CMS, union fighting renewable measure in Michigan

CMS Energy’s (NYSE: CMS) utility subsidiary  Consumers Energy and a labor union  plan to fight a Michigan ballot measure that would require state utilities to go 25% renewable by 2025 – and simultaneously limit the amount of rate increases to accomplish the goal.

During the company’s quarterly earnings call on July 26, CMS President and CEO John Russell said Michigan voters will likely face a lengthy ballot in November. Currently, there are seven proposed constitutional amendments expected to be on the ballot. Among them is a proposal to require 25% of the state’s electricity to come from renewable sources by 2025. That proposal also would put a 1% cap on annual rate increases to pay for meeting that standard, the CEO said.

It would cost an estimated $12bn for Michigan utilities to meet the standard, Russell said. A business, labor coalition has been formed to oppose what Russell deemed a “reckless” proposal. The coalition includes Consumers Energy and the Utility Workers Union of America (UWUA), “which represents about half of our employees are members,” Russell said.

The current Michigan standard calls for utilities to achieve 10% renewable power by 2015. Consumers Energy is currently at 5% and that figure should rise to 8% by the end of this year when the roughly 100-MW Lake Winds project comes online in Mason County, Mich., according to a company spokesperson.

The spokesperson said that barring legal issues it should be clear by early September if the measure will appear on the ballot or not.

CMS officials also said they were concerned about efforts in the Michigan Legislature to return to “full regulation” of the electricity sector. Michigan currently has a “hybrid” regulation system. Russell said such a full-regulation measure is unnecessary due to CMS efforts to keep a lid on costs.

In other news, CMS could announce plans for new gas-fired power generation in 2013, Russell said during the conference call.

The company has said that it probably cease operation of seven small coal units by early 2015. These units have about 950 MW of capacity and CMS cannot make up for that through increased wind or the upgrade of a major pumped storage hydroelectric plant, which is owned jointly with DTE Energy (NYSE: DTE), a CMS spokesperson said.

After experiencing mild weather in the first quarter, CMS has benefitted from the hot summer in Michigan. High temperatures and Michigan’s recovering economy pushed customer demand for electricity on July 17 to its highest level in Consumers Energy’s 125-year history, company officials said.

The company has reduced its headcount by 7% since 2009 thanks to a successful, voluntary separation program, company officials said.

On a side note, CMS officials said the company now burns 97% low-sulfur western coal.

Overall, CMS reported net income of $100m, or $0.37 per share, for the second quarter of 2012, compared to reported net income of $100m, or $0.38 per share, for the same quarter of 2011. 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.