Slide 1: Leading the Clean Energy Transformation: Environmental, Social & Governance
Leading the CLEAN ENERGY TRANSFORMATION Environmental, Social & Governance May 2023
Slide 2: Forward-looking statements disclaimer
This presentation is made as of the date hereof and contains “forward-looking statements” as defined in Rule 3b-6 of the Securities Exchange Act of 1934, Rule 175 of the Securities Act of 1933, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. All f
Slide 3: CMS Energy Overview
CMS Energy Overview Corporate Structure Key Information CMS Energy 2022 Financial Statistics (NYSE: CMS) Based in Jackson, MI ~8,500 Employees (41% unionized)a Consumers Energy NorthStar Clean Energy $8.6B Revenue 2022 $838M Adjusted net incomeb >95% regulated Avg. Rate Base 20 years Industry-leadin
Slide 4: Consumers Energy Positioned Well
Consumers Energy Positioned Well . . . 4th Largest Combination Utility Electric Gas Combined • Electric Utility 1.9M electric customers 7,526 MW of capacity • Gas Utility 1.8M gas customers 309 Bcf gas storage • Serving 6.7M Michigan residents Attracted Planet Goals a >750 MW of new or expanding • E
Slide 5: NorthStar Clean Energy Provides Clean Solutions
a NorthStar Clean Energy Provides Clean Solutions . . . Renewable Platform • 368 MW of wind (OH, TX) • 64 MW of biomass (MI, NC) • 30 MW of solar (MI, WI) DIG & Other • >1,000 MW in MI (including DIG & Peakers) • Upside: tightening supply with future retirements Presentation endnotes are included af
Slide 6: Over 135 years of Sustainable Business Practices
Over 135 years of Sustainable Business Practices . . . Founded by the Exiting Coal in 2025 and Foote Brothers in 1886 adding 8 GW of solar by 2040 Solar Gardens Cross Winds Energy Park Karn Coal Plant Ludington Pumped Storage . . . cleaner and leaner than ever before. 6
Slide 7: Our Commitment to Sustainability
Our Commitment to Sustainability . . . TOP QUARTILE FOR GLOBAL UTILITIES DOUBLE A RATED Received U.S. Environmental Protection Agency 2023 Energy Star® Partner of the Year Sustained Excellence Award . . . continues to be recognized globally. 7
Slide 8: ESG Disclosures are Transparent
ESG Disclosures are Transparent . . . • CMS Energy & • DE&I Website Consumers Energy Websites • EEO1 Report • SEC Filings (10-K & Proxy) • SASB Index (Electric Utilities & • Carbon Disclosure Project Power Generation) • Report Scope 1, 2 & 3 Emissions • SASB Index (Gas Utilities & Distributors) • Wa
Slide 9: Investment Thesis
INVESTMENT THESIS
Slide 10: Investment Thesis
Investment Thesis . . . Industry-leading net zero commitments Clean Energy Leader Diversified Service Territory Infrastructure Excellence through the Renewal Constructive regulatory jurisdiction Strong Cash Flow Constructive & Balance Sheet Legislation Affordable Prices Premium total shareholder ret
Slide 11: Our Clean Energy Transformation
Our Clean Energy Transformation . . . Exit Coal in 2025… …While Ensuring Reliability a (Coal % PP&E ) <20% • Purchase ~1.2 GW of existing gas Classic 7 retirement and capacity (Covert) Karn 1&2 retirement • Maintain ~1.2 GW of peaking capacity Campbell 1–3 through 2031 (Karn 3&4) retirement; <10% Re
Slide 12: Infrastructure Renewal is Necessary
Infrastructure Renewal is Necessary . . . Electric distribution system is older than Exiting coal in 2025 and peers adding 8 GW of solar by 2040 Goal to improve ≥1K miles annually 25 years of main replacement through our >$500M of vegetation management spend over Enhanced Infrastructure 5 years to i
Slide 13: Electric Reliability and Resiliency Investments
