CMS Energy has sold the government energy services division of CMS Viron to Pepco Energy Services for an undisclosed amount. Pepco was a partner with CMS Viron in numerous federal contracts including the largest federal government energy savings contract ever awarded in 1999 with the Military District of Washington. That contract covered five military bases in the Washington, DC, area.

DC-based Pepco said the acquisition consolidates the large Washington contract and transfers other similar energy savings contract assets. “The acquisition of CMS Viron’s Federal Government Business Unit strengthens our position in the marketplace as a leading supplier of energy and energy efficiency services to the Federal Government,” said David Weiss, president of Pepco Energy Services’ performance management group. “We are committed to remaining one of the leading providers of energy services to the federal government on the East Coast.”

The CMS acquisition is expected to be accretive to the company’s earnings in 2003 and should allow Pepco Energy Services to continue to grow its robust Federal Government business, said Ed Mayberry, CEO of Pepco Energy Services, which designs and completes energy efficiency savings projects for commercial, industrial and large government facilities.

Meanwhile, for CMS the sale is another in a long string of divestitures that have included the sale of CMS Panhandle Pipeline, CMS Marketing, Services and Trading’s wholesale electric power business, and CMS’s one third interest in Centennial Pipeline. The company sold or signed agreements to sell in 2002 assets totaling $3.6 billion, including debt assumed. It expects another $900 million in sales proceeds this year and $500 million in 2004, excluding debt, said spokesman Jeff Hollyfield. Still on the block are its one-third interest in the Guardian Pipeline in Illinois and Wisconsin, its field services division and numerous international electric distribution and power generation assets.

The company expects to report a loss per share for 2002 in the range of $4.25 to $4.75 and earnings per share in 2003 that will be roughly break even, dependent largely on the timing and proceeds from planned asset sales. Ongoing earnings will be in the range of 80 cents to 90 cents per share, the company said in January.

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