Cms Energy Corporation · NYSE:CMS
Cms Energy — Investor Presentation (March 2014)
33 slides from Cms Energy's investor presentation, Mar 24, 2014
Slide 1: Investor Meetings, March 24, 2014
Exhibit 99.1 Investor March Cross Jackson Consumers Winds 24, Gas Meetings 2014 Smart Plant EnergyEnergy Park Program
Slide 2: Forward-Looking Statements and Information
Thispresentation relevant from STATEMENTS Consumers cause information The comparable CMS adjusted regulatory able to presentation time Energy CMS estimate legal basis. to items Energy’s GAAP presented time provides decisions. Management AND the from also is inmeasure impact made CMS “FORWARD-LOOKING
Slide 3: Consumers Energy Overview
Consumers T O Fourth 1.8 8,600 312 Premium Cross .Lake . erritory verview . .million TBtu one Winds MW WindsEnergy largest of regulatory ofof electric Energy largest Energy gas owned combination storage investors and . Park environment .and . .1.7 capacity purchased million utility and employers ing
Slide 4: Mindset: Consistent Adjusted EPS Growth
Mindset $0.96 2003 Int’l EPS Future 1 7% Dividend 32% Peers $1.78 5% $0.81 a6% 3 0-Year $1.25 -CAGR Sale 27% 7% 2004 4% $1.08 _$1.74 excluding _Actual . Payout _..14% 2005 _.$1.66 $0.84 ._. Adjusted 39% . 2006 .0% .discontinued $1.21 $1.08 20¢ 80% 25% 2007 36¢ $1.26 6% EPS 30% 2008 50¢ 5% (non-GAAP)
Slide 5: CMS Results: Ten-Year Model
CMS RESULTS Ten Small, None Imposed Sustainable Investment Upside A. B. C. D. E. F. .G. 4 . ROA .Capacity PPA’s Credit Capex Sales Continuous .year benefits Energy “Bet bite Catalysts elimination Limits -expire rating >$15 $15 The Consistent size “Needed base price customers MODEL billion cost Compa
Slide 6: Model for a Future: Shareowner Return
Model A Future Attractive 62% EPS Driven Shareowner EP 7% CMS .aTen-Year 5 .Adjusted bove . Sa .4% growth good, payout Peers Gr Return Delivers by Average 5%-7% Growth owth dividend $7 EPS future CMS return ratio rate billion vs 4% (non-GAAP) .Return 5%-7% .return Peers Future Peers .9%-11% yield 6%
Slide 7: Investment Opportunity: $15-20 Billion Plan
A..15 201 O $ Amount Generation PPA ROA Gas Electric Total Rate .Customer P X 6 pportunity .Visible, .3-20 conversions replacement .Billion Base Opportunities return . . reliability reflects (bils) 22 base 6% 10-Year capacity Higher $10-Year Level 20 rates catch-up & Billion $1.7 &expansion INVESTME
Slide 8: Visible Investment Opportunity
Visible Cap 21% 2003 $1.8 (bils) Amount Source: Peers .CMS 7 . . . Inv $1.5 creates 20% 2004 21% 18Investment: 10K; OCF 1620% 2005 20 unique actual Liquidity 24% 2006opportunity; Catch-Up amounts 2007 2008 through . . .with 2009 . 2013 2012 OCF 2010 Pctalready smoothed of 2011 Market 2012 stronger f
Slide 9: Visible Clean and Reliability Investment
Visible Clean .Reliability Renewable Main Propane Pipeline Consumers Electric Infrastructure Gas Environmental Ludington 8 . . . conversions distribution small replacements Power Investments: reliability distribution switching replacements Pumped and $4.0 energy Smart $2.5 $4.5 incremental Billion B
Slide 10: Visible Gas Infrastructure Investment
Visible 2008 3.0 2.5 2.0 1.5 1.0 0.5 0.0 $2.6 $2.3 $1.4 2013 2018 #4 27,000 24,000 1,700 312 IG 9 nvestment as largest TBtu System -miles 2012 2017 2022 miles Investment: gas gas Amount ofof storage utility transmission distribution service Gas (bils) pipe Infrastructure $lines mains . . . . . . . .