Electric Reliability and Resiliency Investments . . . Approach Benefits • Hardening assets, sectionalizing circuits • Less outages and length of outages • ATR and looping • Capital and O&M efficiencies • Undergrounding • 15% undergrounded today with goal • Fewer high cost, reactive events to ramp up
Slide 14: Michigan Regulatory Environment
Michigan Regulatory Environment . . . Supportive Energy Law • Timely recovery of investments ✓ Forward-looking test years ✓ 10-month rate cases ✓ Earn authorized ROEs ✓ Monthly fuel adjustment trackers (PSCR/GCR) • Supportive incentives ✓ Constructive ROEs ✓ 10.7% ROE for Renewable Portfolio Standar
Slide 15: De-risking Inflationary Pressures
De-risking Inflationary Pressures . . . Near-term Risk Mitigation Episodic Cost Savings Global Risks Countermeasures Year Event Savings ✓ Executed 5-yr union contracts in 2020 (>40% unionized) 2022 Palisades retirement >$90M Labor ✓ ~95% non-union retention ratea 2023 Karn 1&2 coal unit retirementsb
Slide 16: Credit Metrics Maintained
Credit Metrics Maintained . . . Consumers Energy S&P Moody’s Fitch Ratings Drivers Senior Secured • Strong financial A A1 A+ position Commercial Paper A-2 P-2 F-2 • Growing operating cash flow Outlook Stable Stable Stable CMS Energy • Constructive return on regulated Senior Unsecured BBB Baa2 BBB in
Slide 17: Expansive Economic Development Efforts
Expansive Economic Development Efforts . . . Electric Gas Combined 2022 New Load 2023 New Load Attracted Gotion >750 MW Global EV Battery Manufacturer of new or expanding load ~$2,400M investment since 2015a >2,000 jobs FlavorSum Fastest-Growing North Hemlock Semiconductor American Flavor Company Le
Slide 18: Industry-Leading Financial Performance
Industry-Leading Financial Performance . . . Adjusted EPSa +6% to +8% Dividend Weather Help Recession Recession Recession / Hurt Pandemic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023+ Cold Mild Hot Warm Mild Cold Summer- Hot Hot Warm Mild P
Slide 19: Environmental
ENVIRONMENTAL
Slide 20: Net Zero Commitments Drive Decarbonization
Net Zero Commitments Drive Decarbonization . . . 2025 Zero coal ~60% carbon emissions reduction a Net zero methane emissions for our gas delivery system and 20% 2030 gas customer emissions reductionb Accelerating vintage main and service replacements Zero coal Renewable natural gas Net zero carbon e
Slide 21: 2022 Asset Mix
2022 Asset Mix . . . Total PP&E ($M) (%) Electric Generation $3,277 14% Coal 477 ~2% Wind, solar, hydro 2,013 9 Gas & other 787 3 Distribution 8,294 37 Other 781 3 Total electric $12,352 ~54% Gas Distribution $5,473 24% Transmission 2,230 10 Underground storage facilities 1,067 4½ Other 396 1½ Total
Slide 22: A Just Transition Out of Coal
A Just Transition Out of Coal . . . We Have Done This Before Proven Examples ✓ Seven coal units retired in 2016 ✓ Coal plant decommissioning included: ✓ Clear and ongoing communication with affected ✓ Environmental abatement communities and stakeholders ✓ Dismantlement and demolition ✓ Co-workers pr
Slide 23: Our Clean Energy Transformation: Capacity Mix
Our Clean Energy Transformation . . . Capacity Mixa 3% 7% 6% 14% 13% 14% 15% 12% 10% 9% 11% 12% 9% 9% 10% • Exit coal in 2025 • Maintain reliability, 19% 28% 31% resiliency and affordability • 2x renewable 61% 61% 15% energy capacity 43% 30% 19% Today 2025 2030 2040 Coal Renewables Natural Gas Stora
Slide 24: Our Energy Supply Will Be Cleaner
a Our Energy Supply Will Be Cleaner . . . Current Mix Future Mix (2031) (Post-MCV PPA Expiration) One-Time PPA/ Market >50% Wind, Purchases Carbon free Customer 10% 45% Hydro & Programs Natural other 13% Gas 10% Natural 33% Gas Customer Storage 33% Programs 2% 18% Solar 1% Nuclear 6% Wind, Hydro & N
Slide 25: Our VGP Renewable Programs
