New CMS Plant's Gas Will Move on Panhandle Eastern

At the end of a very busy week for CMS Energy, the company announced it had struck its first deal for a large power plant to be fed by gas delivered on Panhandle Eastern Pipeline acquired four days earlier from Duke Energy.

CMS and DTE Energy Services said the new 550 MW gas-fired cogeneration project will serve all of the electric and steam needs of both Rouge Steel Co. and Ford Motor Co. at the Rouge complex in Dearborn, MI. CMS and DTE, an affiliate of Detroit Edison, will form a new company, Dearborn Industrial Generation, LLC, which will build, own and operate a facility with a construction cost of $240 million. The plant will replace the output of the aging Rouge powerhouse.

The deal was in the works for several months, according to a CMS spokesman, during the same period CMS was negotiating to buy the Panhandle Eastern and Trunkline pipelines. Part of the thinking behind that acquisition is the acquired pipes will serve new generation CMS plans to develop in the Midwest. The new generation to serve Rouge and Ford will require a new interconnect to Panhandle and installation of less than a mile of pipe to allow gas delivery, the CMS spokesman said. The existing Rouge powerhouse is powered mainly by coal and boiler gas.

CMS Energy's international power subsidiary, CMS Generation, will hold 70% ownership and manage construction, fuel procurement and operation of the plant while DTE will own 30% of the project. CMS Energy signed a letter of intent with Ford and Rouge Steel to provide up to 400 MW of electricity and 1.7 million pounds/hour of steam from Dearborn Industrial Generation for a period of 15 years. Definitive agreements between the companies are expected to be finalized by December.

The Dearborn Industrial Generation project will be fueled by about 100 MMcf/d of natural gas and blast furnace gas, a by-product of the steelmaking process. About 93 MMcf/d will be natural gas. The plant will use two high-efficiency natural gas combined cycle units with heat recovery steam generators, three blast furnace gas/natural gas boilers and one steam turbine to simultaneously produce up to 550 MW of electricity and 1.2 million pounds/hour of industrial process and heating steam.

Construction of the plant is expected to begin in the first quarter. The first gas turbine at the plant is to go on line no later than mid-2000 and will supply the total Rouge site requirement. Full operation of the project is scheduled for 2001. The project is contingent upon local governmental incentives and finalizing the agreement between CMS Energy, Rouge Steel and Ford.

Joe Fisher, Houston

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