8-K/AOther Events

CMS ENERGY CORP 8-K/A Report, Corporate Update (Jun 12, 2008)

Filed June 12, 2008For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

This Form 8-K/A filing by CMS Energy Corporation (CMS) on June 12, 2008, serves to amend a previous filing by correcting typographical errors and clarifying cost allocations related to the Zeeland Generating Station. The core information revolves around the Michigan Public Service Commission's (MPSC) final order on Consumers Energy Company's electric rate case, issued on June 10, 2008. The order authorizes a net increase in electric base rates of $27,468,600, which is the result of significant adjustments, including the removal of costs from the sold Palisades Nuclear Plant and the inclusion of costs for the newly purchased Zeeland Generating Station. Key details from the rate case order include an authorized rate of return on common equity of 10.7% and the recovery of $26 million in transaction costs for the Palisades sale. Additionally, the MPSC mandated a $20 million reduction in the subsidy residential rates receive from commercial and industrial rates. The filing also notes MPSC approval of a settlement agreement regarding the Midland Cogeneration Venture (MCV), which restates a Power Purchase Agreement (PPA) with Consumers Energy to extend through March 15, 2025, with updated terms for capacity and energy pricing.

Key Highlights

  • 1MPSC authorized a net annual increase of $27,468,600 in Consumers Energy's electric base rates.
  • 2The net rate increase reflects a $163.7 million decrease from the sale of the Palisades Nuclear Plant and a $73.7 million increase from the purchase of the Zeeland Generating Station, among other adjustments.
  • 3The MPSC authorized a rate of return on common equity of 10.7% for Consumers Energy.
  • 4The order allows recovery of $26 million in transaction costs related to the sale of the Palisades Nuclear Plant.
  • 5A directive was issued to reduce the subsidy of residential rates by commercial and industrial rates by approximately $20 million.
  • 6A settlement agreement for the Midland Cogeneration Venture (MCV) was approved, restating its Power Purchase Agreement (PPA) with Consumers Energy through March 15, 2025, with updated pricing terms.

Frequently Asked Questions

This filing is an amendment to a previous 8-K report to correct typographical errors and provide clarification on the costs included in base rates for the Zeeland Generating Station. It mainly provides details on the Michigan Public Service Commission's (MPSC) final order in Consumers Energy's electric rate case.

The MPSC's order authorizes a net increase in Consumers Energy's electric base rates of $27,468,600 annually. This is a result of several offsetting adjustments, including cost reductions from selling the Palisades Nuclear Plant and cost increases from purchasing the Zeeland Generating Station.

The sale of the Palisades Nuclear Plant will lead to a decrease in base rates by $163,686,000 annually. Additionally, $26 million in transaction costs associated with this sale are deemed reasonable and will be recovered from the sale proceeds.

The amended and restated PPA with MCV will take effect when new boilers are commercially operable and will run through March 15, 2025. It sets a capacity price of $10.14 per megawatthour and a variable energy price based on MCV's production costs for 1240 megawatts of capacity. The agreement also preserves a $5 million annual payment to a renewable resources program fund.