a Our VGP Renewable Programs . . . Large Customer Program Other Programs (Available to Residential and Commercial) Large Customer Renewable Energy Program MI Clean Air • >1,000 MW approved expansion as demand grows • Open to natural gas and combination customers • Allows customers to pay for certifi
Slide 26: Decarbonization of Gas Infrastructure
Decarbonization of Gas Infrastructure . . . Net zero methane by 2030... …with additional opportunities. • ~130 miles/yr main replacement • Largest LDC underground storage in U.S. (309 Bcf) • ~9K/yr vintage services replacement • 15 gas storage fields, 8 compressor stations and ~150K horsepower for s
Slide 27: Energy Waste Reduction Programs
Energy Waste Reduction Programs . . . Energy Efficiency Programs Electric ✓ $5.5B of customer savings on energy bills since • ~2% annually 2009 • Next 5 years: ✓ >6,000 GWh of reduced usage since 2009 • Spend ~$198M/yr a – equivalent to ~1 power plant • Pre-tax incentive ~$40M/yr ✓ >28K/yr appliance
Slide 28: Goal to Power >1M EVs by 2030
Goal to Power >1M EVs by 2030 . . . PowerMIDrive PowerMIDrive PowerMIFleet Residential Public Charging • ~25K EVs in Consumers Energy territory today • >80% of all charging is off-peak with 1M EVs by 2030 best in class >90% residential off-peak could add ~10% growth to today’s • 37 EV fast chargers
Slide 29: Social
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Slide 30: Triple Bottom Line: Caring for Our People
Triple Bottom Line: Caring for Our People . . . • Employee and customer safety • Emotional • Physical • Cyber • Financial • Diversity, equity and inclusion (DE&I) • Embedded in our culture, the workplace and within our supply chain • Workforce Development • Electric and gas training programs • Worki
Slide 31: Employee & Customer Safety
EMPLOYEE & CUSTOMER SAFETY 31
Slide 32: Committed to Physical Safety
Committed to Physical Safety . . . Safety Performance • 36% reduction in high-risk injuries vs. 2021 (Recordable Safety Incidents) 355 • Safety performance included in executive and employee compensation Down (70)% • Proactive, risk-based program in partnership with EEI and other utilities 135 107 R
Slide 33: Employee Wellness Programs
Employee Wellness Programs . . . Program Focus & Approach Emotional & Physical • In 2023, introduced inclusive domestic partner benefits for all employees • In 2022, launched DE&I Movement Stands, which represent our multi-year, measurable aspirations in the areas of culture, talent, philanthropy, a
Slide 34: Cyber and Physical Security Program
Cyber and Physical Security Program . . . Program Focus & Approach Robust Corporate Governance • Protect critical infrastructure, customer data and • Board oversight of security risks including cyber and employee safety physical security, compliance and data privacy • Dedicated team monitors environ
Slide 35: Diversity, Equity & Inclusion
DIVERSITY, EQUITY& INCLUSION 35
Slide 36: DE&I Strategy and Movement
DE&I Strategy and Movement . . . Diversity by the Numbers DE&I Movement Stands • Our Culture Stand: We work in our Company and Female PoC our communities to value people of all 25% backgrounds Board of 33% Directors Male White • Our Talent Stand: We expect every future and 67% 75% current employee t
Slide 37: Seven Business Employee Resource Groups
Seven Business Employee Resource Groups . . . Interfaith Supports employees of all religions and those with no religious affiliation. Women in Energy is a reinvented new women’s business employee resource group that incorporates initiatives from both Women’s Engineering Network (WEN) and Women’s Adv
Slide 38: Our Supplier Diversity Initiatives
