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Consumers Energy, a subsidiary of CMS Energy Corporation (CMS - Analyst Report), has filed for the approval of a certificate of necessity from the Michigan Public Service Commission (“MPSC”) for its to 700 megawatt (“MW”) new natural gas-fired power plant in Genesee County. The estimated cost of the project is $750 million.

The review process of the certificate of necessity will take approximately nine months from the filing. Additionally, development of the plant relies on an air permit from the Michigan Department of Environmental Quality (“MDEQ”) and appropriate financing. The company has already filed for the air permit application with MDEQ for two combined cycle units at the Thetford site - one for the current unit and the other for the subsequent development of a second unit.

Located in Thetford Township, about 20 miles northeast of Flint, post completion, the major new natural gas-fired power plant would be able to serve a community of about 445,000 people. The company expects to commence construction in 2014 and come online by 2017. The project will likely create 600 construction jobs. Post construction, the proposed power plant is expected to create 30 operating jobs.

The Thetford project would be the most cost-effective and resourceful power plant in operation using advanced combined cycle technology. Currently, Consumers Energy holds the 230-acre Thetford Township site. The site is interconnected with high-volume natural gas delivery and high-voltage power transmission lines. This would be the tenth natural gas-fired power plant in the township. It already has nine smaller natural-gas fired combustion turbine units.

Post completion, the major new natural gas power plant will be able to comply with the company’s greenhouse gas reduction target of 20% by 2025 and is expected to emit about 50% less carbon dioxide compared to the coal plants it will replace. Consumers Energy intends to suspend the operation of its seven smallest and oldest coal plants, which have a total capacity of about 950 MW.

The company is dedicated to its customers in Michigan with well-timed projects that would boost the state’s economy. Overall, the solid first-quarter results, a constructive Michigan regulatory environment, along with the upcoming certificate of need process for its proposed $750 million, 700 MW natural gas combined-cycle plant will help CMS Energy to maintain this momentum.

The company presently retains a short-term Zacks Rank #3 (Hold). The cautious stance reflects our apprehensions regarding an unfavorable macro backdrop, lower demand for electricity and pending regulatory cases.

Other utility stocks worth considering include Zacks Ranked #1 (Strong Buy) Companhia Paranaense de Energia (ELP - Analyst Report) and Integrys Energy Group, Inc. (TEG - Analyst Report), and Zacks Ranked #2 (Buy) The AES Corp. (AES - Analyst Report).

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