CMS Getting Out of Non-Utility Renewables
The directors of CMS Energy Corp. have approved a plan to stop developing non-utility renewable-energy projects and to sell some assets owned by the company’s NorthStar Clean Energy division.
Jackson, Michigan-based CMS, which is the parent of Consumers Energy, will keep many of NorthStar’s Michigan assets, including Dearborn Industrial Generation, a 770-megawatt natural gas and waste gas cogeneration plant that sits across the street from Ford Motor Co.’s storied Rouge factory complex. President and CEO Garrick Rochow and his team said last week that CMS staffers have started reviewing market information and indications of interest from possible buyers and that they expect to conclude the sales process in the next year.
Most of the assets being put on the block are outside Michigan and comprise wind, solar and biomass projects in seven states. Staying at CMS in addition to Dearborn Industrial Generation and two gas peaking power plants are four solar projects in the Wolverine State that have a combined capacity of about 500 megawatts.
The move to get out of non-utility renewables development, one several other utilities have made in recent years, will streamline CMS’ business to focus more narrowly on regulated energy services and lower the company’s financing needs by more than $500 million between now and 2030.
“You would expect as good fiduciaries of the business that we’re always looking on a regular basis at our businesses and we do that,” Rochow told analysts on a July 28 conference call. “We’re looking at how we deploy capital to bring the highest value back to our owners. The decision we’re sharing here today does just that, right? We talked about reallocation of capital, the capital assets we’re going to maintain with light capital investment and bring cash back to the parent, the disposition of assets.”
To be clear, CMS isn’t getting out of renewables investment: The company’s five-year, $24 billion capex plan includes about $2 billion for utility renewables that new CFO Srikanth Maddipati noted already has been approved. The broader plan assumes annual rate base growth of more than 10% through 2030, when CMS’s rate base will have grown to $46.8 billion.
Shares of CMS (Ticker: CMS) closed trading July 28 trading at $74.37, essentially changed from the prior day. Since then, they have given up some ground and were changing hands around $71.90 on the afternoon of Aug. 4. The company’s market value is about $22.5 billion.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications T&D World, Healthcare Innovation, IndustryWeek, FleetOwner and Oil & Gas Journal. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.