Counties cancel lease with operator of Byllesby Dam

Two south-metro counties are looking for a new partner to operate the hydroelectric Byllesby Dam.

The Dakota and Goodhue county boards voted unanimously Tuesday to oust the companies that had been running the publicly owned dam spanning the Cannon River since 1987, citing unpaid rent.

Neshkoro Power and North American Hydro Holdings have 60 days to cease operations and clear out.

It's the latest chapter in a legal battle the counties began in 2007 when they sued the dam's operators to try to collect unpaid rent.

North American Hydro Holdings president Charles Alsberg told the County Board on Tuesday that the company withheld its payments in an attempt to get the county's attention about a separate disagreement with Xcel Energy.

"That, in hindsight, was a terrible mistake," Alsberg said, apologizing and asking for a chance to continue on the planned 50-year Byllesby Dam lease.

County officials said it wasn't their place to step into that disagreement with Xcel Energy and chided Neshkoro and North American Hydro Holdings for trying to force the issue by withholding rent payments.

In addition to ending the lease, the county boards also rejected a settlement offer put forth by Wisconsin-based Neshkoro Power and North American Hydro Holdings, setting the stage for a court date on Oct. 28 if the counties and the companies cannot agree on the amount of unpaid rent that is due.

Dakota and Goodhue counties say the companies owe nearly $300,000, with interest and penalties continuing to accrue. Neshkoro Power and North American Hydro Holdings say the amount is less than $200,000.

The disagreement arose over differing applications of a formula used to calculate a portion of the rent, interest and penalties.

Michelle Beeman, Dakota County director of environment and natural resources, said the counties will look for another company to lease the dam, perhaps short term, until a permanent arrangement is developed.

Henry Byllesby built the dam across the Cannon River forming Lake Byllseby in 1910 as he expanded his Consumers Power Company, later renamed Northern States Power. The dam was donated to the counties in 1969 and began producing hydropower again in 1987 when North American Hydro Holdings began leasing it.