Consumers Energy Continues Billion-Dollar Natural Gas Investment to Reduce Long-Term Costs for Customers

Rhea-AI Summary

Consumers Energy (CMS) continues its $1 billion annual investment in natural gas delivery, replacing aging infrastructure to provide cleaner, more reliable natural gas for decades to come. The company aims to reduce long-term costs for customers and has filed a natural gas rate case with the Michigan Public Service Commission. Despite potential small bill increases, the average customer would still be paying less than $3 a day for gas.

Positive

• Consumers Energy is investing $1 billion annually in its natural gas delivery system.
• The company is replacing aging infrastructure to provide cleaner, more reliable natural gas.
• The work includes upgrades to transmission infrastructure, removal of old pipes, and replacement of outdated mains and services.
• The company has filed a natural gas rate case with the Michigan Public Service Commission.
• The average customer would still be paying less than $3 a day for gas despite potential small bill increases.

Negative

• None.

Insights

Energy Industry Analyst

Investment in infrastructure, especially within the energy sector, is a critical determinant of operational efficiency and customer satisfaction. Consumers Energy's commitment to a $1 billion annual investment for upgrading its natural gas delivery system can be seen as a strategic move to enhance the safety and reliability of its services. This initiative not only addresses the immediate need for infrastructure improvements but also positions the company to potentially benefit from increased customer trust and regulatory compliance.

As pipelines age, they pose risks such as leaks and service disruptions, which can lead to higher operational costs and safety concerns. By proactively replacing outdated pipelines, Consumers Energy is likely to reduce the incidence of such issues. This could result in lower maintenance costs in the long term, despite the initial capital expenditure. Moreover, the upgrade to more efficient systems can lead to cost savings for customers, as noted by the company's claim of providing cleaner, more reliable natural gas.

However, the rate case filed with the Michigan Public Service Commission indicates a potential increase in customer bills. While the company suggests that the increase would be marginal, the impact on individual customers, particularly those in vulnerable communities, should not be underestimated. Energy affordability remains a critical issue and the company's efforts to alleviate the burden through assistance programs are an essential component of the investment strategy.

Financial Analyst

The financial implications of Consumers Energy's substantial investment in its natural gas delivery system merit attention from investors and stakeholders. A $1 billion annual expenditure represents a significant allocation of capital resources, which could affect the company's financial statements and, by extension, its stock performance. The investment is aimed at modernizing infrastructure, which could lead to operational cost savings and potentially enhance the company's long-term profitability.

Investors should note that infrastructure investments of this scale often have long-term payoffs. The immediate financial impact might include increased capital expenditures and possible debt financing, which could affect the company's leverage and interest expenses. However, the resultant improvements in efficiency and safety are likely to contribute to the company's competitive advantage in the energy market, potentially leading to stable revenue growth.

It is also essential to consider the regulatory environment, as utility companies are often subject to strict oversight. The rate case filed with the Michigan Public Service Commission will be a critical factor in determining how much of the investment cost can be passed on to consumers. A favorable outcome could provide a more predictable revenue stream to offset the investment costs.

Sustainability Expert

From a sustainability perspective, the modernization of energy infrastructure is a step towards reducing environmental impact. Aging pipelines are not only a safety hazard but can also be less efficient and more prone to leaks, leading to higher greenhouse gas emissions. By investing in newer, more efficient technology, Consumers Energy is contributing to a cleaner energy system, which aligns with broader environmental goals and customer expectations for sustainable energy practices.

Furthermore, the transition to a more reliable and efficient natural gas delivery system can be an interim solution while exploring renewable energy alternatives. As natural gas is often considered a 'bridge fuel' towards a low-carbon future, investments in its delivery infrastructure could support the gradual shift to renewable energy sources by ensuring a stable and affordable energy supply in the short to medium term.

Nevertheless, the long-term sustainability of such investments is contingent upon the evolution of energy policies and market demand for cleaner energy sources. As the energy landscape progresses towards renewables, utility companies like Consumers Energy will need to balance infrastructure investments with the integration of renewable energy sources to remain relevant and sustainable in the long run.