Slide 11: Visible Generation Investment
Visible L C K Generation New O uampbell ro a dington ver rn/Weadock ss Capacity 6Winds Investment: GWs Generating Reliability Pumped of Energy $0.4 Generation Generating BMajor Storage Park Plant $0.7Generation JB Assets Complex ackson Plant Environmental 10Plant I n v e sControls t i n g over $1.0$
Slide 12: Cross Winds Energy Park and Purchase
Visible Mic 1 Purchase Lake 100 $235 Cross 105 Commercial .$255 11 .0% . .MW, hig Michigan’s WindsEnergy million renewa WindsEnergy Investment: an50% 56e operation 62 Vestas GE ne ble and rgy largest turbines s by build Park turbines la Renewable Park 2015 w–renewable 50% November rPhase e qu ire En
Slide 13: Investment Drives Rate Increases, Checklist
Visible Gas $3 Amount B $ üAdd üReduce üMandated .$8 $13 12 .ase .$11 $4 . Electric drives Rate Customer $6Investment: (bils) O&M Fuel $11 Increases EPS, by$15 Costs State Costs Value cash $19Rate <2% orflow, 0Federal 5Base <2% 10and 15Growth C Regulators dividend 20 apital 2013. Investment . 2017 .
Slide 14: Expiring PPAs, Replace Capacity
B..0.Expiring Replace .Provides CE 2025 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 10,000 9,000 8,000 7,000 6,000 5,000 Capacity Smart Net Total MCV ?Jackson 13 MW .Portfolio Peak will Peak PPA Energy, Plant PPA Capacity incremental Shortfall provide Demand Termination Demand PPA’S contr
Slide 15: Consistent Credit Ratings
R C. Consistent Less Customer Constructive Good eflects S&PCredit Risk / Energy Present RATINGS Focus FitchPerformance Regulation Policy Prior . . 2002 . . . . . . just upgraded, more ahead? Scale A+ Moody’s (March) S&P Moody’s(January) (February Fitch) A A1 A- A2 Consumers Secured BBB+ A3 BBB Baa1
Slide 16: Consumers Sales Growth and Economic Indicators
D. Consumers SALES Growth . . . . . . . . best economic indicators in State. E conomic Indicators Unemployment December 2013 Grand Rapids Michigan U.S GDP (real) 2010 thru 2012 5.6% 8.4% 6.7% Population 2010 Census thru July 2012 14 11 7 Combination Gas Enbridge Norplas E -5% <1% 2013-17 Recovery 20
Slide 17: Capacity Price Future Scenarios
E. CAPACITY Capacity $7.50 $4.50 $0.50 Future (mils) +$30 $35 +$50 $55 $5 Scenarios price 16 <Price ($ kW Market per month) Increases Today . . . (mils) . . . . . could add value to the 700 MW “DIG” plant.
Slide 18: Retail Open Access Opportunity
F. Retail 310 Governor 0.02% Eliminating Lower Policy $150 17 “ROA” million has industrial Open wants big ROA Electric cost impact Access affordable rates opportunity could: Customers on by Policy competitiveness 10% residential (ROA) or1 all .8 Million customers . .bills . . . .and Consumers . . ch
Slide 19: Michigan's Energy Future
Michigan’s Adaptability Eliminate Reduce Reliability Top coal, quartile half Affordability Energy energy replace performance Future waste with performance .... renewables (SAIDI) (SAIFI) and gas G overnor’s 2025 Energy Goals Residential Competitive Environmental Reduce .Increase (from MPSC Michigan
Slide 20: Choice Rates and Competitiveness
“Choice rates, Question: The competitiveness. Governor Jackson essentially creates “You City onseem atrying Retail Council lot of toto challenges Open agree arbitrage voted Access. with unanimously and utilities’ markets.” . problems . . argument Governor to pass so I wouldn’t aon resolution Rick ch
Slide 21: Cost Control Holds Down Rates
G.holds -10% w/o 2014-2018 2014 2013 2012 2006-2012 Peers Actual/Plan+6% -8% -3% -6% CMS Average -2% .Plan 20 Self-Initiated Storm +2% Major Conservatively Flat +1% 2013 down Annual -3.7% Changes Storms 2013 Reinvestment rates O&M COST Storms and allows Change Control better . . . .system . . . . .
