CMS Energy (NYSE: CMS) is an electric utility and natural gas distributor that operates in Michigan. While the company both produces and distributes electricity, it buys its natrual gas from suppliers in Canada and then stores and delivers it. The company serves nearly 6.5 million of Michigan's 10 million residents.^[1]

After several years of losses, the company has taken steps to restructure its business. In 2007, it sold its only nuclear power plant as well as the majority of its international assets. The revenues generated from this were used in large part to pay down part of the company's debt. Despite these steps, the company still faces significant obstacles. Even after applying proceeds from the sale, the company still had over $5B in debt at the end of 2007. Moreover, the restructuring has served to make CMS more dependent on coal as a fuel source. In 2007, CMS Energy generated 90.1% of its power from coal.^[2] Between March 2007 and March 2008, coal prices from two benchmark sources rose: 93% for coal from central Appalachia and 64% for coal from the Powder River Basin of Wyoming.^[3]. Although CMS' contracts with coal producers shield it from fluctuations in coal prices in the short-run, the company will be adversely affected if prices remain high for a prolonged period. In addition, coal will become more expensive as a fuel source, as pending regulation aimed at reducing emissions from coal fired power plants becomes law. CMS Energy estimates that it will have to spend $845 million through 2015 to comply with the Environmental Protection Agency's (EPA) proposed regulations on fossil fuels.

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