DTE Energy, the Detroit-based parent of Detroit Edison, is a key contender to buy Citizens Gas & Coke Utility’s east-side coke plant, according to a source familiar with the talks.
DTE also owns MichCon, is a natural gas utility that serves 1.3 million customers in
The source, who asked not be identified, said Citizens has had serious discussions with DTE and that a deal could be wrapped up by April.
Citizens spokesman Dan Considine confirmed that a sale could be finalized by then, but would only say the utility has been in discussions with “several prospective buyers.”
Citizens, which serves about 266,000 customers in
Discussions with prospective buyers have indicated that not all 300 workers are likely to be retained, Considine said: “There would be some downsizing.”
Workers at the century-old
Acquiring another coke plant isn’t out of the question for DTE Energy, said Raymond Moore, an analyst with Shields & Co. in
In 2005, the company opened a petroleum coke plant in
Citizens and DTE are no strangers. DTE operated a synthetic fuel operation, DTE IndyCoke, at the
Last October Citizens said it was shopping Indianapolis Coke because it no longer deemed it part of its business strategy. The plant’s income has been wildly cyclical—losing $17.6 million in 2006 versus a $6.9 million profit in 2005.
Indianapolis Coke said 2006 results were dashed by the loss of a key blast-furnace customer.
But the bituminous-belching plant, in an industry with wildly cyclical profitability, also has become a financial drain on Citizens because of mounting environmental compliance costs.
Last fall Citizens reached a deal with the state to spend $2 million on pollution reduction projects. It also agreed to pay IDEM a civil penalty of $280,000 stemming from enforcement violations since 2001.
For years it has fueled concerns over benzene and other chemical emissions linked to cancer. Citizens said it has invested $110 million in environmental upgrades since the early 1970s.
The plant also needs millions of dollars in repairs to its brick-lined coke ovens, some operating continuously for 50 years.