Mark-to-market changes on certain gas contracts, much warmer than normal weather and customer conservation due to high gas prices all contributed to a net loss of $27 million, or $0.12 per share, for Michigan-based CMS Energy in the first quarter compared to net income of $150 million, or $0.74 per share, in the same quarter of 2005.
The expected reversal of $74 million, or $0.34 per share, of mark-to-market gains recorded in 2005 to mark-to-market losses during the latest quarter was the primary factor in the loss, the company said. Mark-to-market is a non-cash accounting adjustment that primarily reflects changes in the value of natural gas contracts. Excluding the mark-to-market effects, net income totaled $48 million, or $0.22 per share, compared to $73 million, or $0.37 per share in the same period for 2005. The company said 10 cents/share of the decline was related to warmer weather.
CMS reported lower gas and electric sales at subsidiary Consumers Energy due to much warmer weather during the quarter compared to the first quarter of 2005, including the warmest January on record. However, the company is maintaining its guidance for 2006 earnings, excluding mark-to-market impacts, of about $1 per share.
"The weather and high natural gas prices have been challenging. However, operating performance continues to be strong, and we continue to make progress on our plan," said CEO David Joos. He said CMS still plans to sell about $150 million in assets this year. Joos also said the utility company has about 16 Bcf more gas in storage so far this year so it will have to buy less gas to store for next winter.
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