Power Grid Transfer Wont Happen This Year

May 20, 2002
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DEARBORN — With two weeks remaining to D-Day (Deregulation Day), Consumers Energy is moving to comply with a requirement to divest itself of its transmission system.

Almost exactly a year ago, the Michigan Public Service Commission gave approval for Consumers’ owner, DMS Energy Corp (NYSE: CMS), to sell the company’s transmission system to Trans-Elect, a limited partnership based in Washington, D.C.

The sale will involve about 5,400 miles of 345 kilovolt and 138 kilovolt transmission lines. It also will include other facilities such as switching stations and their associated easements serving the electricity provider’s entire service territory located throughout the Lower Peninsula.

Michigan’s electricity restructuring law, Public Act 141 of 2000, requires the state’s major utilities to either divest themselves of their transmission systems or to turn over operating control of them to an independent entity.

The deadline for the action is Dec. 31. The actual transfer of ownership may not occur pending approval — presumably during the first quarter of 2002 — of the Federal Energy Regulatory Commission. The two firms are schedule to apply for FERC approval sometime in the next few weeks.

According to CMS, the change will have no effect upon the service or bills received either by residential or business customers of Consumers Energy.

The buyer of the system will complete a capital program to expand the transmission system’s capability to import power into Michigan, also a requirement of Public Act 141.

The requirement to upgrade the power grid is a response to recognition that in times of electrical shortage, Michigan’s electrical transmission systems don’t lend themselves to easy importation of power.

Part of the problem is that the power grid more or less evolved like topsy, and partly because — proportionate to its total electricity demand area — the peninsula has a relatively small land border across which to import power.

Worries about importing power have declined somewhat because weather during recent years has been moderate and because construction has begun on several merchant power plants within the state.

Beyond that, Consumers itself has refurbished some of its old power generation units, making them available at times of peak demand.

But being able to export and import power seamlessly to and from Indiana and Ohio will give all power generators greater flexibility and efficiency in times of peak demand.

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