8-KOther Events

CMS ENERGY CORP 8-K Report, Corporate Update (Aug 24, 2006)

Filed August 24, 2006For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) announced a significant development on August 22, 2006, regarding its subsidiary Consumers Energy Company's power supply cost recovery (PSCR) factor for 2006. The Michigan Public Service Commission (MPSC) approved Consumers' PSCR Plan and associated power supply costs as prudent, authorizing an increase to the PSCR factor. This adjustment is expected to reduce the projected $41 million PSCR under-recovery by approximately $125 million, bringing the total estimated under-recovery for 2006 down to about $125 million. The company anticipates full recovery of its 2006 power supply expenditures through this mechanism, which includes an annual reconciliation process to correct any variances. This MPSC order is a positive development for CMS Energy as it addresses a key financial concern by allowing for the recovery of power supply costs, thereby improving the financial outlook for Consumers Energy. Investors should note that the recovery is subject to ongoing regulatory processes and potential future MPSC actions. The company has also incorporated forward-looking statements, emphasizing that actual results may differ due to various risks and uncertainties, which are detailed in their previous SEC filings.

Key Highlights

  • 1MPSC approved Consumers Energy's 2006 Power Supply Cost Recovery (PSCR) Plan and associated costs as prudent.
  • 2Authorization granted for an increase in Consumers' PSCR factor.
  • 3The PSCR increase is expected to reduce the 2006 PSCR under-recovery by approximately $41 million.
  • 4Revised projected PSCR under-recovery for 2006 is now estimated at $125 million.
  • 5Consumers Energy expects to fully recover all its 2006 power supply expenditures.
  • 6Recovery is subject to an annual reconciliation process to address over or under-recoveries.
  • 7The report includes forward-looking statements, advising investors to consult risk factors in prior filings.

Frequently Asked Questions

The MPSC order approves an increase in Consumers Energy's power supply cost recovery (PSCR) factor, which is expected to significantly reduce the company's projected under-recovery of power supply costs for 2006. This adjustment should bring the total estimated under-recovery down to approximately $125 million and facilitates the full recovery of power supply expenditures.

Yes, Consumers Energy expects to recover fully all of its 2006 power supply expenditures. The approved increase in the PSCR factor is designed to address the under-recovery issue, and the company's recovery is subject to an annual reconciliation process.

The annual reconciliation process allows for the adjustment of actual power supply costs incurred by Consumers Energy against the amounts recovered through the PSCR factors. Any discrepancies, whether over-recovery or under-recovery, are corrected during this annual review.

The company has indicated that forward-looking statements are subject to risks and uncertainties. Investors should refer to the 'FORWARD-LOOKING STATEMENTS AND INFORMATION' and 'RISK FACTORS' sections in CMS Energy's and Consumers' 2005 Form 10-K/A and subsequent 10-Q filings for details on factors that could cause actual results to differ materially from expectations.