Ford dam draws potential buyers

Hydro power
The dam at the Ford plant in St. Paul was built in 1917.
MPR Photo/Marisa Helms

Ford isn't saying why it's selling its hydro plant now, instead of bundling it with the rest of its prime property along the Mississippi River.

Company officials declined to be interviewed, writing by e-mail only that the company is always looking at ways to optimize its assets, and that Ford thinks selling the Twin Cities hydro plant presents a good opportunity for the company.

One reason for selling the hydro plant now seems obvious: Ford needs money. The second-largest automaker in the country lost $7 billion last year.

Dam in 1925
Lock and Dam 1 provides the platform for Ford's hydro power plant. It began generating electricity in 1925.
Photo courtesy of Ford Motor Co.

Bidders estimate the market value of the St. Paul hydro plant is between $30 million and $50 million. Its generating capacity is between 13 and 18 megawatts; that's roughly enough to power more than 10,000 homes.

Ford finished construction of the plant in 1924 and has upgraded it in recent years. Its license with the federal government was renewed in 2004, so it won't be up for regulatory renewal until 2034, adding to its desirability.

Ford is saying nothing about the process of the sale or who the bidders are. But Minnesota Public Radio has learned that a Minnesota government entity, and three regional and local utilities are among the eight finalists chosen by Ford to bid on the hydro plant.

The state's largest utility, Xcel Energy, is among the finalists. A spokesman says it makes sense for Xcel to look at Ford's hydro plant because it is a renewable resource and it's in Xcel's service territory.

Another local finalist is District Energy in St. Paul, a small biomass utility that heats and cools the majority of downtown St. Paul buildings and the Capitol complex. And it does that with renewable energy -- wood waste.

The Ford plant is considered one of the finest examples of low-head hydro in the Midwest.

"To keep this energy resource in our community allows our community to become more self-sufficient, less dependent upon energy generated from fossil fuels, be it coal, be it natural gas, be it some other resource," says District Energy's Ken Smith.

North American Hydro in Wisconsin is another utility vying for the plant. The company is independent and controls 44 hydro plants in the Midwest.

"The Ford plant is considered one of the finest examples of low-head hydro in the Midwest," says Vice President Bill Pickrell. "First of all, it's on the Mississippi River, which is a very important and heavily regulated river."

Pickrell says Ford has had a very high standard of operation and maintenance. And he should know. Over the years, North American has contracted with Ford to maintain the plant.

Each of the finalists knows who else is in the running. But none of the bidders will identify other bidders.

But Pickrell will say North American Hydro is talking with one or more suitors to possibly put together a joint bid.

"For example, North American Hydro's expertise is in owning and operating repairing and upgrading hydro plants," Pickrell says. "There are other companies that have particular benefits in raising capital, and there are other people that have connections in the labor market and with the politicians who control much of the regulatory issues that represent a big cost to a hydro plant. So we, as well as the other bidders, are looking for that magic combination that allows us to prevail in this bidding process."

Another finalist is the Metropolitan Airports Commission, which owns and operates the Twin Cities International Airport.

"It simply would be a good fit for us," says MAC spokesman Pat Hogan.

Hogan says the airport uses about 17 megawatts of electricity a year, costing the MAC nearly $8 million annually.

"We would be able to use the facility to generate electricity that would meet almost all of the airport's needs," Hogan says. "We would not need to buy very much from an outside provider, and that would be a huge savings for the Airports Commission, savings we could then pass along to tenants at the airport."

Hogan says the agency has hired a consultant to look at the feasibility of bidding. He says the MAC is also talking with other finalists.

Hogan says MAC executives will be touring the hydro plant with Ford officials sometime in the next few weeks. The remaining finalists will also visit the facility soon, before submitting final bids to Ford.

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