8-KOther Events

CMS ENERGY CORP 8-K Report, Corporate Update (Feb 10, 2010)

Filed February 10, 2010For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) has filed an 8-K report detailing a significant decision by the Michigan Public Service Commission (MPSC) regarding the decommissioning costs of the Big Rock Nuclear Power Plant. The MPSC ruled against Consumers Energy's request to recover $44.1 million in excess decommissioning costs. Instead, the MPSC ordered Consumers Energy to issue refunds totaling an estimated $86 million to customers. This ruling stems from a dispute over whether revenues collected during a statutory rate freeze period (2001-2003) should have been allocated to decommissioning trusts. The MPSC determined that these funds were indeed meant for the trusts, leading to the conclusion that Consumers Energy had over-collected. The company is required to calculate the exact refund amount, including interest, and implement a surcharge to return these funds over a maximum of 18 months. This financial impact, including the refund and the write-off of a $44.1 million regulatory asset, will be recorded in the company's 2009 financial results.

Key Highlights

  • 1MPSC denied Consumers Energy's request to recover $44.1 million in excess decommissioning costs for the Big Rock Nuclear Power Plant.
  • 2MPSC ordered an estimated $86 million refund to customers, citing over-collection of decommissioning funds.
  • 3The dispute centered on the allocation of revenues collected during the 2001-2003 statutory rate freeze period to decommissioning trusts.
  • 4Consumers Energy is required to file a computation of the exact refund amount plus interest within 30 days.
  • 5A surcharge will be implemented to return the over-collected amount to customers over a period not exceeding 18 months.
  • 6The company will record the $86 million refund and the $44.1 million regulatory asset write-down in its 2009 financial results.

Frequently Asked Questions

The main issue was a decision by the Michigan Public Service Commission (MPSC) concerning the recovery of decommissioning costs for the Big Rock Nuclear Power Plant. The MPSC ruled against Consumers Energy's request for additional cost recovery and ordered a refund to customers.

The MPSC ordered an estimated $86 million to be refunded to customers. This is in contrast to Consumers Energy's request to recover $44.1 million in excess decommissioning costs.

The MPSC found that Consumers Energy had collected sufficient funds for decommissioning the Big Rock plant, including revenues that should have been deposited into the decommissioning trusts during the 2001-2003 rate freeze period. The commission determined these revenues were intended for the trusts, making additional recovery unnecessary and leading to an over-collection.

CMS Energy will record the effects of the $86 million refund and the write-down of a $44.1 million regulatory asset (representing the unrecovered decommissioning funds) in its 2009 financial results. The company also needs to prepare a detailed calculation for the refund, including interest, and a plan to return the funds to customers.