Less reliance on coal reduces staff needs, CMS says

CMS Energy (NYSE:CMS) and its chief subsidiary, Consumers Energy, continues to make big investments in its natural gas and electric infrastructure, CMS President and CEO John Russell said during an April 23 earnings conference call.  

CMS will be making roughly $15.5bn in capital expenditures for the natural gas and electric sides of the business between now and 2024, officials said during the first quarter earnings call, which was webcast.

On the natural gas front, the company will be replacing about 800 miles of main pipeline and installing nine new compressors. On the electric side of the business, CMS has already completed installation of 85% of its clean air improvement projects.

Michigan is moving toward less coal and more natural gas in the electric generation mix. In the long run, this could mean less operation and maintenance expense for CMS, Russell said.

Gas plants and wind power projects require a fraction of the employee footprint needed to run coal plants and this will mean lasting O&M savings, Russell said. CMS said it expects that O&M costs will decrease 7%, or by about $900m, between 2014 and 2019.

CMS has been involved in coal-to-gas switching projects at various stations, according to the CMS presentation.

The Mid-Continent ISO continues to predict an electric capacity shortfall in 2016 for the Michigan Lower Peninsula area  

The company has reached a tentative five-year settlement the Utility Workers Union of America. – that is still pending ratification.

Michigan is updating its energy law. The Michigan Senate and House are debating bills that could include “full regulation,” CMS officials said.

Weather conditions also helped CMS performance, officials said.

“During this second consecutive colder-than-normal winter our customers received safe and reliable energy service. This performance underscores that our long-term strategy to expand and strengthen our gas distribution, transmission and storage system is paying off for our customers,” Russell said.

CMS Energy reported net income of $202m, or 73 cents per share, for 1Q15, compared to reported net income of $204m, or 75 cents per share, for the same quarter of 2014. Earnings per share in 2015 grew 7% compared with 2014 on a weather-normalized basis.

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.