Our Supplier Diversity Initiatives . . . Focus & Approach • Raised Tier II target to $100M for 2023 after achieving $75M target in 2022 • Expanded our diverse supplier universe by 200% in the last 12 months • Expanded supplier diversity work to include ESG Sustainable Supply Chain metrics Met 5-year
Slide 39: Workforce Development
WORKFORCE DEVELOPMENT 39
Slide 40: Creating a Pipeline to Be an Employer of Choice
Creating a Pipeline to Be an Employer of Choice. . . STEM & Robotics Flint “Gas City” • Hometown, statewide and national focus • Training site covers 1.4 acres and is located in • Middle & high school education levels Flint, MI supports the next generation of Consumers Energy gas workers through tra
Slide 41: Union Relationships at the Utility
Union Relationships at the Utility . . . Training Trust Agreement Union Relationships (with Power for America) (Michigan State Utility Workers Council) • Delivers technical and safety training • ~3,400 employees represent electric and gas workforce • >25,000 student hours delivered in 2021 and 2022
Slide 42: Advancing Labor Rights
Advancing Labor Rights . . . Labor Rights Policy - We acknowledge the right of our employees to associate freely and bargain collectively, in compliance with federal and state laws • Complying with all applicable U.S. federal, state and local laws and regulations concerning our co- workers and labor
Slide 43: Community & Customer Support
COMMUNITY & CUSTOMER SUPPORT
Slide 44: Protecting Human Rights
Protecting Human Rights . . . 2022 Scored Human Rights Campaign 90% on the Corporate Equality Index • Committed to prohibiting the use of child labor, forced labor, human trafficking and all forms of modern slavery; and being transparent in our efforts, successes and challenges • Protecting the righ
Slide 45: Continued Corporate Giving
Continued Corporate Giving . . . a Charitable Organizations CE Foundation Donations $18.5M in total charitable donations in 2022 $7.8M in donations to $170M $169M nonprofits in 2022 since 2009 ✓ $3.2M to help end poverty in the state Cumulative Donations ✓ $1.1M to protect Michigan’s land, water and
Slide 46: Partnering with Customers in Need
Partnering with Customers in Need . . . ✓ $2.3M investment applied directly to customers impacted by COVID-19 related hardships such as loss of childcare, loss of a household member or unplanned expenses ✓ $47M of regulatory mechanisms to support vulnerable customers and infrastructure investments i
Slide 47: Our Community Engagement Teams
Our Community Engagement Teams . . . 23 Community Affairs Managers >350 local community events are attended each year >100 boards served on Active in the community . . . are positioned across the state. 47
Slide 48: We're Helping Michigan Thrive
We’re Helping Michigan Thrive . . . Competitive Advantages in the State New and Expanding Load ✓ $1B of state incentives ✓ Energy intensive economic a 2022 development rate >750 MW since 2015 ✓ 2022, 2021, 2020, 2019 & 2018 2021 Editor’s Choice Top Utility - Business Facilities 2020 2019 In 2022, ne
Slide 49: Our J.D. Power Scores
Our J.D. Power Scores . . . Residential Business 812 783 765 737 Up Up Up Up 144 pts 166 pts 121 pts 140 pts 639 646 616 625 2012 2022 2012 2022 2012 2022 2012 2022 Electric Gas Electric Gas . . . highlight our commitment to continuous improvement for our customers. 49
Slide 50: Governance
GOVERNANCE
Slide 51: Exceptional Board Governance
Exceptional Board Governance . . . JOHN RUSSELL GARRICK ROCHOW JON BARFIELD DEBORAH BUTLER Independent Chair KURT DARROW WILLIAM HARVEY RALPH IZZO SUZANNE SHANK 12 Members MYRNA SOTO JOHN SZNEWAJS RONALD TANSKI LAURA WRIGHT 92% Independent . . . led by an independent Chair and highly skilled, divers
Slide 52: Diverse, Engaged and Experienced Board
