Slide 1: Investor Meetings June 27, 2016
Investor Meetings June 27, 2016 Jackson Generating Station Ludington Pumped Storage Cross Winds Energy Park Among lowest acquisition cost ever Fourth largest in the world #2 in renewable sales in the Great Lakes area
Slide 2: Forward-looking statements and non-GAAP measures
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: Quality: Consistent, Predictable Performance
Quality Consistent, Predictable Performance Simple, Perhaps Unique Model . . . . Consistent Growth Through . . . . 2017+ 7% CAGR Plan Capital investment (reliability, costs, enviro mandates) 6% - 8% - O&M cost reductions 2 - 3 pts EPS a Dividend - Sales growth 1 5% to 7% 6% to 8% - No “block” equity
Slide 4: Cost: Premier Cost Reductions
Cost Premier Cost Reductions O&M Cost Performance . . . . O&M Cost Performance . . . . Actual Cost Reduction New Cost Savings Where We Can Improve More How We Will Do It (2015 over 2006) 2014 2016 (Electric Distribution Cost Per Customer) & 2015 & 2017 (mils) (mils) 2014 2015 • Attrition $ - 35 $ -
Slide 5: Delivery: Customers AND Investors
Delivery Customers AND Investors Capex $17 Billion Over 10 Years . . . . Capex $17 Billion Over 10 Years . . . . 2016-2025 2016-2025 2016-2025 Customer Benefit Drivers Investor AND Customer Customer Electric reliability; digital How this customer experience adds value! Cleaner Cleaner Energy Energy
Slide 6: The Consumers Energy Way
The Consumers Energy Way . . . . Vision & Strategy Extraordinary Outcomes Disciplined System for How Operational Performance Safety Price competitiveness CUSTOMER ENABLED Environmental stewardship FOCUS EMPLOYEES Customer satisfaction Value Creation Short-term: eliminate waste to fund BUSI
Slide 7: Electric Customer Prices
Electric Customer Prices . . . . Residential Bills Industrial Rates CUSTOMERS 20% 30 % 26% 15 20 Rates & Worse Worse Fuel 5 10 Rates & 5% OUR MODEL; OUR PLAN National Avg Act 169 Midwest Avg 0 -5 Flat Residential bills well below U.S. average -10 Policy could (7)% Better (18)% Better -15 (13)% Rates
Slide 8: Actual Plan Model
Actual Plan Model 7% /year 2017+ Plan $1.89 $2.02 6% – 8% $1.55 $1.66 $1.77 Capital investment 6% - 8% $1.99 a Adjusted EPS $0.81 $1.26 $1.36 $1.45 $1.08 $1.21 $1.02 $1.08 $1.16 $1.24 - O&M cost reductions 2 - 3 pts $0.90 $0.96 84¢ 96¢ 66¢ - Sales growth 1 Int’l Sale $0.84 50¢ Dividend 20¢ 36¢ - No
Slide 9: GAAP Reconciliation
GAAP Reconciliation
Slide 10: Earnings Per Share By Year GAAP Reconciliation
CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Reported earnings (loss) per share - GAAP ($0.30) $0.64 ($0.44) ($0.41) ($1.02) $1.20 $0.91 $1.28 $1.58 $1.42 $1.66 $1.74 $1.89 After-tax items: Electric
Slide 11: Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities
CMS Energy Reconciliation of Gross Operating Cash Flow to GAAP Operating Activities (unaudited) (mils) 2014 2015 2016 2017 2018 2019 2020 Consumers Operating Income + Depreciation & Amortization $ 1,813 $ 1,866 $ 2,030 $ 2,161 $ 2,336 $ 2,481 $ 2,613 Enterprises Project Cash Flows 20 20 35 58 58 63
Slide 12: Investing in Michigan’s Future Through Economic Development
Investing in Michigan’s Future THROUGH ECONOMIC DEVELOPMENT Garrick Rochow Vice President and Chief Customer Officer
Slide 13: Why Economic Development?
WHY ECONOMIC DEVELOPMENT? 2 130 years in Michigan Community commitment Economic, business, and job growth Political support Customer satisfaction
Slide 14: A Platform for Change: Fuyao Glass
A PLATFORM FOR CHANGE: FUYAO GLASS 3 in 2013…. SLOW RULE TO RESPOND DRIVEN & VS. OPERATIONALLY CUSTOMER INFLEXIBLE DRIVEN
Slide 15: New Mindset & Approach
NEW MINDSET & APPROACH 4 Reduced cost of infrastructure Competitive rates Relationships with economic development organizations Innovative customer programs Energy Ready Sites
Slide 16: Competitive Rates: A Key Differentiator
COMPETITIVE RATES: A KEY DIFFERENTIATOR 5
Slide 17: Delivering Results
DELIVERING RESULTS 6 Examples of New Business Growth Growth by Industry Combination TYPE MW Electric Automotive 71 Gas Arauco Food 20 Manufacturing 53 GM Assembly Metal 28 Continental Dairy Betz Dicastal Durolast Roofing Petroleum 19 Plastics 18 Switch Enbridge Magna-Cosma Others 49 Knauf Post Dart
Slide 18: Delivering Results: Examples of New Business Growth
DELIVERING RESULTS 7 Examples of New Business Growth Arauco Brembo Combination Largest particleboard Construction currently Electric press in North America underway Gas Arauco 250 jobs 254 jobs $325 M $115 M GM Assembly Durolast Roofing Continental Dairy Betz Dicastal Dicastal Switch World’s
Slide 19: Showing Improvements
SHOWING IMPROVEMENTS 8 Top 10 States for Doing Business in 2015 Top 10 Pro-Business States in 2015 1 Utah 6 N. Dakota 2 Nebraska 7 N. Carolina 3 Indiana 8 Wyoming 4 Virginia 9 Missouri 5 Kansas 10 Michigan “For the second consecutive year, [Michigan] is the Most Improved State because of a spectacul
Slide 20: Leading the Way
LEADING THE WAY 9 ALIGNED GOVERNANCE SKILLED WORKFORCE STATE ENERGY INCENTIVES INFRASTRUCTURE Michigan Economic Development Leadership
Slide 21: Questions? Investing in Michigan’s Future
QUESTIONS? Investing in Michigan’s Future THROUGH ECONOMIC DEVELOPMENT Garrick Rochow Vice President and Chief Customer Officer