Consumers Energy, a subsidiary of
CMS Energy Corporation
), has declared that it will curtail its natural gas fuel costs
by 15% with effect from Apr 1, 2013. The declaration comes on the
heels of the company's promise to deliver the best energy value
to its customers.
Since Feb 2012, the company has reduced natural gas prices by
26%. The latest cut marks the largest price reduction in the
company's recent history. In fact, the company indicated that the
prices it charges for nat gas have hit a 10-year low. These
efforts to trim gas fuel costs will assist Michigan families and
businesses to save approximately $200 million by 2014.
Albeit natural gas prices have trended down in recent times, the
cuts employed by CMS are impressive by any standard. This has
only been possible as Consumers Energy is uniquely positioned to
take advantage of lower-priced natural gas due to its massive
storage system. This huge storage system facilitates the company
to purchase gas in bulk when it is priced lower, and share the
advantage with its customers.
Also, the company continues to invest in its natural gas
infrastructure to take advantage of lower-cost supplies,
benefiting customers now and in the future. Its projects include
expansion of gas compressor stations and replacement of natural
In Dec 2012, Consumers Energy announced that it plans to build
a 700 megawatt new natural gas-fired power plant in Genesee
County. Located in Thetford Township, about 20 miles northeast of
Flint, this new natural gas-fired power plant is estimated to
cost $750 million.
Through 2017, Consumers Energy expects to make capital
expenditure of approximately $7.0 billion. It expects base
capital investments of $3.2 billion that includes $2.1 billion of
electric utility projects to improve reliability and increase
capacity and $1.1 billion of gas utility projects to increase
capacity and deliverability and enhance pipeline integrity.
The company expects to spend an additional $1.4 billion of
planned reliability investments to reduce outages and improve
customer satisfaction. It plans to spend $1.1 billion on
environmental investments needed to comply with state and federal
laws and regulations.
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Overall, these infrastructure investments and the company's
massive storage system will aid CMS Energy to achieve its target
of providing the best energy value to the state of Michigan.
Moreover, it will add to the goodwill of the company, thereby
attracting more customers.
The defensive nature of this energy company is also evident from
its regular dividend increase policy. In Jan this year, CMS
Energy increased its dividend by 14%, bringing the annualized
dividend to 96 cents per share from the previous payout of 84
cents per share. The increase in the annual dividend reflects
successful execution of the company's business strategy.
Based in Jackson, Michigan, CMS Energy Corporation, through its
subsidiaries, operates as an energy company primarily in
Michigan. The company is engaged in the generation, purchase,
distribution, and sale of electricity and natural gas to
residential, commercial, and diversified industrial customers.
Key growth drivers of the company are Michigan's balanced and
constructive regulatory environment, the company's execution
track record, and a solid management team. However, volatility in
fuel prices and regulatory matters remain an overhang on the
company's stock. The company presently retains a short-term Zacks
Rank #3 (Hold).
Other energy stocks worth considering are
The AES Corporation
CenterPoint Energy, Inc.
DTE Energy Company
), all with a Zacks Rank #2 (Buy).