CMS Offers Energy: Cheap & Green

Consumers Energy, the major subsidiary of CMS Energy Corporation (CMS - Analyst Report) is implementing its updated renewable energy plan with effect from September 2011. Consumers Energy is Michigan's largest supplier of renewable energy. 

Consumers Energy has already received approval for its updated plan from the Michigan Public Service Commission. The plan has a lower renewable energy surcharge for electric customers. The new plan would almost result in a 70% reduction in renewable energy charge or $54 million annually for its 1.8 million electric customers in Michigan.

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 updated plan maintains Consumers Energy's commitment to 10% of its electricity generation from renewable sources by 2015, as required by the state's energy reform law. 

Currently about 5% of the electricity supplied to its customers comes from renewable sources. The updated plan also includes renewable energy purchase agreements with independent developers, including several landfill-energy and wind projects.

CMS Energy’s regulated electric power operations in Michigan generate a relatively stable earnings stream. Thus growth prospects look robust for CMS Energy in a constructive regulatory environment along with steady recovery in the Michigan economy. 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 Consolidated Edison Inc. (ED - Analyst Report) and The Empire District Electric Company (EDE - Snapshot Report).

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