CMS Energy sells EnerBank USA to fund renewables, grid reliability
The parent of Consumers Energy is selling a Utah-based bank to focus on its core energy business, a decision providing funds to invest in renewable energy and grid safety and reliability in Michigan.
CMS Energy Co. is selling EnerBank USA, a lender focused on home improvement, in a $960 million all-cash transaction to Alabama-based Regions Bank, a subsidiary of Regions Financial Corp. The sale provides the funding for infrastructure projects in Michigan that CMS would have had to seek from other sources such as increased energy or gas rates, said Sri Maddipati, CMS's treasurer and vice president of finance and investor relations.
"We sold a non-core business to fund the needed investments," Maddipati said. "We have annual rate cases, and included are the costs of those investments. How do you get funding for it? We found a source for it rather than make a change to our utility funding plan or customer rates."
Consumers Energy's Clean Energy Plan calls for the addition of 6 gigawatts of solar power over the next 20 years as well as more wind farms. The funds also will support efforts to replace old service pipes and wires.
CMS acquired EnerBank USA in 2000 and has grown its operations from 37 employees in 2006 to 450. The bank has approximately $2.8 billion in loan balance and worked with 1 million homeowners since its inception and more than 10,000 contractors.
CMS attempted to sell the bank to The Home Depot Corp. in 2006, but the deal fell apart as efforts backed by the banking industry sought to keep retailers out of the industry.
The deal with Regions is expected to close in the fourth quarter. It will not affect CMS's plans to deliver 6% to 8% long-term adjusted earnings-per-share growth for its investors. The Jackson-based utility maintained its 2021 annual adjusted earnings guidance of $2.83 to $2.87 per share and a $1.74 per share annual dividend. CMS also shared its 2022 adjusted earnings guidance of $2.85 to $2.87 per share.
"The bank was not a core business for us," Maddipati said. "The full potential for it can be realized under new ownership."