Cms Energy Corporation · NYSE:CMS
Cms Energy — Non-Deal Roadshow (March 2014)
44 slides from Cms Energy's roadshow presentation, Mar 17, 2014
Slide 1: Investor Meetings March 17-21, 2014
Exhibit 99.1 Investor March Cross Jackson Winds® 17-21, Gas Meetings Plant 2014 Energy Park Consumers Smart Energy Program
Slide 2: Forward-Looking Statements and Non-GAAP Information
ThisConsumers relevant from STATEMENTS INFORMATION” “FORWARD-LOOKING and herein The comparable CMS adjusted regulatory able 1 presentation to presentation time Energy to estimate legal basis. reflect to items GAAP time provides decisions. Management Energy’s AND the facts, from also is inand measure
Slide 3: CMS Energy Overview
Territory utility 2 Fourth million 8,600 in purchased Lake Cross •Energy Capacity one Premium 1.8 largest Environment ofWindsthe Overview Winds® largest MW Park gas million United combination electric generation regulatory customers ® of States • investors 312 Capacity owned TBtu and and and of gas
Slide 4: 10-Year Mindset
10-Year Mindset Dividend EPS Peers $1.36 $1.55 $1.26 $1.21 6% $1.08 3 $1.78 4% . . .5%—7% $0.96 $0.90 $0.81 39% 2003 20¢ 36¢ 80% .Adjusted $1.45 2004 96¢ 27%Actual a6% drives 50¢ Int’l7% $1.74 5%—7% $1.08 14% Dividend EPS CAGR Sale 2005 84¢ $1.66 $1.02 consistent (non-GAAP) $0.84 2006 Payout 32% “re
Slide 5: CMS Consistent Results Model
CMS Consistent RESULTS Self-Imposed None Investment Upside .A. 4 . .Capex . benefits Energy “Bet Catalysts >$15 Predictable The “Needed customers MODEL Limits Company” billion Not Ten B. . AND . Wanted” year—$15 .PPA’s . shareowners. expire billion = 2,000 Sustainable MW C. Credit base rates rating
Slide 6: Model Delivers Attractive Future Return
Model Above Future Attractive Return 62% EPS Driven investment Utility Shareowner CMS Ten-Year Adjusted ......good, 5 growth payout Peers Average 7% Delivers...... over byEPS future dividend $7 in CMS next return ratio rate billion regulated (non-GAAP) Return return 5%-7% five Growth Peers 9%-11% yi
Slide 7: 10-Year Customer Investment Plan
Customer A. 2013-2022 10-Year Generation (bils) •Amount Higher Gas Electric transmission Total Rate base PPA ROAVisible, conversions rates Base Opportunities replacement return renewables reliability Plan X <2 6% 10-Year Opportunity capacity 2.0 >4 && $1.7 .3 expansion INVESTMENT $5.0Level 1.0 Plan
Slide 8: Visible Investment Opportunity
Visible 2013 $1.5 $1.8 (bils) Amount Cap CMS Peers 2003 .Source: 7 . . . Inv .Pct 21% 18 . creates Investment: 10K; OCF 16 of20% Market 20 2004 actual Liquidity unique 24%Cap Catch-Up amounts opportunity; 2005 through 2006with 2007 2012 OCF 2008 smoothed already 2009 for stronger 2010 illustration 2
Slide 9: Visible Investment: Clean Environmental and Renewable
Visible Clean $2.5 Environmental Renewable .Ludington 8 . . . .Billion small Power Investments: Pumped energy and $1.5 Capacity New incremental Billion Pipeline Storage gas Customer-Driven. Reliability acquisition $4.0 replacements Gas with Billion conversions no Infrastructure Consumers big $4.5 .
