CMS Energy (NYSE:CMS) President and CEO John Russell said his company has already met Michigan’s renewable power standard, is buying a new natural gas power plant and keeping the door open for developing addition gas-fired generation.
Russell made his remarks during quarterly earnings conference call.
Russell said CMS Energy’s principal subsidiary, Consumers Energy, achieved the state’s 10% renewable energy target one year ahead of schedule with the completion of the Cross Winds energy park.
In addition CMS is seeking government approvals for its purchase of the roughly 600 MW natural gas plant in Jackson, Mich. In addition, CMS is keeping regulatory permits active for eventual development of the 700-MW Thetford natural gas combined-cycle project, officials said.
The CMS CEO said he sees significant potential for access to new electric generation depending on how various market and regulatory issues shake out. The CMS electric utility could retire roughly 800 MW of coal-fired capacity by mid-2016. That’s what CMS calls the “classic seven” coal units.
In addition, CMS and Consumers Energy have about 2,000 MW of power purchase agreements (PPAs) that are scheduled to expire in coming years. All of this creates significant upside for new generation, Russell said.
The CMS CEO also devoted much time to discuss the efforts of recently re-elected Michigan Gov. Rick Snyder (R) to overhaul energy policy in Michigan and alter the state’s “hybrid” electric market.
“We’re anticipating action on energy policy in Michigan consistent with statements from state policy makers,” Russell said. “The Lower Peninsula is facing an electric generation shortfall as early as 2016, which is why we need a Michigan-first energy plan. While supporting the efforts of policy makers, we also are ensuring power reliability for our customers by taking steps such as purchasing the Jackson Gas Plant for our electric generating fleet.”
Russell said Consumers Energy, Michigan’s largest utility with three million electric and natural gas customers, plans to invest more than $15.5bn in its operations over the next 10 years.
CMS officials also said the utility’s 2015 electric rate case is underway.
“CMS Energy continues to deliver on its promise to investors, customers and the State of Michigan. 2014 marks our 12th consecutive year of consistent financial performance, delivering top-end industry earnings growth, with more progress planned for 2015 and beyond,” Russell said.
“Our customer focus is paying off, with major improvements in customer satisfaction scores, residential electric bills that are 10 percent below the national average, and strong electric and natural gas reliability, including during last winter’s historic Polar Vortex,” Russell said.
“Michigan’s economy is rebounding strongly, with the lowest unemployment rate in 12 years. We’re doing our part by making energy costs more affordable. We’ve proposed electric rate reductions of 5 percent to 15 percent for business customers which are large energy users. Natural gas bills for customers are forecasted to be lower in 2015 compared to 2014 and more than 20 percent lower than 5 years ago,” Russell said.
CMS Energy announced reported net income of $96m, or 35 cents per share, for the fourth quarter of 2014, compared to reported net income of $102m, or 37 cents per share, for the same quarter of 2013. Adjusted (non-Generally Accepted Accounting Principles) net income for the fourth quarter was the same as the reported amounts.
For 2014, CMS Energy had reported net income of $477m, or $1.74 per share, compared to $452m, or $1.66 per share for 2013. On an adjusted basis, which excludes the effects of one-time items, the company had net income of $486m, or $1.77 per share for 2014 at the high end of guidance, compared to $452m, or $1.66 per share for 2013.
CMS has also reduced its operation and maintenance (O&M) has been cut dramatically in recent years, officials said.