Slide 22: Fuel Mix and Continuous Cost Reduction
Fuel .G. P $60k 7,600 F 2012 2010 7,200 600 .ast uture .Continuous . .Mix Progress Each a Examples 1,000 way Benefits of$100k COST life at Each CMS. Reduction . . . . 2016 MW Employees 2016 Retire Coal - 900 300- Total GCC Add + 540 20 + Future Savings (mils) -360 - 280 People Productivity = $64 mil
Slide 23: Michigan Energy Law Has Potential to Be Better
22. . . . has Energy .Michigan the potential Law .to. .be . even better!. Historical No 12-18capmonths choice test regulatory year lag Pre 2008 Energy 2008 Law Improvements 2015 capex More has 22 theFaster, potential smoother to be even better!. implement% efficiency standards File-and- Energy 10cap
Slide 24: Constructive Regulation: Commission
Constructive .54321 John Term Sally Greg T Barclays strong Michigan 23 . i. er . strong Quackenbush White Talberg Ends: 1law State Research on law July (I) Regulation Ranking (I) the Term on Term 2,books the 2017 (R), Ends: Ends: books Chairman supported . . .July .July supported 2,2,2015 by2019 a q
Slide 25: Customer Rate Increases About 1% Annually
Customer 2% a~1% 201 Annual C üEliminate Gas Electric üEliminated üLowered affordable 24Includes ost Inflation 3-2017 Reductions Average Rates summer surcharges and 2014 renewable rate sustainable. –Base skewing base Working block Rate rate surcharge rates increases: Increasesa With MPSC To Be . . .
Slide 26: CMS Guidance and Reinvestment
.CMS 2 $1.66 2012 Guidance Reinvested 2014 2013 Storm(total Insurance Lower Sales-weather Reinvestment Improve Accelerate Prefund Total deliver 25.0. 1. deliver Warm 3$58 Cold Mild Mindset +7% contributions Cold for pension gas electric 16 Winter customers Summer generation earlier $50 Winter for Wi
Slide 27: Operating Cash Flow Self-Funds Investment
Operating 2018Amount 2017 2016 2015 2014 2013 2012 2.5 2.0 1.5 1.0 0.5 0.0 Cash aInvestment .Gross Working Interest $1.6 $1.7 $2.0 $1.5 $1.4 $2.2 .Non-GAAP . . 26 self-funds $1.9 $1.8 flow operating capital $1.45 Cash before (bils) NOLs investment Flow cash and dividend $taxes &flowa Growth Credits
Slide 28: Key Takeaways
.Key EPS C $2.00 üVisible üCost üPlan üSupportive üCatalysts Actual Target +4% +12% +7% +8% 2003 5% 7% 2007 2012 Beyond27 . ore . .5% Takeaways adistinguish +12% +7% 2004 2008 2013 Fu Conservatively Controls “Real” 5% 6% = Investment 7% nda -Upside 2005 2009 2014 7% 8% Regulatory +11% men Growth Act
Slide 29: Appendix
Appendix
Slide 30: Capital Expenditures 2014-2018
Capital Customers48 Customers45 ChoicesEnvironmental292$ 100 Utility1,464$ 265Expenditures Renewables83 47 45 1,647$ 38 36 40 391,487$ 201320142015201620172018Total(mils)(mils)(mils)(mils)(mils)(mils)(mils)ElectricDistribution199$ 38 36 163 349280$ 35 1,473$ 196 192 - - -Other88 Other96 200$ 172 1,3
Slide 31: GAAP Reconciliation
GAAP Reconciliation
Slide 32: GAAP Reconciliation (Unaudited)
20032004200520062007200820092010201120122013Reported utility0.21(0.39)- operations earnings non-GAAPNA$0.90$0.96$1.08NANANANANANANA*Less debt and per restricted (income) share,- stock.Earnings (0.07)0.050.330.03- including loss(0.16)0.02(0.07)(0.03)0.40(*)(0.08)0.08(0.01)(0.03)*Asset MTMPer- non-GAA
Slide 33: Reconciliation of Gross Operating Cash Flow to GAAP
2012201320142015201620172018Consumers 35 1,250$ (mils)Other 36 Gross 1,350$ operating Operating 1,450$ activities (a) Cash excludes Flow1,652$ including $(59) million 1,756$ taxes,Operating interest 1,825$ 2012 disallowance payments 1,906$ Income1,980$ +and Depreciation related working 2,089$ to ele