Slide 10: Visible Gas Infrastructure Investment
Visible Gas Amount $ $2.6 •1.5 1.0 2 0 0.5 accelerating 9 008 #4 27,000 24,000 1,700 312 3.0$1.4 System largest -TBtu 2012 Investment: miles miles gas gas Investment investment 2013 ofof storage utility(bils) transmission distribution service - 2017 Gas opportunities. Infrastructure 2018 pipelines m
Slide 11: Visible Propane and Gas Investment Opportunities
Visible New year •who 6,516 million 2010 investment Forecast 10Propane Customer 5-Year Potential Investment 2014-2018 will Business Installs 2011 Investment: per Plan switch to–2012 opportunities. year savings natural 85,000 average Propane potential ~15,000 Service 4,246 1,365 2013~$1,500 Gas 284 g
Slide 12: Visible Generation Investment
Visible Over Generating Karn/Weadock New $0.4 Reliability Storage $0.7 Cross Energy $1.0 Controls Environmental Jackson Plant Investing 11 BCapacity 6Winds Generation Campbell GWs Investment: Park Plant Plant over Ludington Complex of$2 Generation Generating billion Major Pumped inGeneration Assets
Slide 13: Visible Renewable Investment: Cross Winds Energy Park
.•Visible 12 .$255 Michigan 10% Purchase Lake 100 $235 Cross 105 Commercial . . Michigan’s MW, renewables Winds®Energy million Investment: Winds®Energy 50% 56 62 energy operation Vestas GEand largest turbines by law Renewable build turbines 2015 Park requires: Park renewable – 50% November Phase Ene
Slide 14: Investment Drives Rate Base Growth Checklist
Visible (bils) Amount ?$ Electric $15 15 $11 10 $13 5 2 0 $8 Base drivesrives 13013 Add 20$3 $11 ?$4 $6 Federal Reduce $19 Rate 2017 Gas ?Customer ?Investment: Mandated Reduce Capital Increases 2022 EPS, Regulators O&M Value cash Fuel Investment by Costs Rate <2% State flow, Costs Base <2% or and“Ch
Slide 15: Expiring PPAs and Capacity Plan
B.2013 MW 10,000 Planned 9,000 8,000 Classic 7,000 (950 Palisades 6,000(778 MCV (1,240 Termination 0 CE Capacity Net will 14 Expiring Portfolio Peak provide •MW) generation Jackson Mothballed PPA Replace MW) contracts 2014 7Demand Shortfall Demand •PPA MW) Provides ?PPA’S investment incremental earn
Slide 16: Credit Ratings
C.A2 Scale S&P Fitch A+ A A- BBB+ BBB BBB- BB+ Unsecured BB BB- B+ B B- Outlook just 15B2 Credit A3 B3A1 B1 Ba2 upgraded, Ba3 /Ba1 Baa2 Moody’s(March)(January)(February) Reflects Baa3 S&P Consumers Baa1 2002 Performance Present Positive Prior RATINGS • Regulation •Good Constructive Moody’s CMS Secur
Slide 17: Michigan Economy Performance
Michigan Gross WA 8.1 MT SD ME ID 2.1 IA (3.5) 7.4 6.6 IL NV 2.9 6.2 4.3 CA OK 5.0 AZ NM 4.2 MS TX 3.2 13.0 HI FL 6.9 Third U.S. Lowest Source: among PA 8.2 AK 4.7 WY 6.7 7.9 KS 7.3 KY NC 0.7 1.2 WI 4.7 LA 6.1 AL TN UT 5th 4.6 4.6 Total NE quintile Domestic 6.1 5.9 3.6 the Best MO SC Fourth AR 12.3
Slide 18: Michigan Economic Recovery and Sales Assumptions
D.MW Examples Electric Gas Unemployment Combination December GDP Population thru Eco-Bio 3 Betz 8 Enbridge 28 Dart Magna-Cosma 4 Casting 5 2008-2009 Secant 7 best 17 Consumers MWRapids July economic Container Industries (real) Industrial Plan Norplas 6-6% MACI <1% Grand MW Plastics 2012 U.S. of 2013
Slide 19: Capacity Price Upside
E. kW Today +$50 (mils)(mils) +$30 Capacity $5 ($ could 18 CAPACITY $55 $35 add Future perprice value month) Scenarios <Price to$0.50 theMarket 700 $4.50 MW Increases $7.50 “DIG” plant.
