CMS Energy Goes Green in Michigan - Analyst Blog
June 27 2011 - 12:53PM
Zacks
Consumers Energy, the major subsidiary of CMS
Energy (CMS) has got into an agreement to purchase the
total renewable energy output produced by the Fremont Community
Digester (“FCD”). The contract is in line with the utility's
commitment to increase spending in Michigan following the launch of
new Pure Michigan Business Connect initiative in early June by the
Michigan Economic Development Corporation.
CMS Energy will purchase approximately 380,000 megawatt-hours
(MWh), or 19,000 MWh per year, of electricity from the FCD over the
next 20 years at a cost of $55 million. The FCD's electric
output is estimated at 3.1 megawatts.
The $22 million digester and electric generator of FCD is
being built by NOVI Energy, Indus Energy and North Central
Cooperative, and is expected to begin commercial operation in the
summer of 2012. Agricultural waste products for the FCD will
be supplied by Gerber Products, Fremont Cooperative Produce Company
and other agricultural companies.
Consumers Energy is already into a five-year, $6 billion capital
investment plan for Michigan. CMS Energy’s regulated electric power
operations in Michigan generate a relatively stable earnings
stream. Thus growth prospects look robust for CMS Energy with a
constructive regulatory environment along with steady recovery in
the Michigan economy.
CMS Energy reaffirmed its guidance at adjusted earnings of $1.44
per share for fiscal 2011. That's an increase of about 6%
from fiscal 2010 adjusted earnings of $1.36. This is consistent
with the company's long-term plan of 5%–7% annual earnings
growth.
CMS Energy is making substantial investments in renewable
energy, environmental quality, energy efficiency and other areas to
continue to provide customers with safe, reliable and affordable
service. The company also recently updated its renewable energy
plan asserting the company's commitment to meet Michigan’s 10%
renewable energy standard.
Consumers Energy is moving forward with its renewable energy
plan to procure 10% of the power provided to its 1.8 million
customers from Michigan renewable energy projects by 2015, as
required by the state's energy reform law.
The company already is the largest supplier of renewable energy
in Michigan. As of now 5% of the power supplied to its 1.8 million
electric customers comes from renewable sources. Going forward the
company plans to invest more than $6 billion in its utility
operations through 2015, making it one of the largest investors in
Michigan.
We maintain our Neutral rating on CMS Energy. The quantitative
Zacks #3 Rank (short-term Hold rating) for the company indicates no
directional pressure on the shares over the near term. In the
near-term we would advise investors to focus on its Zacks #2 Rank
(short-term Buy rating) peers like Avista
Corporation (AVA) and The AES Corporation
(AES)
AES CORP (AES): Free Stock Analysis Report
AVISTA CORP (AVA): Free Stock Analysis Report
CMS ENERGY (CMS): Free Stock Analysis Report
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