Replacing aging infrastructure results in safer, more affordable natural gas

JACKSON, Mich., Dec. 19, 2023 /PRNewswire/ -- Consumers Energy is continuing its $1 billion annual investment in the company's natural gas delivery system as part of its Natural Gas Delivery Plan, resulting in miles of aging and outdated pipeline replaced every year and reducing long-term costs for customers by providing cleaner, more reliable natural gas for decades to come.

"While exploration of other affordable, clean energy alternatives continues, natural gas remains the most cost-effective means of heating homes and businesses in places like Michigan," said Chris Fultz, vice president of gas operations for Consumers Energy. "We take seriously our responsibility to provide that gas to millions of customers that need it from us, and that is why we're making our system stronger, safer and more affordable than ever before."

The work to increase reliability of the company's natural gas storage and delivery systems has resulted in:

• Upgrades to transmission infrastructure, including the Mid-Michigan Pipeline.
• The removal of pipe made from vintage materials, in some cases more than 60 years old.
• The replacement of outdated mains and services with streamlined processes.
• The support of hundreds of construction jobs each year.

To continue facilitating these improvements — including the replacement of 30 miles of pipeline crossing three counties in 2023 alone — the company has filed a natural gas rate case with the Michigan Public Service Commission. While some customers could potentially see a small increase on their bill, the average customer would still be paying less than $3 a day to feed their family and heat their home.

"Our ultimate goal is to keep costs as low as possible for our customers in the years to come, but we have to make these investments in the short term to achieve that goal," said Holly Bowers, vice president of gas engineering and supply for Consumers Energy. "We understand the significant burden even a small increase can be for our most vulnerable customers, and that is why we've also continued to invest in and develop programs and opportunities that can reduce that burden and provide assistance in other meaningful ways."

Consumers Energy provided more than $25 million last winter to help homes and businesses with rising energy costs, and recently announced a more than $1 million investment in a series of initiatives to improve quality of life and reduce bills for customers in historically disadvantaged communities.

Those in need of help should contact 2-1-1, a free service that connects Michiganders with nonprofits to find help with basic needs, from energy bills to food and shelter. Consumers Energy customers also should call 800-477-5050 if they are facing challenges with their bill.

Many people can manage their winter bills by starting with tips at home or work. Learn more at ConsumersEnergy.com/coldweather.

• Have your heating system tuned and inspected by a service professional. Heat losses from a poorly maintained system can range between 1-2 percent a year.
• Clean or replace your furnace filter often during the heating season. If your furnace can "breathe" more easily, it will use less energy.
• Dial your thermostat down at night and add an extra blanket for warmth.
• Make sure your attic, basement, garage and exterior doors are closed to prevent cold drafts from getting in and heat from getting out.
• Turn on your ceiling fan. Ceiling fans set at a slow speed push warm air away from the ceiling and move it around the room without creating a chilling breeze.

Consumers Energy is the principal subsidiary of CMS Energy (NYSE: CMS), providing natural gas and/or electricity to 6.7 million of the state's 10 million residents in all 68 Lower Peninsula counties.

For more information about Consumers Energy, go to ConsumersEnergy.com.

Check out Consumers Energy on Social Media
Facebook: https://www.facebook.com/consumersenergymichigan
Twitter: https://twitter.com/consumersenergy
LinkedIn: https://linkedin.com/company/consumersenergy
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SOURCE Consumers Energy

FAQ

What is Consumers Energy's (CMS) annual investment in natural gas delivery?

Consumers Energy continues its $1 billion annual investment in natural gas delivery.

What is the goal of Consumers Energy's Natural Gas Delivery Plan?

The goal is to provide cleaner, more reliable natural gas for decades to come and reduce long-term costs for customers.

What has the company done to increase reliability of the natural gas storage and delivery systems?

The work includes upgrades to transmission infrastructure, removal of old pipes, and replacement of outdated mains and services.

What has Consumers Energy done to help customers with rising energy costs?

Consumers Energy provided more than $25 million last winter to help homes and businesses with rising energy costs and announced a more than $1 million investment in initiatives to reduce bills for customers in historically disadvantaged communities.

What should customers do if they are facing challenges with their bill?

Customers should call 800-477-5050 if they are facing challenges with their bill.

What is Consumers Energy's (CMS) ticker symbol?

Consumers Energy is the principal subsidiary of CMS Energy (NYSE: CMS).