Slide 20: Retail Open Access Policy
F.$150 310 0.02% competitive or 1.8 •Customers change 19 Eliminating Lower Retail all Million “ROA” customers million could industrial Open residential =Consumers industrial Electric 99.98% allow ROA Access cost byrates opportunity could: 4% for •competitiveness bills Governor rates Policy(ROA) lowe
Slide 21: Michigan's Governor's Energy Goals
Michigan’s Governor’s and •Michigan will 20 Adaptability Affordability Top Eliminate Reliability Residential Competitive Environmental Reduce Increase gas continue quartile halfcoal, mercury, Governor performance renewables energy Energy 2025 bills to performance industrial replace strengthen Protec
Slide 22: Question on Choice Rates
Question: “Choice rates, Governor .The 21 . . . Jackson Governor choice essentially creates Rick “You isCity not on Snyder seem atrying Retail Council lot theof to solution to challenges Open agree arbitrage voted Access. with to unanimously industrial and utilities’ markets.” . problems . . competi
Slide 23: Self-Initiated Cost Control
G. Self-Initiated CMS Major +1% +2% +6% -2%—3% Peers w/o Reinvestment Actual/Plan Average -10% 2006-2012 holds 22 Storm Flat 2013 down Annual -3.7% Storms -2% Changes 2012 -6% rates -8%Plan O&M COST 2013 Storms andMajor Conservatively allows 2014 Change Control 2013 2014-2018 better system reliabili
Slide 24: Continuous Cost Savings Progress
G.way Past Headcount 7,600 2016 Each $100k 1,000 600 2002-2012 Each(mils) 2013 Future 2010 aPeople 23 Continuous Progress Add 7,200 EGWP, 2012 2016 $60k of Savings savings Productivity life GCC Actions Fuel Total Retire Benefits at OPEB Future COST $75 CMS. (mils) +Mix -360—280 540 Coal—900—300 comp
Slide 25: Constructive Regulation and Commission
Constructive Commission J1 2 S 5 4 3 Term Barclays strong 24 ohn ally Michigan Quackenbush Talberg Ends: lawResearch on July Tier Regulation (I) the2, Greg books 1 2019 2017 (R), State White Chairman supported Term Ranking (I)Ends: byJuly a quality 2, 2015 commission.
Slide 26: Rate Case Outlook
Rate Gas $100 $49 Cross Tax/Other $0 2013 good 25 $0O&M Rate Cases O&M 2014 for Winds® customers Case Tax 2014 Eliminated! Avoided (prices) Electric and investors Rate Case(no Avoided ROE risk).
Slide 27: Customer Rate Increases Affordable
Customer 2013-2017 Annual •2% ?~1% surcharge aElectric affordable 26 Electric Gas Eliminate Eliminated Includes Inflation ~1%Average Gas Rates surcharges and Cost 2014 ?increases: renewable rate Lowered sustainable. –Reductions Base skewing base Working rates Rate rate summer Increasesa With block M
Slide 28: Residential and Industrial Rate Competitiveness
Residential Competitiveness (vss Consumers 25% 22% 20% Self-initiated(2)%(10) 15%(no 10% securitization) Total 5% Peers -5% 1 27 -10% -15% (12)% -20% a-25% b 5%(15) U.S. -5%(3)% 25% 20% Rate 1% 1brate/bill achievable Based Peer Peers pt(10)% -15%rate Average)(vss Policy -25% Total(10)% Design(8) Des
Slide 29: 2014 Guidance and O&M Cost
CMS Icy O&M Than •(mils) 2014 Summer 2013 Cost Guidance 2012 Warm Winter Improve Accelerate Prefund Total deliver 28 Storm(total Insurance Late Savings Cold 2012 $58 Forecast Mindset B/(W) Cost(mils) 2012 & Saving for pension December Total electric Reinvested Summer customers •Reinvestment $1.66 ge
Slide 30: Operating Cash Flow and Investment
Operating (bils) Amount $ Billion 2.0 $2.1 $2.2 $1.7 1.5 $1.5 $1.6 and (0.5) 0 0.5 1.0 Investment 2012 NOLs self-funds 292.5Interest $1.9 taxes $1.8 a2013 up Gross & Non-GAAP $0.1 $2.0 Credits Cash investment 2014 $1.4 operating billion Flow $1.45 2015 $0.7 Cash per Growth $0.6 and cash 2016 Working
Slide 31: Key Takeaways
Key EPS $2.00 Core 7% +8% +12% +7% ?+11% aTarget distinguishistinguish 30 Adjusted Catalysts 5% Takeaways aActual 5% +7% Fundamentals 7% ?+4% “Real” 6%—8% 2003 Supportive ? ?Visible EPS Upside Target Cost = Growth 7%(non-GAAP) Actual Controls Investment 5%—7% Regulatory 2004 CMS EPS 2005 favorably ?
