At the end of a very busy week for CMS Energy, the companyannounced it had struck its first deal for a large power plant tobe fed by gas delivered on Panhandle Eastern Pipeline acquired fourdays earlier from Duke Energy.

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

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

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

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

Construction of the plant is expected to begin in the firstquarter. The first gas turbine at the plant is to go on line nolater than mid-2000 and will supply the total Rouge siterequirement. Full operation of the project is scheduled for 2001.The project is contingent upon local governmental incentives andfinalizing the agreement between CMS Energy, Rouge Steel and Ford.

Joe Fisher, Houston

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