In a US first, independent transmission company Trans-Elect Inc. and partner GE Capital Global Energy will purchase the transmission assets of Consumers Energy’s, a unit of CMS Energy Corp., for $290 million, CMS reported Thursday.
The agreement is the nation’s first sale of a major utility’s electric transmission system to an independent transmission company. Earlier this year, Trans-Elect, Washington, DC, participated in a consortium to buy the transmission assets of Canada’s TransAlta Corp.
Michigan’s electric restructuring law requires the state’s major electric utilities to either divest their electric transmission systems or turn over operating control to an independent entity by Dec. 31, 2001. The Michigan Public Service Commission authorized the anticipated sale of the Consumers Energy transmission system Dec. 4.
“Sale of the electric transmission system will allow for complete independence of ownership and operations, consistent with the intent of Michigan’s electric restructuring law,” said CMS Energy Pres. David W. Joos.
Trans-Elect will purchase Consumers Energy’s wholly owned transmission subsidiary, including 5,400 miles of 345 kv and 138 kv transmission lines, facilities, and associated easement grants serving Michigan’s Lower Peninsula.
Under the agreement, transmission rates will be capped at current levels until Dec. 31, 2005, and will be subject to FERC ratemaking after the moratorium expires. Trans-Elect will complete a capital program to expand the transmission system’s capability to import power into Michigan.
The companies said an application will be filed with the Federal Energy Regulatory Commission shortly. Once the transaction is completed, Trans-Elect will be responsible for its own involvement in a FERC-approved regional transmission organization.
Formed in 1999, Trans-Elect co-owns and co-operates 7,200 miles of electric transmission lines in North America. In July, a consortium including Trans-Elect, SNC Lavalin Energy, the Ontario Teachers’ Pension Plan, and Macquarie North America Ltd., a subsidiary of Macquarie Group, Sydney, Australia, agreed to buy TransAlta Corp.’s Alberta-based transmission business for $560 million.