Dakota County seeks additional $9 million to update Byllesby Dam

Dakota County officials are seeking an additional $9 million from the state to fix the aging hydroelectric Byllesby Dam, including funding to cover the cost of rebuilding its powerhouse to meet updated federal regulations.

The county got $6 million in state funding in 2017 to repair the dam's powerhouse and install new turbines. Since then, the price tag to update the 110-year-old, county-owned dam on the Cannon River has risen from $14 million to somewhere between $23.9 million and $30 million.

Officials chalk up the rising cost to the dam's age and the project's complexity.

"We didn't have a good grasp on the cost estimate," said Josh Petersen, Dakota County's senior water resources engineer. "There's a lot of unknowns."

Dakota County's portion of the price tag is about $8 million so far, said Commissioner Mike Slavik. The county is committed to using revenue from the dam's hydroelectric output rather than property tax dollars, he said.

"There's not many hydroelectric dams around, so some of it is just uniqueness," Slavik said. "We don't know what we're getting into ourselves until we have a contractor there."

Slavik said the state could use bonding dollars along with funds from Minnesota's Renewable Development Account (RDA) to reach $9 million. The RDA was created in 1994 by the Legislature as a condition of letting Xcel Energy store nuclear waste at its Prairie Island power plant.

County officials testified this spring before legislative committees about the dam, an experience Slavik called "very, very positive." But the Legislature shut down due to the coronavirus before officials could address another committee.

Rep. Pat Garofalo, R-Farmington, said he supports funding the dam. If the state doesn't provide additional help, Dakota County taxpayers will have to foot the bill, he said: "It's not the sort of work that we can just ignore."

But Garofalo said there's a bigger concern for the state this year. "Generally speaking, given the collapse of the private sector economy, we don't have any money," he said.

Byllesby Dam is designated as a "high hazard" dam by the federal government because its failure would likely mean loss of life and extensive property damage. Dakota County has prioritized fixing it for several years, and this would be the dam's third large capital improvement project in a decade.

Northern States Power, now Xcel Energy, owned the dam until 1969, when Goodhue and Dakota counties bought it together. Dakota County took it over in 2009.

"It's as old as a Model T Ford at this point and we're still using it every day of the year," he said. "It's exceeded its useful life."

A study several years ago found that removing the dam would be too expensive, lower property values for residents living on the dam's reservoir and might even prompt a lawsuit for that reason, Petersen said.

Previous plans called for the dam's powerhouse to be retrofitted, but a recent assessment found it made more sense to tear it down and build new, Petersen said. The old powerhouse poses safety and structural concerns. "It's nowhere near modern code requirements," he said.

A new powerhouse would have lower maintenance costs, Peterson said, and generate almost twice the energy.

Petersen said Dakota County hopes to start the project in late May or early June. If state funding doesn't materialize, the County Board will have to revisit the project and its financials. Officials will have to figure out how to find the needed funding and the "bare minimum" required for the dam, Petersen said.