CMS focuses on CEO succession; increased capital investment

CMS Energy (NYSE:CMS) management predicted Jan. 27 there will be continued strong performance as CMS President and CEO John Russell turns over the helm of CMS and utility subsidiary Consumers Energy in July to Patricia (Patti) Kessler Poppe.

The parent company announced Jan. 26 that Russell is retiring to become board chairman in May. Russell will replace another former CMS CEO David W. Joos as board chairman. CMS officials talked about the succession and offered an earnings call preview during a call with financial analysts Jan. 27. The regular quarterly earnings report is planned Feb. 4.

Poppe, currently senior vice president of distribution operations, engineering and transmission for Consumers Energy, stressed continuity at the Michigan-based company.

“We have a winning strategy,” Poppe said. “This is not a turnover as part of a crisis,” Poppe said, adding that it’s part of a well-planned leadership succession plan.

“Business as usual here … means extraordinary performance,” Poppe said.

“I do certainly have to replace myself,” which creates some domino effect, but don’t expect big turnover, Poppe said.

Russell was asked how he views his next role as chairman. “It is a non-executive role here is chairman. My role is really to manage the board,” Russell said. Russell also said he has a strong relationship with the new CEO.

On the operational side, CMS officials said they are increasing the capital expenditure plan by $1.5bn. The company now expects capital spending will amount to $17bn between 2016 and 2025. More spending is needed in part to go toward more renewable resources to help comply with the Environmental Protection Agency (EPA) Clean Power Plan.

The Cross Winds project has already established itself as a major renewable sales facility in the Great Lakes official, CMS said in materials released in connection with the call.

When CMS soon releases its earnings for the fourth quarter of 2015, it will show that revenue was hurt by very mild weather in the fourth quarter, officials said.

On other issues, Russell said that an ongoing political crisis over unsafe drinking water in Flint, should not keep the Michigan Legislature from tackling a state energy law overhaul.

 “The Flint issue is a big issue for the administration. But it isn’t a big issue for the legislature,” Russell said.  

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.