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CMS Delays Power Plant After Recession Saps Demand

May 27 (Bloomberg) -- CMS Energy Corp., the owner of Michigan’s second-largest utility, said it’s postponing development of a so-called clean-coal power plant after the recession sapped electricity demand.

The company said its decision will free up about $1 billion over the next five years to instead invest in environmental controls at existing coal-fueled generation units, according to a statement today by Jackson, Michigan-based CMS. The utility owner had planned to bring the 830-megawatt plant online at its Karn/Weadock complex near Bay City, Michigan, in 2017.

Declines in natural-gas prices also contributed to the decision to delay the new power station, CMS said. Coal and gas are the two largest fuel sources for power generation in the U.S. New York gas futures, which traded as high as $6.11 per million British thermal units in January, dropped to as low as $3.86 this month.

CMS, which hasn’t set a new timetable for the clean-coal plant, said it will monitor power demand, fuel costs and other market conditions. The project will still be in the best interests of the company’s 1.8 million electricity customers, CMS Chief Executive Officer John Russell said in the statement.

The U.S. Energy Department has backed development of clean-coal technology to reduce emissions from power generation. Such plants would convert coal to gas before burning the fuel to spin turbines. Pollution can be further reduced with equipment that captures emissions from the plant.

CMS rose 20 cents, or 1.4 percent, to $14.71 as of the 4 p.m. close of New York Stock Exchange composite trading. The stock had dropped 7.3 percent this year before today.

One megawatt is enough power for about 800 average U.S. homes, according to an Energy Department estimate.

To contact the reporter on this story: Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

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