8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 11, 2006

CMS Energy Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

Michigan	001-09513	38-2726431
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
One Energy Plaza, Jackson, Michigan		49201
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 517-788-0550

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Consumers Energy Company
__________________________________________
(Exact name of registrant as specified in its charter)

Michigan	001-05611	38-0442310
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
One Energy Plaza, Jackson, Michigan		49201
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 517-788-0550

n/a
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 11, 2006, Consumers Energy Company ("Consumers"), a wholly owned subsidiary of CMS Energy Corporation ("CMS Energy"), signed an Asset Sale Agreement (the "Sale Agreement") with Entergy Nuclear Palisades, LLC ("Entergy"), an indirect wholly owned subsidiary of Entergy Corporation. Pursuant to the Sale Agreement, Consumers has agreed to sell its 798 megawatt Palisades Nuclear Power Station located in Covert Township, Michigan (the "Plant") to Entergy. The purchase price, subject to adjustment for changes in assumed working capital and capital expenditures, is approximately $380 million. See the News Release dated July 12, 2006, which is attached as Exhibit 99.1, for additional information.

The Sale Agreement contains a number of customary representations, warranties, covenants and closing conditions found in similar transactions. The closing conditions include approvals of the Federal Energy Regulatory Commission ("FERC"), the Nuclear Regulatory Commission, the Michigan Public Service Commis sion (the "MPSC") and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Sale Agreement also contains indemnification provisions subject to specified limitations as to time and amount. The closing of the transaction is targeted for the first quarter of 2007. However, Consumers and CMS Energy cannot predict with certainty whether or when the closing conditions will be satisfied or whether or when this transaction will be consummated.

Also on July 11, 2006, Consumers and Entergy entered into a Power Purchase Agreement (the "PPA"). The term of the PPA is 15 years and provides that Consumers will purchase 100% of the current capacity and energy of the Plant on a unit contingent basis. Pricing is structured such that Consumers’ ratepayers will retain the benefits of the Plant’s low-cost nuclear generation.

Closing conditions of the PPA include approvals by the FERC and the MPSC. The PPA will become effective on the closing da te of the sale of the Plant. Consumers and CMS Energy cannot predict with certainty whether or when the closing conditions will be satisfied or whether or when the PPA will become effective.

A copy of the Sale Agreement and the PPA will be filed with CMS Energy’s and Consumers’ future Securities and Exchange Commission ("SEC") filings as required under SEC regulations.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

99.1 News Release dated July 12, 2006

This Form 8-K contains “forward-looking statements” as defined in Rule 3b-6 of the Securities Exchange Act of 1934, as amended, Rule 175 of the Securities Act of 1933, as amended, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. They should be read in conjunction with “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” each found in the MANAGEMENT’S DISCUSSION AND ANALYSIS sections of CMS Energy’s and Consumers’ Forms 10-K for the Year Ended December 31, 2005 and as updated in CMS Energy’s and Consumers’ Forms 10-Q for the Quarter Ended March 31, 2006 (all such “FORWARD-LOOKING STATEMENTS AND INFORMATION” and “RISK FACTORS” sections are incorporated herein by reference), that discuss important factors that could cause CMS Energy’s and Consumers’ results to differ materiall y from those anticipated in such statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CMS Energy Corporation
July 12, 2006	By:	Thomas J. Webb
		Name: Thomas J. Webb
		Title: Executive Vice President and Chief Financial Officer

	Consumers Energy Company
July 12, 2006	By:	Thomas J. Webb
		Name: Thomas J. Webb
		Title: Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	News Release dated July 12, 2006

EX-99.1

Consumers Energy

Entergy

News
Release

Date: July 11, 2006

For Release: July 12, 2006, 5:30 am

Contact:	Entergy Nuclear	Consumers Energy
	Morgan Stewart (News Media) (504) 576-4238 office (504) 460-7024 cell mstewa3@entergy.com	Jeff Holyfield (News Media) (517) 788-2394 jlholyfield@cmsenergy.com
	Michele Lopiccolo (Investor Relations) (504) 576-4879 mlopicc@entergy.com	Laura L. Mountcastle (Investor Relations) (517) 788-2590 llmountcastle@cmsenergy.com

Entergy To Buy Palisades Nuclear Energy Plant from Consumers Energy

Entergy Corporation (NYSE: ETR) and Consumers Energy, the principal subsidiary of CMS Energy (NYSE: CMS), have reached an agreement for Entergy to purchase the 798-megawatt Palisades Nuclear Plant near South Haven, Mich., for $380 million.