Slide 32: Appendix
Appendix
Slide 33: Model Delivers: Total Return vs Peers
Medel One Year CMS Note: Peer .Source: 32 . . . Three EPS Group Year Energy Dividend Delives..... Bloomberg, cumulative Year Five 3 7% 9 Year 15 Growth Ten 22% 45Future Growth periods growth ?37% 6 29Annual 105% ending 116 at thena 5%-7% very 12/31/2013. 5-7 high endConsensus of all peers. used for
Slide 34: Purchase of Jackson Plant
Purchase The Asset: .•Connecting 33 .Creates Retire Recover Replace Suspend Close . . Transaction providesr 540 late small headroom of with through CON; MW 2015 The Jackson coal substantial cleaner, gas “Dots” Thetford when securitization; plants for plant Gasinexpensive needed other Plant located s
Slide 35: Capital Investment and Depreciation
Capital Amount $7.4 +$1 A.) 2 .0 34.014 . .Was .up Now 2015 BilInvestment $0.4 $7 (bils) $8 2016 B.) billion; $1.8 $6.3 2017 . w/Thetford .$545 .2018 . million 2019w/o 2020 savings Thetford 2021 from 2022 Estimated Jackson 2023 IPP 2019more Depreciation than offset$800 by addition Million of 2014 $1
Slide 36: Capital Expenditures 2014-2018
Capital 2014-2018 2013 (mils)(mils)(mils)(mils)(mils)(mils)(mils) Generation Distribution Other Investment Environmental Electric Gas New Renewables Consumers Ludington Total 35 Base Infrastructure Customers Gas 2014 Base Choices Utility 96Expenditures 88Base Reliability 102 60 Plant Capital Hydro C
Slide 37: 2014 Sources and Uses of Cash
2014 CMS Enterprises Overhead DRP, Retirements(250) aCommon Consumers (mils) Amount Operating Other Sources Interest Capital Dividend Pension Uses Equity New Net Retirements(200) Financing Cash Bank AR b Includes Facility short-term issues aCash $(2,540) flow at continuous Facility Energy working $(
Slide 38: 2014 Annual Sales and Sensitivities
2014 Annual Status Sales (mils) •ROE .Gas 37 .Electric . . (10.3%) (291.0 prices reflect Sensitivities (authorized) aSensitivity aImpact Reflect (37,017 (10.3%) (NYMEX) Bcf) strong + 25+2014 EPS Gwh) + .5risk . 0.01 + 25 . .+ 0.07 sales OCF mitigation. bps + $1.00 +1% 5++forecast; 30 0.03 +–+$0.05 0
Slide 39: GAAP Reconciliation
GAAP Reconciliation
Slide 40: Earnings Reconciliation By Year
Earnings 2003 Reported After-tax Electric Enterprises Corporate Discontinued Asset Cumulative Adjusted Mark-to-market * 2004 impairment Less and Per earnings items: interest 2005 0.74 accounting gas than Share operations utility impacts 0.62 2006 $500 charges, and per (loss) By0.04(0.02) 2007 share,
Slide 41: CMS Cash Flow Reconciliation
CMScash Reconciliation 2012 (mils) (unaudited) Consumers Enterprises Gross Other working Net (a) 40 2013 Energy operating Operating excludes capital(411)(335)(375)(356)(730)(739)(748) provided 2014 Project Operating ofactivities 2015 Cash $(59) Gross by Cash operating Income 2016 Flow million Operat
Slide 42: Consumers 2014 Reclassifications Presentation
Consumers 2014 Reclassifications Presentation non-GAAP Description Operating Other Sources Interest Capital Dividends/tax Uses investing Equity New Retirements(200) Financing Net aCash 41 Includes short-term change Issues $(2,540) Forecasted flow at working $expenditures year and $350 activities 1,6
Slide 43: CMS 2014 Reclassifications Presentation
CMSchange 2014 Reclassifications Presentation non-GAAP Description Consumers Enterprises Sources Interest Overhead Pension Uses investing New Equity Retirements(250) Common Financing Net Cash (a) 42 short-term Issues (a) Forecasted flow at Energy infusions(350) programs Includes year and $Contributi
Slide 44: Consolidated Eliminations and Reclassifications
Consolidated 2014 Eliminations/Reclassifications/Consolidation Arrive Statements Consumers Description operating investing financing Net Cash 43 cash change Forecasted flow atatyear provided the activities and activities from of CMS in Amount end Consolidated CMS operating Cash cash $(356) Consolida