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FORM 8-K
CURRENT REPORT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 10, 1995
Registrant; State of
Commission Incorporation; Address; IRS Employer
File Number and Telephone Number Identification No
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1-9513 CMS ENERGY CORPORATION 38-2726431
(A Michigan Corporation)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9261
1-5611 CONSUMERS POWER COMPANY 38-0442310
(A Michigan Corporation)
212 West Michigan Avenue
Jackson, Michigan 49201
(517) 788-1030
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ITEM 5. OTHER EVENTS.
MCV Fixed Energy Charge Arbitration
As discussed in Note 2 to the Consolidated Financial Statements and
Part II. OTHER INFORMATION. Item 1. Legal Proceedings in the Form 10-Q
for the Quarter ended September 30, 1994 of CMS Energy Corporation and its
wholly-owned subsidiary, Consumers Power Company ("Consumers"), the Power
Purchase Agreement (the "PPA") between Consumers and the Midland
Cogeneration Venture Limited Partnership (the "MCV Partnership"), while
providing for payment of a fixed energy charge, contains a "regulatory
out" provision which permits Consumers to reduce the fixed energy charges
payable to the MCV Partnership throughout the entire contract term if
Consumers is not able to recover these amounts from its customers. In
connection with the MPSC's 1993 settlement order modifying and approving
the Revised Settlement Proposal, Consumers and the MCV Partnership engaged
in arbitration proceedings under the PPA to determine whether Consumers
was entitled to exercise its "regulatory out" regarding fixed energy
charges on the portion of available MCV capacity above the current MPSC-
authorized levels.
On January 10, 1995, the arbitrator ruled in favor of Consumers'
interpretation of the PPA and found that Consumers was entitled to the
immediate return of funds representing the fixed energy amounts for which
Consumers did not receive full cost recovery during the years prior to
settlement (1990-1992). Consumers estimates this to be approximately
$21.7 million, of which approximately $15.6 million is being held in
escrow. The arbitrator postposed the return of unrecovered fixed energy
payments made in 1993 and 1994 because the MPSC settlement order affecting
those years is still subject to pending appeals. The amount under dispute
in 1994 is approximately $9 million and increases each year thereafter,
averaging approximately $17 million per year over the life of the
contract.
The arbitrator did not issue a final order, but requested that the parties
draft a proposed order consistent with the ruling. If the arbitrator had
determined that Consumers could not exercise its regulatory out, Consumers
would have been required to make fixed energy payments to the
MCV Partnership even though Consumers would not be able to recover these
costs.
In December 1993, Consumers made an irrevocable offer to the
MCV Partnership, providing a "floor" or minimum payment by Consumers for
energy deliveries from the MCV Partnership, relating to 325 megawatts of
capacity not covered under the Revised Settlement Proposal. That minimum
offer, which will result in payments of approximately $2.6 million in 1994
and is estimated to average $4.7 million annually through its termination
in 2007, will still be observed by Consumers.
Consumers, through a subsidiary, owns a 49% interest in the
MCV Partnership and does not anticipate that favorable results from the
arbitration will have any immediate earnings impact.
Palisades Plant - Spent Nuclear Fuel Storage
As discussed in Note 4 to the Consolidated Financial Statements and
Part II. OTHER INFORMATION. Item 1. Legal Proceedings in the Form 10-Q
for the Quarter ended September 30, 1994 of CMS Energy Corporation and
Consumers, in April 1993, the NRC amended its regulations, effective
May 7, 1993, to license a certain dry spent fuel storage cask design for
use at any licensed reactor site in the U.S., including the Palisades
Plant. In May 1993, the Attorney General and certain other parties (the
"Petitioners") commenced litigation to block Consumers' use of the storage
casks at the Palisades Plant, alleging that the NRC had failed to comply
adequately with the procedural requirements of the Atomic Energy Act and
the National Environmental Policy Act ("NEPA").
On January 11, 1995, a three judge panel of the U.S. Sixth Circuit Court
of Appeals, in a unanimous decision, rejected the claims of the
Petitioners and upheld the NRC's rulemaking action. The Court ruled that
a right to an adjudicatory hearing did not exist in the case of a general
license granted through an administrative "generic rulemaking". The Court
also found that the NRC's environmental assessment in connection with the
rulemaking satisifed NEPA requirements, and that a site-specific
environmental analysis concerning the use and operation of the storage
casks at Palisades was not required.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by
the undersigned hereunto duly authorized.
CMS ENERGY CORPORATION
Dated: January 13, 1995 By: /s/ Thomas A. McNish
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Thomas A. McNish
Vice President and
Secretary
CONSUMERS POWER COMPANY
Dated: January 13, 1995 By: /s/ Thomas A. McNish
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Thomas A. McNish
Vice President and
Secretary
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