other ideas but these add ~ $0.06/kWh. i.e. $0.08/kWh + $0.06/kWh ~ $0.14/kWh. This would take a huge step toward Bob’s 20 year payback.

  4. June 14, 2009 at 11:41 pm | permalink

    Joe, the city’s calculations used $0.085/kWh, not $0.05/kWh. The city currently gets $0.055/kWh from DTE for electricity generated by the two hydro dams and the landfill methane capture system. The MPSC recently passed a ruling (or so I heard) that set the minimum price to be paid to independent power producers at $0.06/kWh. DTE isn’t likely to pay anything higher than the minimum.

    I think that the value used in the calculations is reasonable. I also expect prices to rise, but they also track the economy to some extent, so projecting them is difficult.

  5. June 14, 2009 at 11:45 pm | permalink

    Sorry, as noted in the article, the value was $0.0835/kWh, not $0.085/kWh. Also note that that was the initial rate and that a 5% rate of inflation was assumed.

  6. By Alan Goldsmith
    June 15, 2009 at 8:12 am | permalink

    “One commissioner asked if the city had considered taxing recreational users on Argo Pond, such as rowing groups, to help pay for dam and impoundment maintenance.”

    I am not a rower, but I think I pay quite enough in city property taxes to not be singled out for more taxes if I decide I want to boat on the Huron. Who made this statement?

    And, the idea to generate clean, locally funded electricity is a GREAT idea. The price of energy isn’t going to increase over the coming decades? It would be unfortunate if this issue were turned into an rich elitist rowers vs. the angels of light environmentalists. It’s not at all.

    Hopefully this isn’t yet another issue the City Council has already decided behind closed doors.

  7. By my two cents
    June 15, 2009 at 10:46 am | permalink

    Not a tax, but how about a user fee?

    The city/PAC charges organized groups a fee for using the baseball fields soccor fields pools etc. Why can’t the city/PAC charge a fee for the rowing groups.

    The public schools charge fees for groups to use their facilities, so I see nothoing wrong with the city charging the school groups(high school, uofm, other)fees for using city facilities.

  8. By Alan Goldsmith
    June 15, 2009 at 11:05 am | permalink

    So the river/Barton Pond would be a ‘city facility’?

  9. By my two cents
    June 15, 2009 at 11:26 am | permalink

    Maybe I am wrong, but aren’t all the dams upkept by the city of ann arbor? I don’t think Barton Hills has a say over what happens on Barton Pond.

    However, correct me if I am mistaken.

  10. By my two cents
    June 15, 2009 at 11:32 am | permalink

    So I guess I am saying that if people want to row on what you are implying is a public resource (the river) and the dam creates the pond that the users want to use, then the rowers should help pay for the upkeep of the dam.

    The argument needs to work both ways.

    If the city is required to pay for the upkeep of the dam and is obligated to keep the dam to support the rowing community, then yes this is a city facility.

    If you want to argue that the river is a public resource (not owned) then the city should be able to remove the dam (which they own) and the rowing community can put up their own dam in the public river to create their pond.

  11. By Joe Edwards
    June 15, 2009 at 12:06 pm | permalink

    Steve – In a comment on an article a few weeks ago, you stated that the MPSC had approved a payback rate of $0.06/kWh for the power Ann Arbor sells to DTE. Based on the 5% annual inflation factor, the average cost of electricity that should be used in the payback calcualtion is $0.102/kWh. The 44 year payback cited by the city is now 32 years.

    If the cost of construction is inflated by 30%, as suspect by some potential community partners, due to the current bid environment in SE Michigan, the payback will be reduced even further.

    Finally, there is no way to account for the cost of a future carbon tax on electricity rates, but many experts believe (as do the community partners in discussions with the city about retrofitting the dams) the 20 year average cost of electricity will nearly double, making the payback less than 10 years.

  12. By Joe Edwards
    June 15, 2009 at 2:21 pm | permalink

    For Bob Martel –

    Argo Dam

    From the Stantec Study:
    Retrofit Cost = $4,350,000
    Total KwHr Generated = 2,000,000
    Cost/KwHr = $0.0835
    Value of Electricity = $167,000
    Operational Costs = $(70,000)
    Annual Return on Investment = $97,000
    Payback in Years = 45

    From the Potential Community Partner Initial Review:
    Retrofit Cost = $3,045,000 (30% less than Stantec estimate due to bid environment and no need for toe drain repair if mill race is closed and drained)
    Total KwHr Generated = 2,000,000
    Cost/KwHr = $0.1528 (20 year average cost based on base year cost of $.06/kwh and inflation rate of 8.5%, which assumes current utility cost trends and carbon tax implementation)
    Value of Electricity = $305,600
    Operational Costs = $(70,000)
    ROI = $235,600
    Payback in Years = 13

    Please note that the HRIMP study (link to HRIMP Report), the alternatives analysis includes the cost of toe drain repairs, which is not needed if the mill race gate is simply closed, and the annual costs for vegetation management, which is currently done by the rowing community. The study also lists $1.8 million for dredging if the dam stays and there has been no need for dredging in the 40 years the current dam has been in place. The alternatives analysis also includes $2.8 million for the value of the land created if the dam is removed. The value of the land seems to have been pulled out of thin air.

    The haphazard used to compile the HRIMP cost matrix is extremely troubling to me.

  13. By Joe Edwards
    June 15, 2009 at 2:22 pm | permalink

    *haphazard approach