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County could take sole ownership of Lake Byllesby dam

Dakota County may soon take sole ownership of the Lake Byllesby Dam and attached hydroelectric power facility located on the shared county border in Cannon Falls.

More financial information is expected to presented during the county's 2011 budget talks this fall.

For years, Dakota County and Goodhue County have owned the dam with Dakota County possessing 60 percent ownership and Goodhue County 40 percent ownership. The counties have shared the responsibilities, costs and hydropower power revenues associated with maintaining the dam and facility. In 1987, the counties leased the facility to North American Hydro Holdings to operate the facility and sell energy to Northern States Power, now Xcel Energy.

In 2001, the county initiated litigation against and North American Hydro Holdings, and in 2009 terminated the leases with the company over a dispute involving unpaid lease rents. Negotiations between the counties and North American Hydro Holdings have continued and settlement discussions are continuing prior to an expected Oct. 17 trial date. The company is continuing to operate the facility through separate operating agreement which ends Oct. 15.

Dakota County water resources manager Michelle Beeman told the Dakota County Board of Commissioners last week that during discussions of future operations of the facility the counties have also been involved in responding to recent requirements of the Federal Energy Regulatory Commission to make physical upgrades to the dam spillway to improve its ability to handle the volume of water in the reservoir under flood conditions. Upgrade costs range from about $2.4 million to $4.8 million. The Minnesota Department of natural resources awarded a grant of $850,000 to the counties to help offset the cost.

As the discussions continue between the counties for long-term options and financial considerations, the counties have identified different priorities for the operations and ownership. The staff from both counties has recommended that it is in the best interest both counties for Dakota County to take over at the dam. As sole owner, Dakota County would receive all future revenue from the sale of the power from the facility, including all lease rents currently being held in escrow with District Court once the legal action is resolved.

The net operating revenues from the dam are expected to increase as county revenue from power sales increase more than operating costs.

Nathan Hansen

Nathan Hansen has been a reporter and editor with the Farmington Independent and the Rosemount Town Pages since 1997. He is very tall.

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