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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): March 7, 1997
Registrant; State of;
Commission Incorporation; Address; and IRS Employer
File Number 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
On March 7, 1997, Consumers Power Company d/b/a/ Consumers Energy Company
(Consumers), the principal subsidiary of CMS Energy Corporation, filed its
response to a request for information from the Michigan Public Service
Commission related to the implementation of an electric utility
restructuring plan in Michigan. A copy of the press release describing
Consumers' response is included as an exhibit to this Current Report on
Form 8-K and is incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
(99) Press Release of Consumers, dated March 7, 1997
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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: March 7, 1997 By: /s/ Alan M. Wright
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Alan M. Wright
Senior Vice President,
Chief Financial Officer
and Treasurer
CONSUMERS POWER COMPANY
Dated: March 7, 1997 By: /s/ Alan M. Wright
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Alan M. Wright
Senior Vice President,
and Chief Financial Officer
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Exhibit 99
Consumers Energy news
________________________________________________________________________
A CMS Energy Company 212 West Michigan Avenue Tel: 517 788 0333
Jackson, MI 49201-2277 Fax: 517 788 2397
JACKSON, Mich., March 7,1997 -- Consumers Energy, the principal
subsidiary of CMS Energy Corporation (NYSE:CMS), today filed its response
to questions from the Michigan Public Service Commission (MPSC) related to
the implementation of an electric utility restructuring plan in Michigan.
The utility's response includes a detailed program for initial
implementation of the plan on a voluntary basis.
Using the definition of transition costs adopted by the MPSC Staff in
its December 1996 report, Consumers Energy estimates its transition costs
to be $1.761 billion and its implementation costs to be $200 million, for
a total of $1.961 billion. Transition and implementation costs would be
charged only to those customers electing to purchase electricity from
suppliers other than Consumers during the 1997-2007 time period in the
form of a delivery surcharge.
Transition costs include regulatory asset costs of $70.3 million;
nuclear facility costs of $220.1 million; decommissioning costs of $16.2
million for the Ludington Pumped Storage Plant and conventional hydros;
and contract capacity charges of $1,459.5 million. An offset for Rate DA
charges reduces the total by $4.9 million. The transition costs represent
costs that, "pursuant to the current regulated industry structure, have
already been subjected to regulatory scrutiny, and have been found to be
properly recoverable from customers," the filing stated.
Implementation costs include employee-related restructuring costs of
$50 million and other implementation costs of $150 million. They
represent costs that will have to be incurred in the future in order to
move to the competitive industry structure envisioned by the MPSC Staff
report. The utility noted in its response that the implementation of any
meaningful restructuring plan will require the expenditure of significant
sums for new billing systems, new metering equipment, the establishment of
an independent system operator and other similar items. "The technology
needed to gather and communicate the information necessary to allow large-
scale retail direct access includes the installation of communication
equipment on customer meters, infrastructure investment needed to transmit
the customer information gathered at the meter, and computer hardware and
software investment necessary to process the information for use in
preparing bills." A completely new billing system will also be needed to
accommodate unbundled pricing.
The utility estimates that the levelized transition charge for the
recovery of costs associated with regulatory assets, nuclear facilities,
hydro decommissioning and purchased power agreements would be 1.31 cents
per kilowatt hour (kWh). The levelized implementation charge for recovery
of employee-related restructuring costs and other implementation costs
would be 0.14 cents per kWh, bringing the total charge to a customer
electing retail direct access service to 1.45 cents per kWh. Customers
who remain a part of the Consumers Energy system would continue to pay
current MPSC-approved bundled rates and, therefore, would not be required
to pay transition and implementation charges.
Because the amounts are based on a number of assumptions, including
sales levels, Consumers Energy believes it would be appropriate to "true-
up" the collection of transition and implementation charges in 2001 and
2004 to reflect actual sales of electricity.
The utility also includes a securitization proposal in its filing.
This would involve the issuance of approximately $4 billion of rate
reduction bonds providing a decrease in customer rates in excess of $200
million per year if appropriate legislation were passed.
Today's filing includes a plan to allocate direct access capacity to
customers beginning this year and continuing through 2004 when all
customers would be free to choose their supplier. The utility proposes
that, in 1997, residential, secondary and primary customer classes be
allocated 49,000 kilowatts (kW), 32,000 kW and 69,000 kW of direct access
capacity respectively. "Customers with maximum demands less than 1,000 kW
and those customers who are metered with energy-only recording meters,
must obtain their power supply for retail direct access through an
aggregator," the proposal stated.
"Upon completing its analysis of the information it has solicited,
Consumers Energy believes the Commission should (i) issue an order
endorsing the restructuring plan set forth in the Staff Report, as that
plan has been further developed in this response, (ii) include in that
order a recommendation to the Legislature that it enact legislation which
is consistent with that plan, and (iii) accept the Company's offer of
voluntary implementation.
"Because of the importance of gaining legislative authorization of
the restructuring plan, the Company's willingness to voluntarily implement
this plan would cease as of December 31, 1997, unless utility
restructuring legislation has been enacted by that date."
Consumers Energy, the principal subsidiary of CMS Energy Corporation,
is Michigan's largest utility providing natural gas and electricity to
more than six million of the state's nine and one-half million residents
in all 68 Lower Peninsula counties.
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March 7, 1997
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