With the addition of Palisades, Entergy – the nation’s second largest nuclear power company – will own 11 nuclear generating reactors and manage a 12th. Palisades is the company’s second reactor in the Midwest. Five others are in the South and five in the Northeast.

— more—

The $380 million price represents $242 million for the plant itself, $83 million in nuclear fuel based on current market prices, and $55 million in related assets. The sale also includes the Big Rock Point Independent Spent Fuel Storage Installation and compensates Entergy for accepting the responsibility.

“The Entergy fleet advantage will assure customers of Consumers Energy that Palisades will continue to be a safe, clean, reliable and low cost producer of electric energy for Michigan for the long term,” said Entergy Nuclear CEO Gary J. Taylor.

“This is also good news for Palisades employees because Entergy is a strong people-oriented nuclear operator. Being a part of a fleet of 12 power reactor units will open many new career opportunities for Palisades people in the future.”

In addition to the $380 million purchase price, Entergy will make employment offers to all 500 of the plant’s current employees at their same salaries for 18 months. Entergy also has committed to maintain the benefits programs for the employees for 36 months.

As part of the purchase, Entergy also agreed to sell 100 percent of the plant’s output, up to its current 798 megawatts, back to Consumers Energy for 15 years at a price structure that retains the benefits of the low-cost nuclear generation for Consumers Energy’s 1.8 million electric customers.

—more—

Other highlights of the sales agreement:

• Entergy will assume responsibility for eventual decommissioning of the plant. Consumers Energy will retain $200 million of the current $566 million Palisades decommissioning funds balance, with the later return of $116 million more, pending a favorable federal tax ruling.

• Consumers Energy will pay Entergy $30 million to accept responsibility for the spent fuel at the decommissioned Big Rock Point nuclear plant, which was located near Charlevoix, Mich.

Palisades has operated at an average capacity factor of 89 percent from 2002 through 2005. The plant set a CMS Energy record in 2004 for the longest continuous operation of any its electric generating units at 478 days.

Palisades already has applied for a 20-year extension of its operating license and expects to receive it in early 2007. Its current operating license expires in 2011.

Entergy knows the reactor design of Palisades. Entergy already has two Combustion Engineering pressurized water reactors in its 11-reactor fleet. Palisades will be the third, opening up opportunities to improve Palisades’ operations through fleet purchasing, inventory management, and shared management and other economies of scale.

The sale transaction is targeted to close in the first quarter of 2007. The final purchase price will be subject to several adjustments at closing. The sale must be reviewed by the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Michigan Public Service Commission, and other regulatory and state agencies.

—more—

The other nuclear plant operated by Entergy in the Midwest is the Cooper Nuclear Station at Brownville, Neb., owned by Nebraska Public Power District.

David Joos, CMS Energy’s president and chief executive officer, said the sale agreement with Entergy capped a competitive bid process launched in December.

“We are pleased with the outcome of this auction. Entergy has a national reputation as one of the premier operators of nuclear energy plants in the country and can continue the long tradition of safe, reliable, and economic production from the Palisades plant,” Joos said.

Concentric Energy Advisors, located in Marlborough, Mass., served as Consumers Energy’s financial advisor and auction manager for the Palisades sale. Concentric Energy Advisors also is providing strategic support throughout the transaction and regulatory approval process.

Entergy Corporation, headquartered in New Orleans, La., is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity. Entergy Nuclear, its nuclear businesses headquartered in Jackson, Miss., is the second-largest nuclear power operator in the United States and the largest in the Northeast. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $10 billion and approximately 14,000 employees. Additional information regarding the transaction is available in Entergy’s investor release dated July 12, 2006, on Entergy’s investor relations website at http://www.shareholder.com/entergy/publications.cfm.

—more—

CMS Energy is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation.

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Consumers Energy is on-line at www.consumersenergy.com
Entergy Nuclear is on-line at www.entergy-nuclear.com