Diverse, Engaged and Experienced Board . . . Diversity Experience 64 Average age Senior Leadership Financing Accounting or Fin. Reporting 100% 100% Regulatory Environment & Governmental Affairs 100% 33% Female Risk Management 100% Customer Experience 75% Info. Tech. / Safety & Security 75% Utility E
Slide 53: Committee Membership
Committee Membership . . . Political contributions >$10K need Member 100% Board approval Chairperson Independent Governance, Compensation & Sustainability, & Name Audit Human Resources Executive Finance Public Responsibility Jon E. Barfield Deborah H. Butler Kurt L. Darrow William
Slide 54: Committee Responsibilities
Committee Responsibilities • Oversees: Audit • Integrity of financial statements & information • Compliance with legal & regulatory requirements • Risk management policies, controls & exposures • Reviews: • Performance of internal audit function Compensation & • Review & Approve: • Executive compens
Slide 55: CEO Compensation
CEO Compensation . . . Compensation Mix for CEO Operational Goals • Employee Safety ~25% tenure- PEOPLE • Culture Index based 18% Annual • Customer Experience Index incentive 67% PROFIT Long-term • Electric Reliability Based on 15% incentive PROFIT PLANET EPS (70%) & Base (Based on relative Utility
Slide 56: Risks are Carefully Considered
Risks are Carefully Considered . . . Risks Mitigation Efforts Regulatory Environment • Participation in legislative and regulatory policy development Climate • Settled the Clean Energy Plan case approving transitioning out of all Carbon Emissions coal in 2025 and expansion of renewable build-out (Re
Slide 57: Political Giving
Political Giving . . . Political Giving Focus Enhanced Disclosures • Meeting Michigan’s energy needs • Publishing annually on the company’s website: • Expenditures made to influence the outcome • Helping the state’s communities thrive of ballot initiatives • Providing safe, reliable, affordable and
Slide 58: Appendix
APPENDIX 58 58
Slide 59: Key IRP Components
a Key IRP Components . . . Renewables & Storage Delivering Across the Solar 4.5 GW by 2030, ~8.0 GW by 2040 Triple Bottom Line Battery >0.5 GW by 2040 (75 MW beginning in 2024) Wind ~0.8 GW pre-2025 (approved via RPS) ✓ Accelerate Customer Programs By 2030 decarbonization Energy Efficiency ~1.1 GW D
Slide 60: Endnotes
ENDNOTES 60 60
Slide 61: Presentation Endnotes (pg 1 of 2)
Presentation Endnotes (pg 1 of 2) Slide 3: aExcludes seasonal and contract workers bAdjusted, (non-GAAP) cDividend per share Slide 4: aNet zero methane emissions for our gas delivery system, net zero carbon emissions for our electric business (includes PPAs and MISO market purchases), net zero GHG e
Slide 62: Presentation Endnotes (pg 2 of 2)
Presentation Endnotes (pg 2 of 2) Slide 26: aMethane emissions from our natural gas delivery system since 2012 Slide 27: aAssumes roughly 1,054 MW saved (6,000 GWh ÷ (65% efficiency rate x 8,760 annual hours) = 1,054 MW) Slide 33: aEmployer contribution of 5% to 10% for employees not covered by Pens
Slide 63: GAAP Reconciliation
CMS Energy provides historical financial results on both a reported (GAAP) and adjusted (non-GAAP) basis and provides forward-looking modeling on an adjusted basis. During an oral presentation, references to “earnings” are on an adjusted basis. All references to net income refer to net income availa
Slide 64: Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
CMS ENERGY CORPORATION Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income (Unaudited) In Millions, Except Per Share Amounts Three Months Ended Twelve Months Ended 12/31/22 12/31/21 12/31/22 12/31/21 Net Income Available to Common Stockholders $ 168 $ 637 $ 827 $ 1,348 Reconciling item