Table 1: CMS Unit Age and Size

This case study on CMS Energy accompanies "White Paper: Financial Risks of Investments in Coal."

CMS faces significant risks due to its reliance on coal.

CMS serves approximately 6.5 million people in Michigan. The company has the oldest coal fleet in the nation [Table 1].i The company expects to burn 9.7 million tons of coal in 2011.ii

These coal-fired facilities generated 48% (17,879 GWh) of CMS' total power in 2010 [Table 2].iii

CMS does not disclose the fuel sources for its purchased and interchange power.

Table 2: CMS Net Generation iv

CMS estimates capital expenditures of $1.5 billion from 2011 through 2015 to comply with state and federal environmental regulations.v

None of CMS's coal plants have SO2 scrubbers, although two are scheduled to install them.vi Of the 12 coal units, none have Mercury controls, and only 3 have NOx controls [Table 3].vii

Bernstein Research found that CMS faces scrubber installation costs equal to 5% of its rate base, and the potential loss of 61% of its coal fired output due to EPA regulation of mercury and acid gases.viii

Table 3: CMS Emissions from Coal

CMS has received:

CMS estimates capital expenditures of $180 million between 2011 and 2018 to comply with future cooling water intake regulations, but does not disclose which plants will need to be converted to closed water systems.xi

Table 4: CMS Coal Source xv

CMS produces 600,000 tons of coal ash annually.xii CMS's dry storage facility at Karn Weadock has been leaking arsenic, boron, mercury and phosphorous into Saginaw Bay. Studies have found that the on-site damage to the groundwater is moving off-site and that there is off-site damage to surface water from the landfills. Estimated clean-up for the bay is $52 million.

CMS sources its coal from the Powder River Basin (PRB) and Central Appalachia (CAPP) [Table 4]. The price of coal from PRB increased 59% and from CAPP 31% in 2009.

In 2010, CMS deferred construction of a new 830 MW coal-fired plant at Karn-Weadock because its construction was not economical.

Had the plant been built, CMS would have retired 638 MW of coal-fired capacity. No additional information has been disclosed regarding additional retirements and repowering.

Footnotes
i. CMS Energy, "New and Cleaner Generation," accessed 21 April 2011, available at: http://www.consumersenergy.com/content.aspx?id=1512.
ii. CMS Energy, "Coal Combustion Byproducts", accessed 22 April 2011, available at: http://www.consumersenergy.com/content.aspx?id=3254.
iii. CMS Energy, "2010 Form 10-K," U.S. Securities and Exchange Commission, 24 February 2011, p. 18.
iv. NRDC 2008 data set.
v. CMS Energy, "2010 Form 10-K," U.S. Securities and Exchange Commission, 24 February 2011, p. 50.
vi. CMS Energy, "New and Cleaner Generation," accessed 21 April 2011, available at: http://www.consumersenergy.com/content.aspx?id=1512.
vii. eGRID 2007 data and http://www.consumersenergy.com/content.aspx?id=1512
viii. Bernstein Research, "Black Days Ahead for Coal: EPA Air Emissions Regulations for the Energy & Power Markets," 21 July 2010, p. 13.
ix. CMS Energy, "2010 Form 10-K," U.S. Securities and Exchange Commission, 24 February 2011, p. 109.
x. CMS Energy, "2010 Form 10-K," U.S. Securities and Exchange Commission, 24 February 2011, p. 109.
xi. CMS Energy, "2010 Form 10-K," U.S. Securities and Exchange Commission, 24 February 2011, p. 26.
xii. http://www.consumersenergy.com/content.aspx?id=3254.
xiii. October 2009, available at: http://www.mlive.com/news/bay-city/index.ssf/2009/10/state_says_saginaw_bay_coal_as.html.
xiv. Environmental Integrity Project and Earthjustice, "Out of Control: Mounting Damages from Coal Ash Waste Sites," 24 February 2010, p. 28, available at: http://www.environmentalintegrity.org/news_reports/news_02_24_10.php
xv. Calculated using the 2010 EIA 923 dataset.